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.

Anticipation of a flood of new bond supply is sending interest rates higher even as expectations for economic growth start to flat line, said Gundlach, as can be seen from flagging consumer confidence.

“What you have to watch out for is when it goes from an elevated feel-good position to a free fall. That means there’s a recession,” Gundlach said, regarding consumer confidence.

In fact, unemployment claims are usually a leading indicator of consumer confidence, said Gundlach. While unemployment has yet to spike, the number of job openings reported by U.S. employers has “already deteriorated.”

And in the U.S., at least, gold has not been a great safe haven, said Gundlach, because of the rising U.S. dollar. Eventually, as investors flee towards quality, gold should reach a new high.

The equity market, on the other  hand, may be a land of opportunity for investors, said Gundlach, who said that stocks will eventually rebound. While he isn’t personally buying stocks, he has reduced his sort position in recent days.

Gundlach named his presentation “The Price Is Right?” because of unpredictable price movements in fixed income markets. For example, the spreads between BB and BBB rated corporate bonds have contracted, then expanded – leading to large discrepancies between bids and quotes.

There are also increasing discrepancies between the prices of bond ETFs and the value  of their underlying indexes, said Gundlach, which is being caused by liquidity issues. Investors are having an easier time with price discovery in liquid, exchange-traded bond funds than they are trading the underlying fixed income instruments – so bond ETF prices are running ahead of the indexes themselves.

But even more concerning are the impacts that a recession could have on the corporate bond market, as ratings agencies will begin to downgrade bonds and a wave of defaults will sweep across high yield bonds, especially those issues by companies tied to the energy sector.

“If oil stays below $30, which it looks like it has a good chance of doing given the economic situation, you’re going to have en masse defaults in parts of the high-yield bond market and you can see that the oil sector is certainly pricing that in,” Gundlach said.

Compounding the problem, bond dealers are no longer permitted to hold large inventories of corporate bonds. The coronavirus exacerbates the problem by requiring that bond traders practice quarantining and social distancing, which means that trading desks are no longer as connected as they were before the outbreak. The squeeze in corporate debt trading makes it more difficult for American companies to find liquidity, which has essentially put a stop to the practice of corporate stock buybacks – removing a key support for stock prices.

There are few, if any, opportunities in fixed income, said Gundlach, but investors may want to look at closed end funds.

“There are no opportunities for you now except maybe in closed-end funds,” said Gundlach. “Closed-end funds were trading at premiums but are now down 30% and are trading at huge discounts.”

Advisors do need to be careful and look under the hood of closed-end funds, said Gundlach – for example, if a fund was primarily invested in energy bonds, investors might want to stay away.

And Gundlach, well-known for his pessimistic market and economic commentary, ended his presentation on a positive note. “I expect you’ll see some bad economic numbers come out, and I’m actually excited about this,” he said. “This is exhilarating to me. This is where we see real opportunity.”