Jeffrey Gundlach, DoubleLine Capital CEO and Wall Street "bond king," is pointing the finger at Democratic presidential hopeful Bernie Sanders for the market's tumultuous rout this week.
"If this stock market reversal is due exclusively to the virus, then why is United Healthcare down far more than SPX?" Gundlach wrote in an email to CNBC's Scott Wapner, referring to the S&P 500. "Why is healthcare as a sector broadly not outperforming? Answer to these questions: the market is digesting a better than 50% chance of Bernie getting the nomination."
The Dow and the S&P 500 dropped on Wednesday, continuing a dismal week for stocks as investors worry about a dent to global economic growth due to the coronavirus. The S&P 500 wiped out a whopping $1.7 trillion in just two sessions earlier this week. The equity benchmark nosedived 6.3% in two days, suffering its biggest two-day drop since August 2015.
All the while, Sanders has opened up a double-digit lead nationally over his closest rivals, according to an NBC News/Wall Street Journal poll released last week. It said the senator from Vermont has maintained the support of 27% of Democratic primary voters.
"Maybe this is the dark side of momentum investing (which is exactly what defines 'passive')," Gundlach wrote. "The market goes down in a knee jerk way on the Bernie rise, but the market going down makes Bernie's polls go up on his rejection of a market based economy. Which makes the market go down another leg. Rinse and repeat."
Gundlach has previously said that Sanders is the biggest risk to the financial markets in 2020. Sanders, a self-proclaimed democratic socialist, is pushing for policies including higher taxes on the wealthy, breaking up big banks and a $15 per hour minimum wage. Sanders has also vowed to take on the pharmaceutical industry and his biggest proposal, "Medicare for All," would end private health insurance like that provided by United Healthcare.
Gundlach went on to say he pitied the Federal Reserve, which lowered interest rates three times last year in order to sustain the economic expansion.
"Just weeks after finally being able to term the present policy stance 'appropriate' and 'in a good place' the bond market is asserting that present policy is, in fact (to quote Joe Biden), in need of significant adjustment," Gundlach wrote.
If commodity prices, specifically oil prices, continue their recent weakness, Fed Chairman Jerome Powell will have to pivot again soon, according to Gundlach.
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