DoubleLine Capital CEO and Wall Street "Bond King" Jeffrey Gundlach is not worried about a possible recession in 2020 even though he doesn't think China and the U.S. will get a trade deal done anytime soon.
"We've never had a recession without negative leading indicators," Gundlach told CNBC's Scott Wapner on Wednesday. "Leading indicators are low right now … but numbers that are rolling off from the December-January period are quite low. So our forecast is that those are going to improve, which makes it very unlikely that we'll have a recession in the next six to 12 months."
Gundlach noted that consumers' perception of current conditions would have to drastically deteriorate while weekly jobless claims spike up for a recession to take place. Consumer sentiment has tapered off in recent months but remains at relatively high levels. Weekly jobless claims, meanwhile, fell to a seven-month low in the week that ended Nov. 30.
Earlier this year, investors grew concerned about the potential for a recession as global manufacturing activity slowed down while business sentiment was dented by the U.S.-China trade war. Manufacturing activity has stabilized since then while recent optimism around a possible trade deal between the world's largest economies lifted stocks to record highs in October and November.
However, uncertainty around trade increased this week after a slew of mixed reports and comments from a top U.S. official raised questions about both sides striking a deal before a Sunday deadline. If a deal is not reached by then, additional U.S. tariffs on Chinese goods will take effect.
Gundlach added Wednesday that he does not think an agreement will be reached before the 2020 presidential election. "There's absolutely no reason for China to do a trade deal on the terms the United States wants when there's an election coming up in less than a year," he said.