The stock market's slide probably won't end until the Federal Reserve's current tightening cycle is over, Jurrien Timmer, Fidelty Investment's director of global macro, said on CNBC as equities plunged Friday.
He also suggested on Twitter that the current market correction will require patience.
Timmer provided some key data points to indicate the market may be headed lower.
"The Fed surprised by being even more hawkish than they have been. That raises the 2-year (Treasury) yield, that raises the real 10-year yield, and to me (those two yields) are the primary drivers for this particular cycle," he said on CNBC's "Squawk on the Street."
A regression of the forward price-to-earnings ratio against those two variables shows that finding fair market value "has been a moving target," Timmer said.
In June, 15 times forward earnings was considered fair value for the S&P 500, then came a 17% equities rally "completely unjustified by the fundamentals," he said.
"Now we're back down there but now that forward P/E that's fair value is down to 14 or even 13 times (forward earnings), and that brings you down to 3,300 or so on the S&P, so we're probably not out of the woods," Timmer said.
"That's a moving target, and that's assuming that the forward earnings estimate which is $235 for the next 12 months ends up holding," Timmer said.
"If we end up getting flat earnings instead of plus 10% earnings, then you apply that 14X, 15X, times $219, and that gets you down towards the 3100-ish, so my sense is that this decline is not over and it won't be over until the Fed cycle finishes and at that point we'll see whether there's a soft landing or a hard landing," he added.
The S&P 500 recently was down more than 90 points at roughly 3667. The Dow Jones Industrial Average dropped more than 700 points mid-session Friday, hitting a new low for this year.
