While U.S. stocks are now in an "accelerating phase," billionaire investor Jeffrey Gundlach is predicting that the S&P 500 will post a negative rate of return in 2018.
One of the best investments for 2018 will be commodities, Gundlach, chief executive of DoubleLine Capital and known on Wall Street as the "Bond King," said on an investor webcast on Tuesday.
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 U.S. corporate bonds stems from the notion that the Federal Reserve has begun its era of "quantitative tightening."
He said if the 10-year U.S. Treasury note yield goes above 2.63 percent, U.S. 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."