Stock market is a 'bubble' that will likely 'end in tears,' Scott Minerd says

Published Thu, Jun 11 20205:31 PM EDT

Jesse Pound @/in/jesse-pound @jesserpound

(This story is for CNBC Pro subscribers only.) Guggenheim Partners Global CIO Scott Minerd continued to sound the alarm about the stock market on Thursday, telling CNBC that the recent selloff could be just the start of a roughly 50% decline. "The recent highs have been a selling opportunity, and I think we're going to have a tough slog here, especially with the increasing number of Covid cases that are coming up as a result of the reopening," he said on " Closing Bell ." The S & P 500 fell 5.9% on Thursday, its worst session since March 16, to finish just above 3,000. Minerd said he thought the next level of support was around 2,750 for the S & P 500 but that the index could break through its March lows and fall all the way to the 1,600 level. He said his clients have more weight in silver and gold than in stocks. With earnings for corporate America expected to be bleak in the coming quarters due to the pandemic, the stock market is dangerously overvalued, Minerd said. "If the stocks are trading at 30, maybe 35 times earnings, then yes, it's a bubble. Those sorts of valuations are really historically extreme and in all likelihood end in tears," he said. Minerd tweeted on May 13 that the stock market had "clearly topped its recent uptrend." The market continued to push higher over the next few weeks, and the S & P 500 is still above its closing level on that day despite Thursday's sharp pullback. The trend of high-profile money managers saying that they had changed their minds about the markets in recent weeks was a sign of a top this time around, Minerd said. "Institutional money, by and large, fought this rally all the way up. Some of the smartest money in the world. And people, I noticed, were starting to change their position on the institutional side and buying into the rally and saying you can't fight this. That to me, that sounds like the classic throw in the towel, 'I've been wrong, I have to be long,'" Minerd said. Minerd, who warned about market excess and the coronavirus in mid-February , said his team bought some stocks at the bottom of the market in March but was overweight high yield corporate debt. He said would be examining selling out of those positions in the next few days if the market rose. Watch the full interview above.

Scott Minerd, Global Chief Investment Officer at Guggenheim Partner, at the 2020 World Economic Forum in Davos, Switzerland on Jan. 21st, 2020.

Adam Galica | CNBC

(This story is for CNBC Pro subscribers only.)

Guggenheim Partners Global CIO Scott Minerd continued to sound the alarm about the stock market on Thursday, telling CNBC that the recent selloff could be just the start of a roughly 50% decline.

"The recent highs have been a selling opportunity, and I think we're going to have a tough slog here, especially with the increasing number of Covid cases that are coming up as a result of the reopening," he said on "Closing Bell."