Stockman: "What's Going On Today Is Complete Insanity"

Tyler Durden's picture

In his recent TV appearance, last week David Stockman suggested that President Trump would be better suited to spend some time actually addressing economic issues instead of the administration's travel ban for immigrants from Middle Eastern countries, which Stockman called "a giant misfire." Employing the 1992 Clinton Campaign motto of "it's the economy, stupid," Stockman noted "Trump was elected because flyover America is hurting economically. The voters of Racine, Wisconsin and Johnstown, Pennsylvania are imperiled not because of some refugees, they're imperiled because their jobs have all been disappearing for decades." He added, correctly, that "the problem is far more the Federal Reserve, Janet Yellen, the bubbles they're creating on Wall Street."

Stockman went on to suggest that the Trump Administration is showing decreased interest in "draining the swamp", having surrounded himself with, as he himself has now realized, the "Goldman Guys."

Then, in a follow up interview with CNBC, Stockman once again discussed the impact of Trump, this time on markets, and warned that while stocks are booming under Trump, with the S&P now up 12%  since the election (with banks up 25% and Goldman 35% higher), traders are living in a "fantasy land" that can't last —and Trump's policies will derail the market for years to come.

Stockman reiterated his concern that Trump has lost his focus on the economy, and has become distracted by other issues which should be a particular point of worry for investors.

Most of Trump's actions "[have] nothing to do with the economic agenda" he's proposed, Stockman told CNBC. That, along with a debt ceiling debate that will take place on March 15 in Congress, and a market rally that has gone on for a while, has the bearish Stockman worrying about a big downturn, which however not only refuses not to come, but the S&P hasn't had a 1% drop in 85 days.

"What's going on today is complete insanity," said Stockman. "The market is apparently pricing in a huge Trump stimulus. But if you just look at the real world out there, the only thing that's going to happen is a fiscal bloodbath and a White House train wreck like never before in U.S. history."

He added that "there's going to be no tax action this year," said Stockman, echoing repeated concerns by Goldman who have said, mostly recently this morning, that Trump's plans for the economy are facing mounting political risks. Last week, the president vowed that tax reform could happen this year, and promised to unveil a "phenomenal" tax plan within the next few weeks, which however has drawn skepticism from Washington insiders.

"If there's any next year it will be deficit neutral, which means it's not going to add the $15 to earnings like these people expect," Stockman said. In fact, as reported earlier, with the Border Adjustment Tax becoming a virtual impossibility, the extent of corporate tax cuts will likely be far less than what the market is pricing in currently. 

"My argument is there is not going to be any economic rebound, there is not going to be any profit surge," Stockman added. "Therefore the market will be repricing dramatically downward once it's clear that that's the case."

For now, the market blissfully refuses to listen. In a prior appearance on CNBC in November, Stockman argued that a recession was coming in 2017 thanks to Trump. For now it is Stockman's word of caution against that of Gartman, who earlier today predicted that because "Illogic reigns" the market “melt Up” has begun in earnest and it will stop when it stops and not a moment before."

Needless to say, everyone would like to know when that "moment" is.

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youarelost's picture

Did he speak ill of Trump?

J S Bach's picture

"Stockman reiterated his concern that Trump has lost his focus on the economy"

For F***s sake!  The guy has only been in office 3 weeks and this know-it-all has the gall to state this.  The President has little to do with the economy.  It is the money power that pulls the strings.  And as long as our money is debt-based-fiat-counterfeit controlled by usurious jews, we're toast.  Trump could prove his similarity to Hitler if only he'd make these points openly and put an end to this corrupt system forever.

knukles's picture

Way too strange for a safe afternoon out with the kiddies.
Here.  Put this over your head and don't listen.  Hum real loud while you eat saltines. 

Cognitive Dissonance's picture

This will be the result when left and right meet head on.



O C Sure's picture

SP500 broke away on the first trading day of 2013 and now just entering that target range of 2300-2400 DG claims there is going to be a melt up! Now?

The_Juggernaut's picture

Maybe a believeable promise of less regulation after eight years of Obama uncertainty is enough to drive a bull market.

max2205's picture

Great now I am seeing shit here I read 3 days ago somewhere had to happen one day 

Oracle of Kypseli's picture

Everyone knows that the downturn will come and will be violent.

Since no one knows when, I go short every Friday and long every Wednesday.

Hopefully the downturn will be on a Tuesday.

Just a guess

wee-weed up's picture



6 simple words...

Fuck you, Stockman - you're an idiot!

eatthebanksters's picture

Yes, I used to think Stockman made some sense but now I am just tired of him...he's been saying the sky is falling for too many years now.

Creative_Destruct's picture

Dave can have some cogent between his shrill alarmist whining.

Chicken little and the boy who cried wolf are in his bloodline.

BUT... like the stopped clock, he will be right one day. Might be soon.

YouJustMadeTheList's picture
YouJustMadeTheList (not verified) Creative_Destruct Feb 14, 2017 1:36 AM

What ever happened to just fading Gartman?

YouJustMadeTheList's picture
YouJustMadeTheList (not verified) Creative_Destruct Feb 14, 2017 1:36 AM

What ever happened to just fading Gartman?

marathonman's picture

I quit listening to Stockman when he started charging for all the content on his site.  Sorry dude, I can read the same crapola on a lot of different sites.  I like the way he writes but it wasn't worth what he was charging.

clove's picture

What's the logic behind the weekend being counted as market time? Or are you simply expecting bad news on the weekend to be consolidated into Monday's market?


Also, Mondays are the best long plays, while Wednesday to Friday typically are a lot less volatile. I'm not saying you have thought the strategy through, just that you didn't explain it very well.


I prefer to be hedged on both sides of the market, choosing my longs and shorts carefully so that the payoff will be linearly good via mean reversion and non-linearly good in the event of a black swan.


More about "me" by the way, since I ended up interjecting myself here:

Arnold's picture

Your 'bio' page is no asset.

Trolly McTrollface's picture

They've been predicting a correction for years and nothing. I'm with George Castanza on this. Figure out what's likely to happen....then do the opposite!

onthesquare's picture

same message, different words

O C Sure's picture


"Maybe a believeable promise of less regulation after eight years of Obama uncertainty is enough to drive a bull market."

Good news rises to the top.

BullyBearish's picture

"Bagholders, Bagholders...looking for bagholders, have nice bags of steaming $hit to sell you, come and get a special on GS and JPM, if you have any extra cash step right up!"

Hulk's picture

looks like the "right" won !!!

Tlön Uqbar's picture

Happy Valentines Day!

RevIdahoSpud3's picture

Figuratively speaking. When left and right finally meet after decades of  name calling I for one, if a survival of the right after the crash, will pull out my weapon and search for survivors. If I find a leftist, they will be exterminated.

Potato Farmer's picture

Stockman is right in that tax cuts won't do the trick.  It will help, but it won't be enough.

It's frustrating to see that Stockman doesn't state that we need to earn our way to have a solvent national economy.  Earning our way means that we need to have our raw materials priced at parity (balanced with costs), such that consumers have enough income to consume their own production.  In other words, income of producers needs to be in balance with the income of consumers.  If that's not the case, we go into a deflationary spiral, also known as a depression.  The problem is, we've been masking the depression by using debt (borrowing) to make up for the lack of earnings.  That debt is both public and private.

If you want to understand this better, read "Unforgiven, the American  Economic System Sold for Debt and War" by Charles Walters.  It spells out what you need to know.

The supply siders got it partly right when they said that supply creates its own demand.  The part they missed is that the raw material supply needs to be priced at parity (in balance with costs, aka costs of production).  If it's not priced that way, the supply doesn't generate enough income, or demand, through the trade turn to consume that supply.

Furthermore, getting rid of the Federal Reserve isn't the total answer either.  You still need to have that balance I speak of to have the functional economy we seek.  Taking currency policy out of the hands of the Fed won't be enough.



techpriest's picture

1) So just is the right number to achieve this "balance?"

2) What if the right number involves the price of everything, wages included, falling 90%?

BorisTheBlade's picture

1) 6 dollars an hour.

2) well, if wages stagnate at the same rate as everything else, then purchasing power isn't affected. Though I think it's going to play in a different direction: prices for essentials go up, wages stable or stagnant, unemployment high as measured properly (reported unemployment + significant portion of out of labour force), see misery index. That's how parity with 3rd world labour pools will be achieved.

It was essentially spelled out long before.

 ...when [Mexico's] jobs come up from a dollar an hour to six dollars an hour, and ours go down to six dollars an hour, and then it's leveled again. But in the meantime, you've wrecked the country with these kinds of deals.


MsCreant's picture

PF did say deflationary spiral. And yes, the cure might kill the patient. We let it go too long in the wrong direction propping things up. There will be a cost, sort of. The truth is we will be correcting a debt driven illusion. 

Is-Be's picture

Right on Spud.

There was a war between Capital and Labour. Capital  won and has been screwimg Labour since the 70's.

And when Capital realised that they needed customers they decided to lend Labour the where with all to increase the Velocity of money.

That story ends in default.

We can either be civilised about the default (a la Steve Keen) or we can get wet with blood.

JRev's picture

Adam Curtis just did a killer documentary on this very topic, with a dose of Transhuman Technofeudalism thrown in for good measure. If you can ignore the obvious propaganda bits about Syria and Qadaffi, it's a great watch - the title's Hypernormalisation and it's linked below for your viewing pleasure:

Arnold's picture

Now that he is on a soy based diet, he gets cranky and irrational on a monthly basis.


Earn our way to prosperity.


I never hear about it on <CNN>.

JRev's picture

Never heard of Charles Walters, just looked him up. Seems like a fascinating cat, I'll be sure to pick up that book someday soon.

Thanks for my daily dose of "Shit you didn't know before you read The Hedge," mate. 

lew1024's picture

How could anybody possibly know any of that? The web of subsidies and taxes and laws and educations distorts prices of everything so much we have no clue how much anything 'really' costs, it is all as ephemeral as the value of work in proess, allocation of overheads, etc. All those make it very difficult to make rational decisions based on the 'real cost' of anything

We can't make intelligent decisions about anything when there is a historical bias to high rates of price changes, those make the risks for everyone higher. Increasing complexity of the economy means there are more economic gotchas as rapid changes in two or more costs make it more difficult to make rational decisions, requires many more failures to nail down the "does and don'ts". The equivalent for individuals is the rapid evolution of careers as they receive support for reasons of particular political policies. These are operational risks and increase the failure rates for institutions, careers and lives.

This modern age has added very much to the complexity of economic and social calculations by the centralization and resulting rules and regulations. Centralization == stultification by rules and regulations of ever-increasing complexity because of the continual proliferation of interactions. What used to be a problem of different laws in different jurisdictions is now N! special cases.

We need to decentralize, which is only devolving from the pov of our central states and minions. It is empowering and evolving from the pov of the average man. Yes, local control == local sets of law. We need to depend upon localities to make their sets of law accomodating of freedom in common ways, local evolution by interaction of individuals in a locality with individuals and institutions in others. It doesn't require a common set of laws to do that, it requires a common set of restrictions on Freedom. The one we all come to by showing each other the best example in our locality and depending on their judgement to chose 'best working superset of Freedoms' and implement it.

Back to reality! Reality has to be defined locally and implemented locally. They are the people with the skin in the game, they are the people to judge the effect of laws and administration.

kommissar's picture

i agreed with you right up until you went anti-jew.  now i know who you really are.  

reagan rued the day he hired stockman, who ended up being a traitor to ronaldus maximus.  neg bang away - deal with it.

Quantum Bunk's picture

doesn't take long to get the ovens warming up in the comment section of ZH

Is-Be's picture

Kommisar? Interesting handle.

Were you or your kin the organisers of the systematic rape of all German womenfolk from 8 to 80 by the Mongols?

Nice touch, I thought


Jubal Early's picture

now i know who you really are

The first action Lenin took when the Rothschilds finally got him imposed on Russia as their genocider in chief, was to make anti-semitism a death penalty.  kommisar obviously revels in goyim murder and blood, but becomes threatening and abusive as soon as someone mentions his race.   My guess is that his favorite pastime is making matza bread from the blood he extracted from the goyim children he has abducted. 

Is-Be's picture

Kommisar? Interesting handle.

Were you or your kin the organisers of the systematic rape of all German womenfolk from 8 to 80 by the Mongols?

Nice touch, I thought.

The cherry on the Holodamor.

JRev's picture

Reagan didn't run the country, Poppy Bush did. Just ask John Hinckley, Jr. Who, by the way, is now a free man. What other Presidential assassin is a free man, for fuck's sake?

(Oh, right... Poppy Bush...)

swamp's picture

Stockman is a jackass

Focus on the economy?
1). Trump dumped TTP
2). Is trashing Obamacare, a mega financial burden
3). Is lowering taxes
4). Is dealing with immigratiion -- job stealers and welfare burden and crime
5) is making the fed give loans to small businesses
6). Just wrote some EO on mortgafe rates for under 650k


sarz's picture

You're not supposed to know that about Hitler - that's what the Holocaust story is for. Trump's first wife mentioned he had a book of Hitler's speeches by his bedside. So he knows what's possible. And Mnuchin and the other Goldman Sachs Jews? Since Trump knows the score, why should we write off these guys' patriotism in advance?

Omen IV's picture

Stockman doesnt want to acknowledge that there is a demand and supply of labor detemining the price of labor in all categories and who gets to work

 H1-b / immigration / and other offshore sources increase the supply of labor - the lack of Tariffs reduce the demand for labor


Stockman is in the tank for wage supression

swamp's picture

Trimp just dumped TTP

wareco's picture

Stockman, May 13, 2016:  "Get out of the casino.  2% upside, 40% downside".  Hmm, the Dow was where on May 13, 2016?  Oh yeah, about 3,000 points lower than today.   To quote Trump, I like guys who weren't captured.

techpriest's picture

I think Trump was also calling it a big ugly bubble back then.