Jeffrey Gundlach, founder and CEO of DoubleLine Capital, warned that the U.S. fiscal deficit and inflation are pushing the Federal Reserve into an unsolvable dilemma, where both rate hikes and cuts would come at a heavy cost. He believes the path of least resistance for the 10-year U.S. government bond yield is towards 6%, and the 30-year yield would need to reach 6% to 6.5% to be worth buying. Gundlach also pointed out that the S&P 500's Shiller CAPE ratio is as high as 42, and historical data shows that real returns over the subsequent decade are mostly negative; once a recession hits, the U.S. dollar will face a significant depreciation of at least 20%. In this environment, he has reduced his market-cap-weighted equity exposure to zero, shifted to an equal-weight allocation, and increased physical assets to 20% of his portfolio, while also favoring emerging market local currency debt and gold.