DoubleLine’s Gundlach sees more risk coming, greater chance of recession

DoubleLine Capital CEO Jeffrey Gundlach expressed concerns about a potential period of heightened volatility and increased risk of a recession in the near future.

Gundlach stated, “I believe that investors should have already upgraded their portfolios. I think that we’re going to have another bout of risk.”

With DoubleLine managing approximately $95 billion in assets, Gundlach revealed that the firm has reduced its borrowed funds to amplify positions in leveraged funds to the lowest level in its 16-year history.

Recent volatility escalated following President Donald Trump’s imposition of tariffs on major trading partners, sparking fears of an economic slowdown and leading to a monthlong pullback in the S&P 500, which experienced a 10% correction last week.

Gundlach now predicts a 50% to 60% chance of a recession in the coming quarters, stating, “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.”

Following the Federal Reserve’s downgrade of economic growth outlook and increase in inflation forecast, Gundlach highlighted concerns of stagflation. Despite the Fed’s expectation of two rate cuts for the remainder of 2025, it acknowledged a worsened inflation outlook.

Gundlach recommended that U.S. investors diversify away from American securities and explore opportunities in Europe and emerging markets. He emphasized, “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.”