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Guggenheim Securities Chief funding Officer Scott Minerd expects shares to drop one other 20% by mid-October, citing the connection between worth-to-earnings ratios and inflation.
“we ought to always see shares fall one other 20% by mid-October…if historic seasonals imply something,” Minerd said in a tweet.
retailers have struggled with considerations over how hawkish the Federal Reserve may even be in its battle to tame traditionally extreme inflation. fully different macroeconomic factors, like Europe’s vitality disaster and strict Covid-19 lockdowns in China, even have dented investor sentiment. The
has fallen about sixteen% this yr. Minerd expects shares a sharp drop in equities by means of the center of subsequent month.
Following his tweet Thursday, Minerd was interviewed on CNBC the place he said that “if you’re taking a look at historic previous… it truly is stark to see the worth earnings ratio the place it is.”
Minerd added that August by means of October is usually the worst time for shares, and “given the current energy over the earlier couple of days, it simply seems that individuals are ignoring the macro backdrop, monetary coverage backdrop, which may primarily level out that the bear market is undamaged and given the place seasonals are and the method far out of line we’re traditionally with the place the P/E is, we ought to always see a terribly sharp adjustment in prices very quick.”
The S&P 500 has risen 1.three% this month. The
Dow Jones Industrial common
has gained zero.eight% and the
has risen zero.4%.
Minerd added that an argument may very properly be made that earnings shifting forward may “choose up” and which will assist the worth/earnings ratio, however “given the backdrop we’re in, which we may very properly already be in a recession, I don’t see earnings choosing up dramatically.”
“truly, I see some downward strain on earnings coming out of vitality and fully different sectors the place we’ve had worth declines,” he said.
Write to Angela Palumbo at [email protected]