Personal Consumption Expenditures are much more important than the Consumer Price Index at this time after today’s CPI came “back to bite” the Federal Reserve, DoubleLine Capital’s Jeffrey Gundlach told CNBC in an interview.

PCE, which comes out Feb. 29, “cannot go up and have the Fed talking about cutting interest rates,” Gundlach said. The three-month annualized core CPI is coming up now and the trend may stick, he added, so the market can no longer look at it and take comfort.

On leading indicators, Gundlach said the two-year Treasury yield is telling the market that there are going to be about 100 basis points of cuts on average over that time period and that if the Fed cuts interest rates this year, it “should” cut by 50 basis points.

Gundlach does not see May as the likely starting gate for rate cuts, adding that it is “probably going to be June, if at all.” The market has also “tremendously overpriced” the amount of cuts this year, he said.

Gundlach recommends allocating 30% in stocks, with 10% in Japan, 10% in India and 10% equal weighted in the US. His portfolio, however, weights 25% in cash right now because he wants to be ready for when stocks get cheaper.

Gundlach adds that he has always recommended India as they are the “strongest economy in the world with the best demographics.”

“That’s a pretty good one-two-punch,” he said.

This article was provided by Bloomberg News.