The grapevine can certainly carry a great deal of information, but the problem is that much of it has nothing to do with reality. In fact, if you figure that at least half of the information on the grapevine is false, and the manager in question was half-joking in his comments to you, couldn't it be argued that the odds of this negative outcome are 25% or less? Either way, if your source of information is the grapevine, take it with a large grain of salt.
However, whether your manager is kidding or not, his remark raises real questions about his values, style, and competence. His comment is foolish and reckless, and whether you report to him or not, you should have a businesslike conversation with him regarding your performance and his remark.
If you end up with him as your boss, you should try to keep your performance up and keep your attitudes and expectations up as well. If you still sense that he is heading you toward the door, you should head toward his manager's door.
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