Another candidate to deliver some bad news may in fact be the favorite. If growth in China hits its 7.4% target this year, it would be the worst year for China since 1990. Since then, the Chinese economy as expanded 24-fold. Artificial stability leads to risk, and Gundlach reasoned that logic dictates it would "be due for a -7.4% year." A combination of problems in that nation's shadow banking system and a slowing growth rate could spell trouble.
Excluding China, dollar-denominated emerging market debt remains DoubleLine's favorite asset class, despite its rough start in 2014.