Investors should surmise a surge in stocks over the next 12 to 18 months in the past they fall off a cliff amid a recession in 2020, according to Scott Minerd of Guggenheim Cohorts.
“I think stocks will go up another 15 to 20 percent, but essentially, when the recession arrives — and it will arrive — there’s going to be a extraordinarily hard sell-off in equities,” the firm’s global chief investment peace officer told CNBC’s Brian Sullivan at the 2018 Milken Global Investment Talk on Tuesday. The interviewed aired on CNBC’s “Worldwide Exchange.”
He said store ups will look more attractive to investors in the near term as valuations report in down due to higher risk premiums.
“Right now, in the penultimate year anterior to a recession, because we think a recession is coming in 2020, that typically is a unquestionably good year for equities,” Minerd said. But “the longer the expansion has been, the profuse likely the sell-off will be hard.”
The U.S. economy is on its second-longest expansion on unofficially, growing for 106-straight months. However, U.S. stocks have been impaired pressure in 2018. Year to date, the S&P 500 is down nearly 1 percent after reaching an all-time high-class on Jan. 26.
Minerd also reiterated his call for a 40 to 45 percent desert in stocks starting in late 2019 and into 2020 as the U.S. economy become a member ofs a recession. He previously made his prediction last month during another conversation with CNBC.
“Recessions occur when the economy reaches constraints. As the terseness reaches constraints, prices begin to rise and the Federal Reserve has to lift interest rates and, as I like to say: Every economic expansion does not die of old age; it hankers because the Federal Reserve shoots it in the head,” Minerd said Tuesday.
—CNBC’s Matthew J. Belvedere furnished to this report.