- President Trump's early criticism of the Fed's 2018 interest rate hikes have proven right over time, Guggenheim Partners' Scott Minerd said.
- "As long as the central banks keep the liquidity spigots open, I don't see any reason why we can't just keep pushing asset prices higher," argued the firm's global CIO.
- The Fed pivot early last year to take its foot off the gas and then cut rates fueled a nearly 29% rise in the S&P 500, in a rally that's continued in 2020.
President Donald Trump's early criticism of the Federal Reserve's four 2018 interest rate hikes have proven right over time and the stock market loves it, Guggenheim Partners' Scott Minerd told CNBC on Tuesday.
"I think he was [correct] in hindsight," the money management firm's global chief investment officer said in a "Squawk Box" interview from the World Economic Forum in Davos, Switzerland. "I think he was more concerned about slowing the economy in his administration."
However, Trump's calls for lower rates proved prescient, Minerd argued, as the stock market plunged during the fall of 2018 and reached a nadir on Christmas Eve 2018.
The Fed pivot early last year to take its foot off the gas and then cut rates three times fueled a nearly 29% rise in the S&P 500 in 2019, the best annual performance since 2013. Stock have also gotten off to a roaring start this year.
The rally should continue in throughout 2020, said Minerd, also a member of the New York Fed's Investor Advisory Committee on Financial Markets. "Bull markets go as long as they go. As long as the central banks keep the liquidity spigots open, I don't see any reason why we can't just keep pushing asset prices higher."
Minerd, who noted he is more optimistic about stocks than bonds, also said that "the fundamentals in the economy are actually pretty good." He predicted solid earnings growth this year.
"The Fed's going to be, after everything they've just been through and the criticism they've taken, they're going to be really hesitant to start raising rates again," added the CIO at Guggenheim, which has more than $275 billion in assets under management.
Trump, shortly before Minerd's remarks, levied more criticism at the Fed from Davos. In Tuesday's speech, which also touched on his affinity for negative rates, the president said that recent U.S. economic success has happened "despite the fact that the Fed has raised rates too fast and lowered them too slowly."
The president's criticism of the central bank's monetary policy sprang up publicly in June 2018, when he told CNBC shortly after the second hike that year that he was "not thrilled," and later argued the Fed had "gone crazy." The verbal attacks of the Fed and its Chairman Jerome Powell, at the time, represented rare public rebukes of central bank decisions by a sitting president. But more than a year later, they show no signs of letting up.
However, Minerd said, "If there are price pressures, the Fed will feel an obligation to kill the expansion," referring to the old Wall Street saying that bull markets don't die of old age, the Fed kills them.