New York (HedgeCo.net) – Not many warning statements come back to life eight months after they were made, but a warning made by Doubleline Capital’s Jeff Gundlach back in December is getting some renewed interest. In a presentation titled “This Time It’s Different”, Gundlach said he hoped oil didn’t fall to $40 per barrel.

In a recent Business Insider article, Gundlach was quoted from that presentation. “I hope it does not go to $40,” Gundlach said in a presentation, “because then something is very, very wrong with the world, not just the economy. The geopolitical consequences could be — to put it bluntly — terrifying.”

After the Chinese government announced their plans to devalue the yuan on Tuesday, oil prices fell to under $43 per barrel for the first time since early 2009 and apparently that renewed interest to Gundlach’s warning. Gundlach is known more for being one of the top bond traders in the hedge fund industry more so than for his predictions on oil, but in the December presentation, Gundlach stated that “If oil falls to around $40 a barrel, then I think the yield on 10-year Treasury note is going to 1%.”

Considering the current yield on 10-year notes is around 2.13%, the idea of them getting cut in half is a scary thought.

Rick Pendergraft
Research Analyst
HedgeCoVest
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