"New Bond King" Gundlach's Heavy Prediction: Dollar Bear Market Inevitable, Stay Away from US Stocks and Embrace Emerging Markets

According to the Zhitong Finance APP, Jeffrey Gundlach, CEO of global asset management giant DoubleLine Capital and known as the "new bond king," stated on Tuesday local time that as a series of radical policies by Trump lead to the gradual collapse of the "American exceptionalism," the dollar is almost certain to enter a long-term depreciation curve, and international stocks, represented by emerging markets, are expected to continue outperforming the U.S. stock market.

"I believe the current trading strategy is to not hold U.S. stocks but to hold stocks from other parts of the world. This strategy is clearly working," Gundlach pointed out during an investor live broadcast. "The dollar is now at the very beginning of what I believe to be a long-term bearish market."

Under Gundlach's leadership, DoubleLine Capital manages approximately $95 billion in assets as of the end of 2024. He stated that if the dollar weakens against foreign currencies and international stock markets continue to perform well, investors priced in dollars buying overseas stocks—especially emerging market stocks from China and Southeast Asian countries—may welcome a "double tailwind."

Due to the Trump administration's radical trade and immigration policies, global investors' optimistic sentiment towards U.S. assets has been dampened, prompting a reassessment of the dollar's dominant position in the global trade system. The dollar has been weak since 2025. The ICE Dollar Index, which measures the strength of the dollar against a basket of major currencies, has fallen about 8% so far this year.

"I think it is entirely reasonable to invest in some emerging market countries, and I still prefer the Indian market as my long-term emerging market choice," Gundlach said in an interview. "In my view, investing in certain Southeast Asian countries, perhaps even Mexico and Latin America, is also a viable option."

This influential figure in the investment world, who has garnered global investor attention, pointed out that due to the potential escalation of geopolitical tensions and the unpredictability of the Trump administration's policy planning, foreign investors may hold back and delay injecting more capital into the U.S. market, which could also bring new tailwinds to international markets.

"If this trend begins to reverse, there could be a massive sell-off. This is also one of the important reasons I advocate holding stocks outside of the U.S. rather than U.S. stocks," he stated in the interview.

Gundlach has held a negative view of the U.S. market and economy for a long time, stating that several critical recession indicators have begun to "light up red." He predicts that even though the current U.S. inflation rate is "relatively low," the Federal Reserve will keep the benchmark interest rate unchanged at its policy meeting next week.

Gundlach expects the U.S. inflation rate to be around 3% by the end of 2025, but he also acknowledges that due to the lack of clarity and transparency in Trump's tariff policies, predicting future price pressures in the U.S. is quite challenging.

It is understood that although the dollar index rebounded after the easing of U.S.-China trade tensions, an increasing number of Wall Street investment institutions indicate that this rebound is merely temporary and emphasize that a "dollar bear market" that could last for years has just begun, triggered by the Trump administration's chaotic and disruptive "American economic transformation" actions on the global trade system. In particular, the Trump administration's erratic tariff measures have caused significant turmoil in the financial markets, irreversibly shaking investors' confidence in dollar assets, leading to the gradual collapse of "American exceptionalism." Morgan Stanley, a major Wall Street firm, recently issued a warning about the outlook for the US dollar. As the market assesses the disruptive trade policies of the Trump administration, combined with the possibility of the Federal Reserve restarting its interest rate cut cycle in December, the dollar is expected to depreciate significantly over the next year. The dollar index is projected to plummet by 9%, potentially falling to levels not seen since the early days of the pandemic.

Since the beginning of this year, non-US stock markets have significantly outperformed US stocks. The "new bond king" is not the only force on Wall Street optimistic about emerging markets. Michael Hartnett, a stock market strategist at Bank of America known as "Wall Street's most accurate strategist," recently stated that the decline of the dollar will trigger a wave of sell-offs in the US stock market, and the next bull market is expected to emerge in emerging markets