A billionaire investor blamed the GameStop stock surge on the government's $1,200 COVID-19 relief checks

• Bonds investor Jeffrey Gundlach has blamed COVID-19 relief checks for the GameStop surge.
• The $1,200 relief checks were sent out last year as households struggled with the economic fallout of the pandemic.
• Some observers see the GameStop surge as a bid by amateur investors to humiliate an out-of-touch financial elite.

Billionaire bond fund manager Jeffrey Gundlach in an interview on Fox Business, said that COVID-19 relief checks sent to Americans to cushion them from the economic fallout from the pandemic were behind the GameStop stock surge.

In the interview Friday night, Gundlach was talking about the surge in value of shares in ailing video games retailer GameStop. The rise has been fulled by novice traders, coordinating on the Reddit messaging board, taking on Wall St traders who'd been betting on the stock declining in value.

"In this case thanks to primarily government policy there's wherewithal among investors, if you want to call them that, with government money being sprayed all over the place, with checks to people, that they have the wherewithal to put it together into a real capital base," Gundlach, CEO and chief investment officer of Los Angeles-based DoubleLine Capital told Fox Business host Charles Payne.

"In this case, there were 2.1 million people that somehow got organized on Reddit and managed to get about $20bn in buying power, and they found an opportunity to pile drive these hedge funds."

Gundlach went on to criticize the hedge funds as well but warned against viewing the contest as the triumph of underdogs against financial giants.

"I have no sympathy whatsoever for these hedge funds," he said. "There's a little bit of hubris that seems to be going on with this network that makes me less likely to view it as David vs. Goliath."

Last March, the economic stimulus bill approved by Congress saw $1,200 checks sent out to Americans to help them through the economic hardship caused by the coronavirus crisis and provide the economy with a cash injection from consumers. A third round of checks is being pushed as part of the Biden administration's new stimulus bill and is currently being negotiated by Congress.

Unemployment has risen to historical highs in the US during the pandemic, with 847,000 Americans filing for unemployment insurance last week as businesses continue to lay off staff.

Many Americans are struggling with hunger during the pandemic, with food charity Feeding America in a study last October finding that 50 million Americans could experience food insecurity during the pandemic.

According to data from the US Bureau of Labor Statistics last September, 59% of Americans spent their checks on food, bills, and other essential household expenses.

Other commentators have seen in the GameStop rally not as a misuse of government relief but a desire to punish out-of-touch financial elites.

"The people investing today are driven by righteous anger, about generational injustice, about what they see as the corruption and unfairness of the way banks were bailed out in 2008 without having to pay legal penalties later, and about lacerating poverty and inequality," wrote markets expert John Authers in Bloomberg.