Jeffrey Gundlach, the CEO of DoubleLine Capital, recently shared his concerns about the possibility of another period of volatility and a heightened risk of recession in the near future. In a recent interview on CNBC’s “Closing Bell,” Gundlach urged investors to upgrade their portfolios in preparation for potential market turbulence.
Gundlach, whose firm manages approximately $95 billion in assets, revealed that DoubleLine has reduced its use of borrowed funds to amplify positions in its leveraged funds to the lowest level in the company’s 16-year history. This move reflects his cautious approach in the current market environment, characterized by increased uncertainty and volatility.
The recent spike in volatility can be attributed to President Donald Trump’s imposition of aggressive tariffs on major trading partners, leading to concerns about an economic slowdown. The S&P 500 experienced a month-long pullback, resulting in a 10% correction last week, with the index currently sitting about 8% below its all-time high reached in February.
Gundlach now believes there is a 50% to 60% chance of a recession occurring in the coming quarters, higher than what most people anticipate. This outlook is supported by the Federal Reserve’s decision to downgrade its economic growth forecast and raise its inflation outlook, sparking fears of stagflation. Despite projecting two rate cuts for the remainder of 2025, the Fed acknowledged that the inflation outlook has worsened.
In light of these developments, Gundlach is advising U.S. investors to diversify their portfolios away from American securities and explore opportunities in Europe and emerging markets. He emphasized the importance of moving away from a solely U.S.-focused investment strategy, suggesting that this trend is likely to continue in the long term.
As investors navigate the uncertain market conditions and prepare for potential challenges ahead, Gundlach’s insights serve as a valuable guide for adapting investment strategies to mitigate risks and capitalize on opportunities in a changing global landscape.
