Revisiting the top 10 surprises he announced in January, Morgan Creek Capital CEO/CIO Mark Yusko told attendees at John Mauldin's Strategic Investment Conference to expect a bear market and a recession by next year.

Despite continuing massive central bank intervention around the globe, debt, deflation and demographics will conspire to cause secular decline in the developed world, he said. Global trade is rapidly approaching a year-over-year decline.

When global exports go negative, it has never happened before without a recession, he said, noting that Europe and Japan already are teetering on the edge of recession.

In the U.S., corporate earnings have been down six quarters in a row. Yusko noted that has never happened before without a recession.

One potential development that could stave off a recession is oil prices. In 1986, an oil price surprise helped delay a recession for almost four years, Yusko noted.

Many economists argue there can't be a recession without an inverted yield curve. Yusko says that in reality the yield curve is inverting but "you just can't see it."

That's because the Fed is manipulating the Fed funds rate and keeping it artificially low, he argued. Only banks can borrow at that rate. The real rate for everyone else is 3 percent and if one uses that figure it is inverted.

Yusko predicted that the Fed would be talking about QE4 by the fall. He added that whenever QE stops as it did in 2014, equities stop appreciating.

Raising interest rates later this year would be a huge blunder, he said. The only time the Fed made that type of move was in 1937, when a 25-basis-point rate hike triggered a nasty recession that extended the Great Depression for several years.

Yusko did not say whether the next recession would be mild or severe. However, he noted that while the 2001 recession was quite mild, "stocks
got killed."