Jeffrey Gundlach speaking at the 2019 SOHN Conference in New York on May 5, 2019.
Adam Jeffery | CNBC
DoubleLine Capital CEO Jeffrey Gundlach said Thursday there could be another painful period of volatility on the horizon as the fixed income guru sees heighted risk of a recession.
“I believe that investors should have already upgraded their portfolios … I think that we’re going to have another bout of risk,” Gundlach said on CNBC’s “Closing Bell.”
Gundlach, whose firm managed about $95 billion at the end of 2024, said DoubleLine has lowered the amount of borrowed funds to amplify positions in its leveraged funds to the lowest point in the company’s 16-year history.
Volatility recently spiked after President Donald Trump’s aggressive tariffs on leading trading partners triggered fears of an economic slowdown, spurring a monthlong pullback in the S&P 500 that tipped the benchmark into a 10% correction last week. The index is now about 8% below its all-time high reached in February.
The widely followed investor now sees a 50% to 60% chance of a recession in coming quarters.
“I do think the chance of recession is higher than most people believe. I actually think it’s higher than 50% coming in the next few quarters,” Gundlach said.
His comments came after the Federal Reserve downgraded its outlook for economic growth and hiked its inflation outlook Wednesday, raising fears of stagflation. The Fed still expects to make two rate cuts for the remainder of 2025, even though it said the inflation outlook has worsened.
Gundlach is recommending U.S. investors move away from American securities and find opportunities in Europe and emerging markets.
“It’s probably time to pull the trigger for real on dollar-based investors diversifying away from simply United States investing. And I think that’s going to be a long-term trend,” he said.