Investors should brace themselves for a vicious recession made worse by large corporate debt levels, according to Guggenheim's Scott Minerd.

He warned clients that inflation and rate hikes from the Federal Reserve will lead to the next market downturn.

"I have come to realize that the markets are potentially on a collision course for disaster. The collision course is being brought about by strong fiscal stimulus in the late stage of the business cycle, when conventional economic wisdom mandates that it should be heading the other direction to create fiscal drag," the firm's global chief investment officer wrote in a note to clients Monday. "With the huge fiscal stimulus coming online, the Federal Open Market Committee (FOMC) will feel obliged to play the role of creating economic headwinds."

Guggenheim has more than $250 billion in assets under management across its fixed income, equity and alternative investment strategies, according to its website.

Minerd predicts the Fed will hike rates four times this year and four times next year, increasing the benchmark funds rate to a range of 3.25 percent to 3.5 percent in two years from the current 1.5 percent to 1.75 percent.

"We are essentially running out of labor and other factors of production are being stretched—makes it extremely hard not to see how inflation and wage pressures will pass through to the real economy," he wrote. "When the overnight rate gets to 3 percent the amount of free cash flow in corporate America will be reduced to a level which is consistent with what we have seen in prior recessions."

The analyst said when the economy enters the next recession companies will have the "highest debt load" in history.

"The next recession is going to emanate from the corporate sector," Minerd wrote. "There is likely to be a sharp decline in employment and a sharp decline in profitability, followed by widening credit spreads as the market discounts the expectation of higher corporate defaults."