David Stockman, the so-called "Reaganomics Father," is back on its latest forecast of Doom for Wall Street and the broader economy, even though the stock market is testing fresh heights for the year.
The 72-year-old politician and businessman, who was director of the management and budget office of President Ronald Reagan in the 1980s, told Fox Business's Neil Cavuto on Thursday that investors should get out of the market and withdraw return to assumed security of treasury bills and cold, hard cash.
Here's an exchange between Cavuto and Stockman during nearly 8 minutes of segment, where the businessman warned that the end of the Federal Reserve's monetary policy would ultimately increase ill because a country jumped up on debt and boast a growing trillion dollar deficit:
Cavuto: When is the day of the bill? I would like to know
Stockman: I think we are here. I think we're here because the Fed stopped buying bonds two years ago.
Cavuto: What would you invest in?
Stockman: I think you are coming out of the market. The bond market, the stock market, put your money in cash, put your money into government bonds, wait for the collapse to come because it's going to happen.
Stockman has been a persistent doomsayer whose forecasts have not yet happened. However, his White House and fiscal pedigree has made him a difficult one to ignore the vote on the prospects for the market and the economy.
Read: & # 39; Mother of All Gives Shock & # 39; is about to break stocks, warns Reaganomics father
Stockman's comments also come as market participants are increasingly concerned about lowering economic expansion outside the US will eventually wash up on US shores.
But so far, the market has been limited after having suffered from a slight decline towards the end of 201
DJIA, + 0.68%
is up 19.4% since that time, and broke a psychologically significant 26,000 level on Friday, while the S&P 500 index
SPX, + 0.57%
has advanced 19.5%, Nasdaq Composite Index
COMP, + 0.77%
has risen 22.4%, and the small capitalization-focused Russell 2000 index has returned more than 25%, according to FactSet data.
Much of this gain has been backed by a Fed that has signaled its likely to reduce a $ 4 trillion reduction as soon as this year and a willingness to wait before rising borrowing costs further. Both of these plans were called free from markets.
However, Stockman has said a gaping deficit and an economic expansion in the United States that makes history its length are indicative of my expectation of being present. He says that simple money days cannot last and have consequences for everyone, claiming that the Fed must normalize its policies, at some point:
"My point is that it finally comes up with us. 30 years because the Fed has made money on the debt bond loans over hand. When Greenspan arrived, the Fed's balance was $ 200 billion; at the top it was $ 4.5 trillion, "he told Cavuto, referring to former Fed boss Alan Greenspan.
"We have to wake up and smell the roses here. We are this year of the longest business expansion in history. We increase the deficit at the wrong time. They say it is $ 900 billion this year, it will be $ 1.2 trillions of loans while the Fed is beginning to shrink its balance, meaning they will be dumped bonds in the market, he said. (Wednesday's Fed minutes indicate that the Fed may end the balance sheet reduction, or quantitative tightening, already at the end of 2019.)  Review the entire interview below:
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