The economy and financial markets will never be the same, and the worst is yet to come, said DoubleLine Capital CEO Jeffrey Gundlach.

The selloff caused by the COVID-19 outbreak has further to go, and U.S. financial markets are not likely to see a bottom until later in April, said Gundlach in a webcast yesterday.

“The low we hit in the middle of March, I would bet dollars to donuts that low will get taken out,” Gundlach said.

Gundlach also cautioned that the “v-shaped” recovery being forecast by many analysts appears to be unlikely, instead comparing this year’s market declines to the 1929 stock market crash, where the financial markets held their low levels for nearly a year before worsening again.

Bank analysts in particular are being too optimistic, said Gundlach, who pointed to the difficulties Japan’s Nikkei 200, emerging market indexes and European stock indexes have had returning to their all-time highs over the past 30 years as evidence that there are no guarantees equities will be able to reverse their declines.

“I don’t think it will be back to where it was prior for a long time, particularly on a real basis,” he said.

Referring to Goldman Sachs’ recent estimate that U.S. GDP will fall by 3.1% for the year, Gundlach said that he would “take the under.”

At some point in April, the “panicky feeling” that drove frenzied selling in mid-March should return, he said. In March, the S&P lost more than 12.5%, its largest monthly decline since October 2008, capping off one of the worst quarters in market history.

Gundlach argued that financial markets are behaving dysfunctionally, in part because of the ongoing affect of monetary and fiscal stimulus packages.

Fixed income is not functioning as a safe haven in the current environment, said Gundlach, as the amount of distressed bonds quadrupled in less than a week to nearly $1 trillion.

Gundlach argued that the U.S. economy “looks like a depression scenario,” with up to 35 million lower-paying jobs at risk of evaporating entirely. Unemployment is likely to rise to at least 10%, he said, referring to a St. Louis Fed estimate that total job losses could total 47 million, which would represent a 32% unemployment rate.

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