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30-year yield could rise above 4%, 10-year rate to 3.6% before this move ends

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Jeffrey Gundlach, founder and chief executive officer of Doubleline Capital LP.

Scott Eells | Bloomberg | Getty Images

Jeffrey Gundlach, founder and chief executive officer of Doubleline Capital LP.

Jeffrey Gundlach wouldn’t be surprised to see Treasury yields leap to new multiyear highs before the bond market calms down.

“If you look at the charts and you look at the way the market’s behaving and you think about the trends that are underneath the bond market, it wouldn’t be surprising at all to see the 30-year [yield] go to 4 percent before this move of the breakout above 3.25 percent is over,” he said on “Halftime Report” Thursday.

“The curve should probably steepen so maybe the 10-year Treasury makes it to 3.5 percent or 3.6 percent during that move,” he added.

As of the latest reading, the 10-year Treasury note yield was at 3.17 percent, down from seven-year highs above 3.2 percent notched earlier in the week. The 30-year yield was last at 3.35 percent.

“One of the things that is really fascinating about this sell-off in bonds is that it’s happening of the context of a really high short position against the Treasury market,” Gundlach added. “With this sell-off you’d have thought that maybe it would be braked a little bit by all of that short positing maybe looking to take profits because rarely do you have this crowded positioning in a market and they’re all making money on it.”

Gundlach is founder and CEO of DoubleLine. He is known for his investment acumen in the fixed income markets. DoubleLine has assets under management of more than $120 billion, according to its website.

Treasury yields have soared in recent weeks as the Fed has raised rates and data has showed a strong economy, sending both the 10-year rate and the 30-year rate above multiyear highs, and beyond what the so-called Bond King dubbed a “game changer.”

The DoubleLine Capital CEO wrote on Twitter in September, “Yields: On the march! 10’s above 3% again, this time without financial media concern. Watch 3.25% on 30’s. Two closes above = game changer.”



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Tesla CEO Elon Musk: extreme micromanager

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Tesla’s future as a mass-market car company hinges on efficient, automated production of the Model 3. Tesla will lose $6,000 for every $35,000 Model 3 it sells, says UBS analyst Colin Langan. It only breaks even if the car sells for over $41,000. Tesla has yet to produce the $35,000 base model of the Model 3.

Tesla did meet the goal of producing more than 5,000 Model 3 vehicles in a week during the third quarter. It made 80,142 vehicles (including 53,239 Model 3’s), beating Wall Street analysts’ expectations. But the company is nowhere near the 500,000 mark Musk promised in 2016. As of the end of Q3, Tesla has produced 167,975 cars this year. To put that in context, Ford makes that many cars approximately every 10 days.

Tesla promised investors that it will achieve positive cash flow and profitability in the second half of 2018. But some investors and analysts are deeply skeptical this will happen. Tesla’s debts are quickly coming due: The company has to pay around $230 million in November, part of a larger $1.3 billion debt bill coming due in March 2019, according to AP.

Faith in the Tesla CEO is being tested like never before. Investors are wary of his social media and legal battles, attitude toward regulators and recreational drug use.

Many employees think Musk is essential to the company’s success. They praise his creativity, sense of humor and inspiring speeches. Some credit his hands-on management style with building a great company. A former Tesla and SpaceX employee, Spencer Gore, who is now the CEO of Impossible Aerospace, explained:

“Elon Musk is in a position most will never experience — trying to deliver an industry-defining product on a limited budget. He can’t afford to make decisions slowly, or even always compassionately. When he involves himself in low-level details it’s to enhance execution speed. For some engineers, this can be frustrating, at times heartbreaking — but Elon’s unconventional style is what built the Tesla we all chose to join.”

But other employees describe how Musk’s management style has increased costs and complexity in the factories.

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Saudi Arabia says journalist Jamal Khashoggi was killed after a fight broke out in consulate

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A man holds a poster of Saudi journalist Jamal Khashoggi during a protest organized by members of the Turkish-Arabic Media Association at the entrance to Saudi Arabia's consulate on October 8, 2018 in Istanbul, Turkey. 

Chris McGrath | Getty Images News | Getty Images

A man holds a poster of Saudi journalist Jamal Khashoggi during a protest organized by members of the Turkish-Arabic Media Association at the entrance to Saudi Arabia’s consulate on October 8, 2018 in Istanbul, Turkey. 

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Top VC deals: Instacart hits a $7B valuation; Bill Gates raises an EU energy fund

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 A weekly recap of the most interesting venture capital deals, funds and start-ups.

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