- "Bond King" Jeffrey Gundlach covered the last of his three stock shorts Wednesday afternoon, tweeting "the profits were just too great to not harvest, and the panic is palpable."
- The DoubleLine Capital CEO is not short any US stocks "for the first time in years," he added, even as coronavirus risks drag equities to three-year lows.
- Short-selling has been temporarily banned across several European nations as authorities look to curb financial market turmoil.
- Gundlach appeared on CNBC Tuesday, saying he views the odds of a 2020 US recession at 90% as the outbreak tears into economic activity across several key sectors.
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Even as the stock market downtrend pushes further into its fourth straight week, "Bond King" Jeffrey Gundlach is cashing in his short bets.
The CEO of investment firm DoubleLine Capital tweeted Wednesday evening that he closed out the last of his equity shorts and, for the first time in years, isn't short any stocks. The short-covering arrived as the Dow plunged below 20,000 for the first time since 2017, adding to the intense, coronavirus-fueled selling streak.
"The profits were just too great to not harvest, and the panic is palpable," he wrote, adding his last three shorts were covered at 2:37 p.m. ET Wednesday.
Several countries have instituted short-selling bans as the coronavirus wreaks havoc on markets around the globe. Italy, France, Spain, Belgium, and Greece are among the countries that blocked traders from initiating shorts. Short selling can add fuel to an already-sharp sell-off as investors aim to profit from depreciating stock prices.
The European Union's financial regulation body, the European Securities and Markets Authority, also ordered greater transparency around short positions. The agency on Tuesday halved the level at which short positions must be disclosed to the government.
"ESMA considers that lowering the reporting threshold is a precautionary action that, under the exceptional circumstances linked to the ongoing COVID-19 pandemic, is essential for authorities to monitor developments in markets," the authority said in a statement.
Gundlach appeared on CNBC Tuesday to give his thoughts on the possibility of a US economic recession. Treasury Secretary Steven Mnuchin's statement that the US will avoid recession was "so ludicrous," he said. Gundlach pegged the odds of a 2020 recession at 90%, noting that the coronavirus' damage to the travel and tourism industries started a prolonged downtrend for economic activity.
"When you decimate the restaurant industry, the travel industry, the hotel industry, the airline industry ... the cruise line industry, obviously you're going to take a huge divot out of economic activity," he said in a Tuesday webcast with investors.
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