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Jeffrey Gundlach, chief executive and chief investment officer of DoubleLine Capital, speaks during the Sohn Investment Conference in New York May 4, 2015.Brendan McDermid/Reuters

The U.S. stock market has recovered because of the Federal Reserve’s actions but a retest of the recent lows is possible, Jeffrey Gundlach, chief executive of DoubleLine Capital, said in a CNBC interview on Monday.

“I think we take out the low,” the bond investor said. DoubleLine had about $148 billion in assets as of Dec. 31.

After their sharp bounce from recent lows, markets are looking quite tired and “the sentiment shifts should have investors concerned,” Gundlach said.

Gundlach said he has put on a bearish bet against the S&P 500 at the 2,863 level. On Monday, the S&P 500 was up 1.38% at 2,875.93. The index is up 31% since touching a low of 2,191.86 on March 23.

While markets were cheering improved testing for the coronavirus and the reopening of the economy is a positive, “many people don’t understand the wide-ranging ramification of this societal shift that’s going on,” Gundlach said. “I am certainly in the camp that we are not out of the woods.”

The crash in U.S. crude prices in recent weeks has given fresh urgency to bearish voices, who say it sounds alarm bells for global growth and are bracing for a catastrophic collapse in asset prices.

“The market’s pretty much recovered obviously because of the Fed,” Gundlach said.

In recent months, the Fed has slashed rates to near zero, restarted bond purchases and rolled out an unprecedented range of programs to keep credit flowing and shore up business and household confidence, as the central bank tried to offset the economic hit from the coronavirus outbreak.

The Fed’s actions may have led to over-valued assets, Gundlach warned.

He singled out the iShares iBoxx Investment Grade Corporate Bond ETF, in particular, saying the ETF “looks to be the most over-valued asset in the bond market.”

LQD is up about 23% since hitting a low on March 19, boosted by the Fed’s move to buy corporate bonds through exchange-traded funds. On Monday the ETF was down 0.5%.

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