Gundlach: QE won't end in 2014
Global economic worries, centered in China, could create a 50-50 chance that the U.S. Federal Reserve reverses its plans to taper asset purchases by $10 billion a month, money manager Jeffrey Gundlach told CNBC on Wednesday.
"My suspicion is that they will not end quantitative easing in 2014 and there will be some reason, probably because of some market volatility, to slow down the taper, to probably stop the taper," said Gundlach, the co-founder and CEO of DoubleLine Capital.
In interview on "Squawk on the Street," Gundlach said he's worried that China saw too much growth too soon, and he questioned whether the country has the financial controls to handle its rapidly expanding economy. Asked why he thought the Fed could perform an about-face on its taper plans, Gundlach said global economic growth hasn't met expectations.
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Gundlach added that yields on benchmark 10-year Treasury bonds could drop to 2.5 percent or lower in the early part of 2014. He sees a 30 percent chance for a "scramble" into Treasurys that could send yields that low, he said.
"Well the world hasn't started out that great in 2014," Gundlach said. "I keep hearing about downgraded global economic growth. ... I have a feeling that Chinese growth is going to underperform the downgraded expectations."
Shifting his focus to Puerto Rico's debt crisis, Gundlach told CNBC he thought the island's bonds would remain volatile but will "make it to the goal line."
Despite the U.S. federal government's insistence otherwise, Gundlach believes the U.S. will bail out Puerto Rico. He added that Puerto Rico's bonds may even reward the hardy investor.
(Read more: White House: No bailout for Puerto Rico)
"At the end of the day, Puerto Rico will make it only because of assistance from the federal government," Gundlach said. "So if you really want to make some money, and aren't afraid of losing a little a sleep at night, I think the Puerto Rico bonds are fine. But they're going to be volatile."
Despite his nickname as the "Bond King," Gundlach discussed his equity strategy and disclosed he had sold some Apple stock recently, downplaying its growth prospects. Describing Apple shares as "dead money," he believes prices will remain locked between $500 and $550 a share.
(Read more: Why Google is tech's darling-not Apple)
"What does the future really bring for a company that is not innovating?" Gundlach said. "It's a cheap stock. Which is why I'm comfortable owning some of it."
—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street."