Those who are in this stock market fiction better heed the warnings from Reagan's OMB director, David Stockman, who found truth during the instantiation of voodoo economic/supply-side economics in then real-time. The tax cut was a scam that pilfered most Americans, and the inflated stock prices will leave another group holding the bag IMHO.
Former OMB Director David Stockman says the market is "just way, way over-priced for reality."
Those who are in this stock market fiction better heed the warnings from David Stockman. The tax cut was a scam that pilfered most Americans, and the inflated stock prices will leave another group holding the bag IMHO. https://t.co/C6GQUJVQJQ pic.twitter.com/INVyGP4uM2
— Egberto Willies (@EgbertoWillies) June 6, 2018
CNBC reported his comments as follows.
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."
His thoughts came as the Nasdaq was reaching all-time highs again, while S&P 500 rose slightly but the Dow failed to extend its win streak to three days in a row.
"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."
Dismissing Stockman in the current stock market euphoria is easy. But one must ask oneself where could the growth possibly come from when the current economic policy provides no stimulus to build (infrastructure spending), to invest in the future (more money for education including student debt relief), a healthcare policy that gives people stability needed to invest and innovate in what they can bring to an economy.