Guggenheim’s Scott Minerd believes in a post-election rally and has “pretty constructive” market prospects
Guggenheim Partner’s Scott Minerd told CNBC that Wednesday’s rally on Wall Street made sense despite the uncertain outcome of the presidential contest between President Donald Trump and Democrat Joe Biden.
“I always believed, regardless of the outcome, without getting anarchy on the streets, that it would be good for stocks,” the company’s global chief investment officer told Closing Bell. “I honestly think a blue wave would be better, but I think even if Trump were President, people would say, ‘Hey, we’re not getting any big tax hikes and we have the green light as long as the economy stays on track.’ “
Minerd’s comments came as major US stock indices rose as investors digested election day’s uncertain results. The Dow Jones Industrial Average rose 367 points, or 1.3%, while the S&P 500 benchmark was up 2.2%. The tech-heavy Nasdaq outperformed, jumping nearly 4%.
While NBC News has not given a prediction of the balance of power in the Senate, some market watchers believe stock gains were fueled by belief that Republicans would retain a majority, which hinders a potential Biden administration’s desire for corporate increase and capital gains taxes. Both policy changes are generally seen as headwinds to stock valuations.
Minerd expressed concern about the rising number of coronavirus cases and the risk to the economic recovery. “The rate of new Covid cases has increased exponentially,” he said.
“I think we’re still facing a pretty heavy period of infection in the fourth and first quarters. That will unsuspectingly make a lot of noise in the economy, but it will put more pressure on the stimuli and the Senate Republicans are compromising to get even more momentum give, “said Minerd. Republicans preferred a smaller stimulus agreement than Democrats.
Senate Majority Leader Mitch McConnell, R-Ky., Said earlier Wednesday that he hopes to approve another pandemic relief package “before the end of the year”. He added, “I think this will be job one when we get back. Hopefully we have a more cooperative situation than before” after election day is over.
Minerd said it was important for investors to look beyond short-term uncertainties when considering how to position their portfolios. “Ultimately, as an investor, you can be pretty positive if you can clear the smoke in the next few months and see what’s going on in the next six months as an investor – high yield bonds, corporate bonds and stocks too,” he said.