Guggenheim's head of investing sees a tough road ahead for the market and economy, with a sharp recession and a 40 percent decline in stocks looming.
Scott Minerd, who warned clients in a recent note that the market is on a "collision course with disaster," expects the worst of the damage to start in late 2019 and into 2020.
Along with the decline in equities, a rise in corporate bond defaults is likely as the Federal Reserve raises interest rates and companies struggle to pay off record debt levels.
"For the next year ... equities will probably continue to go up as we have all these stock buybacks and free cash flow," Minerd told CNBC's Brian Sullivan in a "Worldwide Exchange" interview. "Ultimately, when the chickens come home to roost and we have a recession, we're going to see a lot of pressure on equities especially as defaults rise, and I think once we reach a peak that we'll probably see a 40 percent retracement in equities."
(Editor's note: Video above is an extended interview with Minerd, including parts exclusive for the web and not aired on "Worldwide Exchange".)
One of the main problems is that Congress and President Donald Trump have pushed through aggressive fiscal policies at a time when the Fed is looking to control growth with higher interest rates and less accommodative monetary policy.