Investors should prepare for a ‘summer of pain’ that looks a lot like the dot-com bubble, Guggenheim Partners’ Scott Minerd says

As the S&P 500 teeters on the brink of bear market territory after a historically poor start to the year, many investors have been left wondering whether there’s more downside ahead.

But at least one Wall Street titan is certain we’re headed for a “summer of pain.”

Scott Minerd, the chief investment officer at Guggenheim Partners, told MarketWatch on Wednesday that he expects that the S&P 500 could tumble 45% from its January peak this summer. Even worse, he argues the tech-heavy Nasdaq could eventually plunge 75% from its November 2021 high as tech stocks are repriced for a new era of Fed policy.

“That looks a lot like the collapse of the internet bubble,” Minerd said, referring to technology stocks’ blowup in 1999 and early 2000.

Minerd’s bearish view is based, mainly, on the end of the free money era and the so-called “Fed put”—or the idea that the Fed will come to stocks’ rescue in the case of a serious downturn.

“There is no market put, and I think we’re all waking up to that fact now,” Minerd said.

The Federal Reserve has undergone perhaps its most significant policy shift in decades this year, moving from an ultra-accommodative stance that leaned on near-zero interest rates and Quantitative Easing (QE) to spur lending and investment, to a more hawkish approach.

The central bank has raised interest rates twice so far this year, once by a quarter-point in March and again by a half-point in May, in an attempt to combat persistent inflation. And most economists predict more rate increases ahead, plus a plan to reduce the nearly $9 trillion balance sheet the Fed has amassed through purchases of mortgage-backed securities and government bonds under its QE policy.

As the Fed moves from too slow to act to overtightening, recession fears grow

The Consumer Price Index (CPI) hit a four-decade high annual rate of 8.5% in March, and despite a slight retreat to 8.3% in April, inflation remains one of the most pressing issues on both Wall Street and Main Street.

As a result, Fed Chair Jerome Powell said in an interview at the Wall Street Journal’s Future of Everything Festival on Tuesday that he needs to see “clear and convincing evidence” that inflation is dissipating before he will consider slowing interest rate increases.

The comments led Minerd to argue that the Federal Reserve seems to have “very little concern about the continuation of what I think now is a bear market.”

“We are probably going to have a pretty severe selloff,” the CIO said.

On Wednesday, Minerd also added his name to a growing list of billionaire investors, including Carl Icahn and Leon Cooperman, who are calling for a recession this year.

“As the Fed tightens into a downturn, investors want to know when a recession will occur. It could be as early as the second half of next year,” Minerd tweeted.

He argues the Fed was late to raise interest rates and take the proverbial punch bowl away from markets, leading asset bubbles to form in sectors like tech and crypto. Now though, the CIO sees the Fed’s aggressive approach as a form of “overtightening.”

“With the passage of time as the Fed continues to hike, we will likely find ourselves experiencing the effects of increasingly restrictive monetary policy,” Minerd wrote in a report on Wednesday. “Well before it reaches this terminal rate the Fed will increase the risk of overshooting, causing a financial accident, and starting a recession."

This story was originally featured on Fortune.com