//Need to Know: Gundlach says this is how stock-market investors can survive the ‘zigzags’ of 2019

Need to Know: Gundlach says this is how stock-market investors can survive the ‘zigzags’ of 2019

While the commander-in-chief doesn’t always get what he wants these days, asking for a stock market rally may be less of a stretch than it was in the dark days around Christmas.

Amid the drag of a border-wall stalemate and government shutdown, reports have emerged that POTUS wants to get a China trade deal done to light a match under Wall Street, and help it get over that December slump. Positive chatter out of Beijing as a surprise third day of talks came to a close is not hurting at all.

Of course, the greenest of investors have hopefully learned by now that markets can turn on a dime and pull the rug right out from under them.

And love him or hate him, DoubleLine Capital founder Jeff Gundlach has warned that the market downturn could be a prolonged one. He’s back with more advice for investors, earning a spot in our call of the day.

After a major meltdown in December, junk bonds have been having a revival of sorts lately, but Gundlach told investors Tuesday to use those gains “as a gift and get out of them.”

Instead, he suggests looking for companies with strong balance sheets. “That’s going to be the way to survive the zigzags in 2019,” said Gundlach, in his annual “Just Markets” webcast Tuesday. And while some say investors may be looking for signs of recession that aren’t there, he said junk-bond spreads are among those “flashing yellow” on that front.

Gundlach also tossed some shade at Fed Chairman Jerome Powell’s rally-inspiring comments last Friday, as he said the central bank chief “went from pragmatic Powell to Powell put and the markets have been throwing a party since then.” He added that the way investors have been piling into the market lately looks similar to what was going in the credit market before the last big financial crisis.

Other snippets of advice included a call to invest in emerging market stocks over the S&P, especially if the dollar weakens; avoid the value trap in Europe; and for the brave, bitcoin could crawl back to $5,000.

One more thing, Gundlach thinks U.S. national debt is “horrific,” describing it as akin to every U.S. household maxing out three credit cards with $5,000 limits.

The market

Dow

YMH9, +0.45%

S&P 500

ESH9, +0.34%

 and Nasdaq

NQH9, +0.46%

 futures are in the green, though gains have pared. That’s after Tuesday’s win for the Dow

DJIA, +1.09%

S&P 500

SPX, +0.97%

 and Nasdaq

COMP, +1.08%

The dollar

DXY, -0.09%

is flat and gold

US:GCU8

is down again, but crude

US:CLU8

is climbing.

Europe stocks

SXXP, +1.05%

 are up, while continued optimism over trade talks triggered a rally for Asia, with the Hang Seng

HSI, +2.27%

 up over 2%.

The buzz

Perhaps dampening spirits a bit, Fitch warned that the U.S. could lose its triple-A sovereign credit rating this year if government dysfunction raises fears about a breach of the debt limit toward March. As for the shutdown, furloughed federal workers owe an estimated $438 million in rent and mortgage payments for January, says Zillow. But funding for food stamps will continue. Meanwhile, a new poll finds most Americans blaming Trump for the stalemate.

Days after announcing weak iPhone sales and a sharply lower revenue forecast for the holiday quarter, Apple

AAPL, +1.91%

 reportedly plans to cut production of three of its newest iPhone models. But the company exceeded financial targets last year, which meant a 22% pay hike for CEO Tim Cook, who told CNBC’s Jim Cramer that naysayers were full of “bologna.”

Cook also ripped into chip group Qualcomm

QCOM, -0.87%

 over a continuing legal battle, meaning a settlement is probably not forthcoming.

Lennar

LEN, +1.20%

Constellation Brands

STZ, +1.30%

and KB Home

KBH, +0.57%

 are all reporting.

In Beijing, the trade talks that stretched to a third day have concluded. China’s foreign ministry said the outcome of that will be made public soon, while Ted McKinney, U.S. undersecretary of agriculture for trade and foreign agricultural affairs, said the discussions “went just fine.”

Even so, Trump is reportedly expected to use this month’s State of the Union address to ask for more powers to raise tariffs.

Tesla

TLSA, +3.70%

 is dropping in premarket. The electric car maker is being sued by the parents of a Florida teen, killed when a sedan crashed and caught fire.

The chart

How much money flowed out of equities during December’s meltdown? According to this Deutsche Bank chart (h/t The Daily Shot), that amount was the biggest since 2008.

The economy

No data, but we’re getting minutes of the December Fed meeting, in which the central bank delivered on a rate hike, and a bunch of Fed speakers — Atlanta Fed President Raphael Bostic, Chicago’s Charles Evans and Boston’s Eric Rosengren.

The quote

“The symbol of America should be the Statue of Liberty, not a 30-foot wall.” — That was Senate minority leader Chuck Schumer, responding to POTUS’ eight-minute televised speech from the Oval Office, where he called illegal immigration a crisis, but didn’t declare a national emergency. But really, Schumer and House Speaker Nancy Pelosi’s awkward joint appearance and ensuing memes may have stolen all of Trump’s thunder:

Random reads

LA police probing the second death in less than two years at the home of a big Democratic donor

Australia may be ready to grant asylum to a young Saudi woman fleeing her family

Weeks after drone drama caused mayhem at Gatwick, Heathrow is shaking off its own drone incident

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