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S&P 500 could rise 15% in the second half, Guggenheim CIO says

Key Points
  • "The central banks around the world have basically signaled that they are going to step on the accelerator," Scott Minerd says.
  • Minerd compares current market conditions to 1998, when the Fed cut rates in three consecutive months amid concerns about an economic crisis in Asia. The S&P 500 rose more than 28% in the last four months of that year.
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Guggenheim's Scott Minerd on the market, earnings and the Fed

The global chief investment officer at Guggenheim said Monday that he thinks the S&P 500 could rise 15% and approach 3,500 before the end of year, comparing the current market environment to a 1998 rally amid interest rate cuts.

Scott Minerd said on CNBC's "Halftime Report " that the easier monetary policy from the Federal Reserve and central banks around the world would boost stocks before the end of the year.

"This rally — whether you're looking at bonds, you're looking at stocks, high yield, pick whatever you want — is all being driven by liquidity. And the central banks around the world have basically signaled that they are going to step on the accelerator," Minerd said.

The S&P 500 gained 17% in the first six months of this year, the best first half for the index since 1997. However, the Fed is widely expected to cut interest rates at the end of the month, as domestic inflation and wage growth have not accelerated in recent months and international economic growth has slowed.

Minerd compared current market conditions to 1998, when the Fed cut rates in three consecutive months amid concerns about an economic crisis in Asia. The S&P 500 rose more than 28% in the last four months of that year.

"All you have to do is look at a replay of the post-Asia crisis back in 1998, and you get stocks at the kinds of levels that I'm talking about," Minerd said.

The S&P 500 rose late in 1998 as the Federal Reserve cut interest rates.

Minerd, who also said he had had discussions about joining the Federal Reserve, said that neither Europe nor China can afford a slowdown and that the Fed has "kind of hit the panic button."

"You're going to see the money flow out of the central banks into bonds, which will free up capital and that will naturally find another place to migrate to and ultimately it will end up in the hands of stocks," Minerd said.

Correction: This article has been updated to reflect that the S&P 500 rose more than 28% in the last four months of 1998.

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Key Points
  • The Guggenheim CIO says he had been approached by the White House about possibly joining the Federal Reserve.
  • Minerd says discussions took place over the past couple of months before President Donald Trump announced his intention to nominate Judy Shelton and Christopher Waller.
  • "It would be a great opportunity to serve the Federal Reserve," says Minerd. But he adds he would not necessarily accept the job if it were offered.