DoubleLine's Gundlach sees the S&P 500 falling 20%-25%

Billionaire investor Jeff Gundlach expects the S&P 500 Index to fall to 3,000 or about a 20%-25% drop from its current level."The action of the credit market is consistent with economic weakness and stock market trouble," DoubleLine's Gundlach said in a CNBC interview. "I think you have to start becoming more bearish."Gundlach said he believes the Fed should do a 25 bps rate increase, though he expects the Fed will institute a 75 bps increase when it meets next week."I would do 25 basis points," Gundlach told the business network.The hotter than forecasted Consumer Price Index report data that Wall Street received Tuesday morning, had Nomura suggesting for a 100-basis point rate hike in September and a higher terminal rate.Gundlach recommend investors buy long-term treasuries. He also owns more European stocks than U.S. stocks."The deflation risk is much higher today it's been for the last two years," Gundlach said.Gundlach said he plans to buy emerging markets when the U.S. Dollar falls below its 200-day moving average."And when it does, you want to be in big," Gundlach explained.Gundlach also said he wouldn't be a buyer of crypto during the market washout.Gundlach's comments come after high-profile investor Scott Minerd said Thursday that he expects stocks to fall another 20% by mid-October, citing a historical connection between price-to-earnings ratios for stocks and inflation.