April 16, 2025 | Investing in Uncertain Times

Some worthwhile macro observations in this discussion.

DoubleLine Deputy CIO Jeffrey Sherman moderates a discussion on April 3, the day after President Donald Trump’s reciprocal tariff announcement, between DoubleLine CEO-CIO Jeffrey Gundlach and Quill Intelligence CEO and Chief Strategist Danielle DiMartino Booth on the current state of the market and economic outlook. The discussion was held as part of a DoubleLine Client Event in Dallas on April 3, 2025. Here is a direct video link. 

A few charts along for the ride…

Household liquidity is at its lowest in more than five years. Savings are mostly tied up in real estate and a record concentration in the stock market.

In the recent decline, the S&P 500 forward price-to-earnings multiple has fallen to about 19x earnings from 24.4x last September. The median PE at bear market bottoms since 1982 has been 13x. To restore the 43-year median and correct for the extreme overvaluations of the previous 20 years, either prices will need to fall significantly more, or earnings will need to leap from here.

At the moment, falling revenue projections and rising input costs are pushing earnings expectations in the opposite direction.

So, further price declines are needed to improve the investment return outlook. Since World War II, the average bear market decline for stock prices has been 35%, ranging from -25 to -55 %.  This is not happy news for the always-be-long crowd, but it is promising for those with patience and a risk-adjusted value discipline.

Happy Easter.

Danielle Park April 16th, 2025

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