Gundlach warns of increased recession risks for investors

Jeffrey Gundlach, CEO of DoubleLine Capital, warned of potential risks and a higher chance of recession ahead. He suggested that investors should rethink and upgrade their portfolios now. Speaking on CNBC, Gundlach noted that the current environment is showing signs of increased volatility. He highlighted that DoubleLine has reduced its use of borrowed funds to support its investments to their lowest level in 16 years. Concerns over an economic slowdown have grown after recent tariffs imposed by President Donald Trump, leading to a significant drop in the S&P 500 index. It is approximately 8% below its peak from February. Gundlach estimates there is a 50% to 60% chance of a recession in the near future. He believes this likelihood is higher than what most investors think. His comments followed the Federal Reserve's downgraded growth outlook and increased inflation expectations. Despite these concerns, the Fed plans to cut interest rates twice in 2025. Gundlach also advised U.S. investors to look for opportunities outside the country. He sees it as a good time to diversify into European and emerging markets, suggesting that this trend may continue into the long term.