"Tax Reform Is A Pipe-Dream" - Stockman Warns Market Is Heading For Massive Crash

Tyler Durden's picture

Having raged against President Trump's '1500-word-airball' of a tax reform plan, the Reagan administration's director of the Office of Management and Budget, David Stockman told CNBC this week that Wall Street is "delusional" for believing it will even be passed.

"This is a fiscal disaster that when they [Wall Street] begin to look at it, they'll see it's not even remotely paid for. This bill will go down for the count," said Stockman.

He said White House economic advisor Gary Cohn and Treasury Secretary Steve Mnuchin "totally failed to provide any detail, any leadership, any plan. Both of them ought to be fired because they let down the president in a major, major way."

Stockman pulled no punches about President Donald Trump...

"You get a black swan in the old days, or maybe you get an orange swan now, the one in the Oval Office who can't seem to stop tweeting and distracting the whole process from accomplishing anything."

Reaffirming his thesis that the stock market rally is in serious trouble...

"There is a correction every seven to eight years, and they tend to be anywhere from 40 to 70 percent," Stockman said recently on CNBC's "Futures Now." "If you have to work for a living, get out of the casino because it's a dangerous place."


"This market at 24 times GAAP earnings, 21 times operating earnings, 100 months into a business expansion with the kind of troubles you have in Washington, central banks [are] going to the sidelines," he said.


"There's very little reward, and there's a heck of a lot of risk."

Stockman puts a big portion of the blame on the Federal Reserve, and its ultra-loose monetary policy.

"This is a bubble created by the Fed," he said.


"We're heading for higher yields. We are heading for a huge reset of pricing in the risk markets that's been based on ultra-cheap yields that the central banks of the world created that are now going to go away because they're telling you that they're done."

Full interview below:

Stockman: Stocks to plummet 40-70% from CNBC.

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Raffie's picture

Been heading for massive crash for a long time.

FreeShitter's picture

Yeah, its not even worth repeating anymore.

The Management's picture

At this point I almost have to give CREDIT to the Fed.

FreeShitter's picture

They have usury down pat for sure.

BennyBoy's picture


I predict Davey's next column headline will be yet another iteration of his classic:

"Stockman Warns Market Is Heading For Massive Crash"
abyssinian's picture

yep. all these experts are all correct about heading to a massive crash, but none of them know when... It's like saying we are all dying, since birth!  Tell us something we don't already know.... back to buying more bitcoins and Ethereum 

FreeShitter's picture

I will predict this country will be unfit to live in  the next 10 years. Could I be right?

ghengiskhan's picture

We have news anchors gaslighting anyone who dares to question why a 7 year old needs a sex change operaton.  We are well on our way out.  Nothing but chaos ahead.

Escrava Isaura's picture

I beg to differ. And I just put this on some other post.

Focusing on the crash of the stock market, inflation, and bubble miss the point. Isn’t about two percent of the population that own about 50 percent of the stocks?

The reason that you haven’t see all these predictions coming through has mainly to do with that the general population is no longer participating, so the owners and managers of the nation can make this market high and higher.

The problem will be when they lose control of the middleclass, because the middleclass became the poor class.

When a nation has no middle class we’ll have a problem. The harmony is gone, because they will come after the rich.

And that time will be when the oil goes to $100 dollars plus a barrel. Until then, the owners of this nation should be able to hold it together.



ByTheCross's picture

They'll never come after the rich.

The rich will simply discover one day that the stock market has crashed, WW3 has started, their jet has been impounded, and there's no easy way to get to their villa in New Zealand.


Escrava Isaura's picture

They will come after the rich.

At the next president 2020/2024.


ByTheCross's picture

Who will still be around for the next president?

For many, the current one will be the last: Trump.

Rubicon727's picture

"They'll never come after the rich."

Isaura actually perceives America's dying middle class as an educated class of folks who understand the ins and outs of corporate oligarchs, the FED, and HOW the wealthy have become filthy rich. Probably about 80% of the middle-lower middle class folks have only the faintest understanding what these wealthy SOBS have purposely done to this economy and to millions of American citizens over the last 30 years!

Add to that and a population that has ALWAYS turned inward and despises "intellectualism" - it's made for a perfect recipe in destroying this nation.

You're correct, ByTheCross.



ThirteenthFloor's picture

Just divide the slaves just keep them fighting amongst themselves. Meanwhile we'll steal away.

The rich have played that tune for over 2400 years, see it working everyday.

ByTheCross's picture

What is being done and has been done, has been in the process of being done for a very long time.

An understanding as to precisely what that is (as opposed to what it appears to be) and why, is extremely hard to come by.

I can tell you at least, that it's not simply to keep the wealthy wealthy at the expense of the proles.

Give Me Some Truth's picture

You make a good point about 2 percent owning 50 percent of the stocks. And that doesn't count the central banks and the crony funds. There's not many people that have to be "controlled" to control the stock market

BTW, the stock market's going up.  For the Status Quo to remain the Status Quo- for the Establishment to remain the Establishment -  It HAS to. 

ThirteenthFloor's picture

Nope. 14-16 percent of Wall Street is middle and working class pension funds... research it up.

32 percent of Wall Street investment $$ does not even live in the US. Research that as well US does not does tax foreign profit taking on WS.

ArthurDaley-OldieTimeTrader's picture

"back to buying more bitcoins and Ethereum"


The smart move is buy stuff that hasn't moved upwards yet. FCG is on the move. As has NGE the Nigerian ETF from Global X ETFs..

SeuMadruga's picture

Maybe we are already straight into the crash-equivalent, mirrored crack-up boom phase where the currency takes all the final brunt from this psychedelic monetary "experiment"...

sleigher's picture

"They have usury down pat for sure."

Is it still usury if interest rates are at 0%?  At this point they are just printing money hoping it doesn't happen tomorrow.  Seems that way anyhow.

sleigher's picture

NSA, stay out of my connection you assholes.

NYC_Rocks's picture

Unfortunately you are right.  The power of money printing is a lot of power and they have the upper hand.  Makes it impossible to tell when it all comes crashing down.  Maybe this time it won't and we will just have hyper inflation instead.  No one knows regarding timing.  But we do know the debt and current model is unsusttainable.  We either print/inflate/devalue or debt written off and/or services no delivered.  There is no other choice.  All they did was defer the pain.  David is right, it will happen but no one can predict when.

striped-pad's picture

The thing is that if you do allow a proper default, where the bad debts are all written off in bankruptcy, you resume from a clean slate, so that we can be confident that the debts circulating around the economy can all be settled. There's a lot of productive capacity around, and in that sort of environment, production can thrive.

I don't deny it will be a difficult process, because there are just too many people who have made too many promises they can't keep in order to have the things they wanted. The most difficult thing will probably be getting people to take responsibility for their decisions to get into debt, particularly because they were deceived in many cases. They need to be convinced to take it out on the people who conned them instead of on the people who refused to join in the Ponzi scheme. I hope that we can be sympathetic while firmly insisting that everyone must live within their means.

I'm sure some public services will be cut back, but only the ones which were being funded by running down the nation's saved capital.

Writing off debts is neutral to net worth. For each dollar which is removed from one person's assets, another dollar is removed from someone else's liabilities.

Giant Meteor's picture

Naw, I'm gonna say it anyway ..

This sucker is goin down !

JohnGaltUk's picture

Dude you are dead right. The USA is the default currency and so when the dollar is so cheap to borrow it turns up everywhere. My broher wrote me an email a few years back, he lives in Singapore and he tells me how great things are because he could borrow at 2.5% in USD for his house in Singapore!!!!! I am thinking shit dude, you are nearly 60 and you need a mortgage? Hell I discharged my mortgage in my 40's.

With the USD being a global currency it has turned up everywhere, like those CDO's in 2007. Our next collapse will be global and there will be no where to hide. When folks start losing their homes, pensions, cars and everything else there will be violence. It's kinda funny really because many politicians and pundits said about the 2007 crash that they never saw it coming. I was thinking, WHAT, it was painted red like a Fire Truck and had bells ringing all over it. WTF.

yogibear's picture

Stockman, Mac Faber, Shiller and Husmann have been crying wolf for years.

They forget the Federal Reserve can print hundreds of trillions and have an infinite fun house with mirrors to distort reality.

ArthurDaley-OldieTimeTrader's picture

“How did you go bankrupt?” Bill asked.

“Two ways,” Mike said. “Gradually and then suddenly.”

 Ernest Hemingway’s 1926 novel, The Sun Also Rises.

Nations go bankrupt in the same way. Banking collapses occur in the same way. Currency crises strike in the same way. They all happen gradually… and then suddenly. Sometimes overnight




FWIW We've been running on fumes for years.. Think about it.

Raffie's picture

Guess it would be safe to say it will crash long before PM are worth what they should be. 


So, there's that.

*edit on 1st comment timer goes real fast*

Proofreder's picture

No timer, you can edit all you wish UNTIL someone gives a red or greenie.

Uninformed but had to come up with a reason - seems to be ingrained in the DNA.

Also known as JUMPING TO CONCLUSIONS; almost always wrong.

HopefulCynical's picture

No, votes don't stop editing capability. Being replied to does. FYI.

curbjob's picture


Not to worry, there's a useful scapegoat on the sidelines :

When 4th quarter GDP crashes it'll be blamed on declining NFL ticket sales.

MagicHandPuppet's picture

Which the libtards would then use to "prove" that it's all really Trump's fault... and the Russians' of course, along with the xenophobes and "raysisses"!

Justin Case's picture

blamed on declining NFL ticket sales.

Oh not Russia this time?

Blue Steel 309's picture

He is not wrong, but trying to make money off of it by implying he can time it is behavior I would expect of his (((tribe)).

Pumpkin's picture

Been heading for massive crash for a long time.


It was a very high cliff.

garypaul's picture

"If you have to work for a living, get out of the casino because it's a dangerous place."

What kind of BS advice is that? When it does crash (someday), everyone's going to feel the consequences, whether in the casino or not.

Bubenthauser's picture

Baah, just gimme a 15% drawdown. Not asking for much, LOL

TheLastTrump's picture

He said this in June as well.


He's getting closer to being right....along with the ZeroHope Doomer crowd...any day now...come on please CRASH and make me right!

onewayticket2's picture

My insider source says it's not happening.  "No way..."

WmWallace's picture

He is right and the ZH crowd is right and the $4.5 trillion the Fed pumped into the corpse to keep its heart beating proves they are right.

MagicHandPuppet's picture

"There is a correction every seven to eight years, and they tend to be anywhere from 40 to 70 percent,"

Here's hoping for 70!

gm_general's picture

120 years of CAPE data say its more like 80, even more if you take lower earnings into account in the equation. In other words, now CAPE is 31, soon to be 5-7.

curbjob's picture


"There is a correction every seven to eight years, and they tend to be anywhere from 40 to 70 percent,"


So, after 10 to 11 years the correction is 70 to 90 percent then ?

JohnGaltUk's picture

Stockman is right, corrections normally are every 8.5 years. What is different this time is that CB's are buying everything, bonds, equities and are naked shorting gold. They have stretched this economic spring so far that when it snaps back it will be devasting. This will be like the fall of the Roman Empire.

If the ECB was not buying Italian soveriegn bonds there would be no market for them, the fix is in.

ArthurDaley-OldieTimeTrader's picture


You get it. Most think that we'll skirt along okay. We don't have any way this time to bail the system out when we go over the cliff. This time its going to be for real. I think it will take a long time to recover..

HopefulCynical's picture

Exactly. This will be Roman Empire Collapse 2.0 and nobody now alive will have children who see a light at the end of that tunnel.

Six Sigma plus...