Reuters
Jeffrey Gundlach, CEO of DoubleLine Capital LP.
- The billionaire bond king Jeff Gundlach said on Wednesday that the world will never go back to a January 2020, and bizarrely predicted the end of the "You blow dry my hair and I'll blow dry your hair" economy.
- The DoubleLine Capital chief executive said in a tweet that: "Saving money and having a net economically productive skill will be the new cool."
- His statement seems to reference the idea that considering the current state of economy, people aren't going to continue spending money on things they don't need and will instead increase their rates of savings.
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Jeffrey Gundlach sent a bizarre, somewhat cryptic tweet Wednesday, predicting the end of what he called the "You blow dry my hair and I'll blow dry your hair" economy once the coronavirus crisis is over.
"Saving money and having a net economically productive skill will be the new cool," he added.
Although he did not elaborate on his somewhat strange analogy, the second half of Gundlach's tweets suggests he meant that in the current economic climate, consumers and investors will not burn money on wasteful expenditures, but would rather increase savings.
As a frame of reference, once the Great Depression subsided and the economy normalised, consumers and businesses complimented one another since households were spending and consequently, businesses flourished. This led to a consistent flow of give and take in the circular economy.
But as things stand, Gundlach seems to imply that putting away money while utilizing a skill that contributes productively to the economy would be prudent. This could also suggest that the broader economy suffers in the short term if everyone does this.
Separately, top economist Mohamed El-Erian recently spoke of a 'new, new normal' post the pandemic, in which corporates and investors will have to adjust to survive. He spoke of slow productivity growth and an array of other elements that would take time to get sorted out in the new environment.
"Nobody knows how long the cash burn will last or the hit to earnings will be. Anyone who does know is either a health genius, or is deceiving themselves," El-Erian said.
What people in financial media don't seem to understand is that we are never going back to the January 2020 "You blow dry my hair and I'll blow dry your hair" economy. Saving money and having a net economically productive skill will be the new cool.
- Jeffrey Gundlach (@TruthGundlach) April 15, 2020