(Adds quotes from Gundlach)
By Jennifer Ablan
NEW YORK, Sept 29 Jeffrey Gundlach, chief
executive of DoubleLine Capital, said on Thursday that investors
should tread carefully when trading Deutsche Bank AG
shares because a government bailout is not out of the question.
Earlier on Thursday, the bank's U.S.-traded shares hit a
"I would just stay away. It's un-analyzable," Gundlach told
Reuters by phone about Deutsche Bank shares and debt. "It's too
binary. The market is going to push down Deutsche Bank until
there is some recognition of support. They will get assistance,
if need be."
Gundlach, who oversees more than $100 billion at Los
Angeles-based DoubleLine, said investors who are betting against
shares in Deutsche Bank might find it futile.
"One day, Deutsche Bank shares will go up 40 percent. And it
will be the day the government bails them out. That jump will
happen in a minute," Gundlach said. "It is about an event which
is completely out of your control."
Concerns over the stability of Germany's largest bank pushed
its U.S-listed shares down as much as 9.1 percent to a record
low of $11.185. Daily volume was also at a record, with more
than 43 million shares changing hands.
The latest fall came after Bloomberg reported that a number
of funds that clear derivatives trades with Deutsche had
withdrawn some excess cash and adjusted positions held at the
lender because of its problems.
Gundlach, known on Wall Street as the "Bond King," said
financials and banks have been poor relative performers all
"Something has been hurting the banks," he said. "It is not
a coincidence that increased regulation and bizarre monetary
policies have coincided with relatively poor performance from
the banking sector. They have been very poor relative
performers, particularly for the last five quarters at the onset
of negative interest rate policies."
Gundlach said investors should continue to stay defensive.
About recent market weakness, Gundlach said: "It doesn't feel
like it's over."
In July, Gundlach told Reuters said stock investors had
entered a "world of uber complacency," as the S&P 500 had been
hitting fresh record highs almost daily.
"The artist Christopher Wool has a word painting, 'Sell the
house, sell the car, sell the kids.' That's exactly how I feel -
sell everything. Nothing here looks good," Gundlach said.
The Dow Jones Industrials Average closed down on Thursday by
more than 195 points, or 1.07 percent, while the S&P 500 closed
down by over 20 points, or 0.93 percent.
(Reporting by Jennifer Ablan; Editing by Alan Crosby and