Minerd envisions the possibility of a summer of pain for bulls
The carnage playing out in the U.S. stock market Wednesday is likely an amuse-bouche compared to the devastation on the menu for the bulls in the coming months and years, Guggenheim Partners Global Chief Investment Officer Scott Minerd told MarketWatch in an interview.
What’s driving Minerd’s pessimism? He fears that the Federal Reserve has made it abundantly clear that they are aiming to raise interest rates, despite the possibility that it could result in ructions in equity markets and elsewhere. MORE BEAR MARKET FEARS: Why are stocks falling? Inflation jitters killing fragile ‘bear market’ bounce
Earlier this month, the Fed’s rate-setting committee raised benchmark federal-funds rate to a target range between 0.75% and 1%. It is expected to raise rates about at least 50 basis points at its June 14-15 gathering, as U.S. inflation stood at an 8.3% annual rate in April, according to the Labor Department. That is well above the Fed’s target rate of 2%.
He said attendees at that Hoover conference estimated that the Fed would need to take interest rates to 3.5% to 8% to hit neutral, which suggested to him that the U.S. central bank might need to dial up rates until something in the economy or markets, or both, breaks. CRITICAL INFO: Why this investor who paid $650,000 to lunch with Buffett isn’t buying or selling stocks right now
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