David Stockman – Stocks will Plunge 50%
By Stephanie Landsman | June 6, 2018
David Stockman is intensifying his bear case.
President Ronald Reagan’s Office of Management and Budget director blames a bull market that’s getting longer in the tooth — paired with headwinds ranging from President Donald Trump’s leadership to fiscal policy decisions to questionable earnings.
“I call this a daredevil market. It’s all risk and very little reward in the path ahead,” Stockman said Tuesday on CNBC’s “Futures Now.” “This market is just way, way over-priced for reality.”
“The S&P 500 could easily drop to 1,600 because earnings could drop to $75 a share the next time we have a recession,” Stockman warned. “We’re about eight or nine years into this expansion. Everything is crazily priced. I mean the S&P 500 at 24 times at the end, tippy top of a business cycle.”
One of his biggest gripes with the bulls is the notion that President Donald Trump’s tax cuts are providing a fundamental lift to stocks.
“These tax cuts are going to add to the deficit in the 10th year of an expansion. It’s just irresponsible crazy,” he said. “It’s all going to stock buybacks and M&A deals anyway. That doesn’t cause the economy to grow. It’s just a short-term boost to the stock market that doesn’t last.”
Stockman has made similar bearish calls in the past, but they haven’t materialized. Yet, he’s not backing down.