Treasury Secretary Steven Mnuchin’s assertions that the U.S. won’t enter a recession due to the coronavirus are “ludicrous,” said Doubleline Capital CEO Jeffrey Gundlach.

“Obviously we’re going to have a very substantial negative quarter,” Gundlach said. “I couldn’t believe Secretary Mnuchin actually said he wasn’t sure we’re going to a recession as a result of this, we might actually avoid a recession. That just seems so ludicrous.”

In a Tuesday afternoon webcast entitled “The Price Is Right?,” Gundlach said that the U.S. has about a 90% chance of entering a recession, raising the probability up from 80% last week. “When you decimate the restaurant industry, the travel industry, the hotel industry, the airline industry, the cruise line industry… obviously you’re going to take a huge divot out of economic activity,” he said.

U.S. businesses need stimulus to help them survive the downturn – but the Trump’s administration plan to provide more than $1 trillion in financial assistance will almost certainly lead to abuses, said Gundlach. “Once you start giving cash to businesses and business groups, I can’t even imagine the level of graft that can go on in that system,” Gundlach said.

In his presentation, he also warned of a stimulus oriented towards large businesses and major corporations versus smaller, Main Street-type businesses who are most likely to suffer during an outbreak-caused recession. “Underneath the surface, there could be real anger about bailouts this time around, particularly if they’re bailouts for large businesses while small businesses are getting shuttered up,” he said.

Gundlach was also critical of “helicopter money,” proposals for the government to put checks into the hands of individual citizens. Such practices are ultimately inflationary, he said.

Fiscal stimulus is having a negative impact on the bond market, said Gundlach, potentially ratcheting up the federal budget deficit by trillions of dollars and requiring a massive issue of new Treasurys.

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