Guggenheim Securities Chief Investment Officer Scott Mynerd expects the stock to fall another 20% by mid-October, citing the price-to-earnings ratio and inflation.
“We should see stocks fall another 20% by mid-October … if historical seasons are anything to go by,” Maynerd said in a tweet.
Traders are grappling with concerns about how hawkish the Federal Reserve will be in its fight to tame historically high inflation. Other macroeconomic issues such as The energy crisis in Europe and strict Covid-19 blockades in China, also weighed on investor sentiment. The
is down about 16% this year. Minerd expects the stock to fall sharply by the middle of next month.
After his tweet on Thursday, Maynerd was interviewed by CNBC where he said that “when you look at the story … it’s really terrible to see the price/earnings ratio where it is.”
Maynerd added that August through October is typically the worst time for stocks and “given the recent strength over the last couple of days, it just seems like people are ignoring the macro background, the monetary policy background, which would effectively mean that the bearish market is intact and given where the seasonals are and how far out of line we are historically with where the P/E is, we should see a really sharp correction in prices very quickly.”
The S&P 500 is up 1.3% this month. The
has gained 0.8% and
has grown by 0.4%.
Maynerd added that an argument could be made that future earnings could “go up” and that would help the price-to-earnings ratio, but “given the situation we’re in, which is maybe already in a recession, I don’t see profits increasing dramatically.”
“I actually see some pressure on earnings coming from energy and other sectors where we’ve had price declines,” he said.
Write to Angela Palumbo at [email protected]