On a recent investor call, DoubleLine chief investment officer Jeffrey Gundlach argued that investors are wrongly focused on the 10-year Treasury yield breaching 3%, that instead they should be paying attention to whether the  30-year “long bond” goes above 3.22%. This according to an article in Advisor Perspectives.

If the 30-year bond rises above that level, he said, “then the 10-year yield will break out upwards,” potentially quickly breaching the 4% mark, which could be problematic for equities. Gundlach qualified his comments, however, saying they were not a “high conviction forecast” and that investors should “let the market play things out.”

According to Gundlach, there is not a chance for a recession in the next year unless the leading economic indicator (LEI) turns to the negative (it has been rising for a year and is currently above 5% but has seen a downtick). The current expansion, he said, has been “aided and abetted” by monetary policy, “but now we are going to see the opposite,” adding that monetary policy has already tightened in the U.S. and he expects quantitative easing to end in Europe this year.

On inflation, Gundlach says that the recent rise in the CPI is a typical late-stage occurrence in a rising rate environment but does not necessarily signal a recession. He cited the Taylor rule, saying that the Fed funds rate should be at 4.710 Ye5%. “That gives the Fed cover to continue to raise rates,” he said.

Gundlach repeated a prior prediction that the S&P 500 will register negative returns for 2018, adding that one of the compelling reasons to own equities—”the fact that dividend yields were greater than bond market yields–is no longer true.”