The S&P 500 "may go up 15 percent in the first part of the year, but I believe, when it falls, it will wipe out the entire gain of the first part of the year with a negative sign in front of it," Gundlach said. Gundlach said his bearishness on the S&P and other risk assets including US corporate bonds stems from the notion that the Federal Reserve has begun its era of "quantitative tightening."
He said if the 10-year US Treasury note yield goes above 2.63 percent, US stocks will be affected. "If the 10-year goes above 2.63 ... it will accelerate higher and equity markets are going to be spooked and maybe that's the cocktail that is coming our way.
"Gundlach, who manages $119 billion at Los Angeles-based DoubleLine, said investors are "celebrating the magic moment of stronger economic growth domestically, stronger economic growth globally, stronger earnings." He said overall he is seeing "a lot of euphoria out there, a lot of bullishness" on the equity markets. Gundlach said the financial markets have not priced in a "more hawkish" European Central Bank. "Maybe that's why the euro has started to rally," he said, adding: "Maybe it will rally further."
Gundlach said he believes the price on bitcoin has hit its peak. "The high for bitcoin is in," he said. "It's just a thing that is out there, unproven. I have a theory that bitcoin is very different than what people think. People think that it is tremendously safe and anonymous and get can't be hacked and all that stuff. I have feeling that it is the opposite. "I do not own bitcoin. This type of investment is very, very different from my conservative DNA," Gundlach said.