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Jeffrey Gundlach sees a year of more muted returns in 2020 than in 2019, when assets from stocks to bonds to Bitcoin all soared. In a webcast on Tuesday afternoon, the DoubleLine Capital CEO and chief investment officer discussed his outlook for 2020 and beyond.

Despite his forecast for harder-to-find returns, Gundlach doesn’t expect the coming year to be uneventful: “I don’t think it’s going to be the boring ’20s, nor do I think it’s going to be the roaring ’20s,” Gundlach said. “I think it’s going to be a highly volatile period.”

He sees the lead-up to the 2020 presidential election as a looming risk for U.S. stocks. Gundlach expects Sen. Bernie Sanders (Ind., Vt.) to win the Democratic Party nomination and President Donald Trump to win the general election, as long as the economy holds up. He worries that should Sanders’ candidacy become stronger, financial markets would sell off in response.

Gundlach noted that the U.S. government budget deficit is at levels relative to gross domestic product that have previously occurred only in times of fiscal stimulus at the depths of previous recessions. If Sanders is elected and implemented, Gundlach sees his progressive platform expanding that deficit to record levels.

“If people get more worried about Bernie Sanders and they start to price in his spending programs, then you could really start to see trouble in both [long-term Treasury] bonds and stocks, which could really be on a rough ride,” he said.

Gundlach sees some risk of a recession in 2020, which he pegs at a 30% to 35% probability. Most likely, however, strength in the job market and consumer spending will outweigh weakness in the U.S. manufacturing sector, he said.

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The Federal Reserve and other central banks will be committed to keeping monetary policy accommodative in 2020, as long as they don’t see their preferred measure of inflation moving up, he said. As that happens, he sees longer-term bonds like the 10-year Treasury note falling.

“I think the pattern here should be a steeper yield curve, with the Fed very unlikely to raise rates and with gold going up and inflation expectations starting to show some signs of life and the supply of long-term bonds still bigger than ever,” Gundlach said. “I think organically—without Fed manipulation—interest rates would be rising.”

Gundlach expects non-U.S. markets to outperform U.S. stocks as the dollar weakens—similar to the call he made in early 2019. The dollar remained relatively flat last year, however, and non-U.S. developed and emerging markets, while posting respectable gains, fell short of their U.S. counterparts.

In 2020 and beyond, Gundlach sees foreign investors withdrawing from the U.S., putting pressure on the dollar. A deeper U.S. twin deficit—government deficit plus trade deficit—plus a Fed in easing mode should weaken the dollar further, he said.

A falling dollar in 2020 will favor emerging markets and commodities, according to Gundlach.

Gundlach also sees Bitcoin going higher in the near term, and recommended a permanent allocation to gold in investors’ portfolios. He’s bearish on BB- and BBB-rated corporate credit given declining quality and stretched valuations.

Write to Nicholas Jasinski at nicholas.jasinski@barrons.com