Stockman: Comey Testimony a ‘Big Fat Nothingburger’

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David Stockman joined Futures Now to discuss former FBI Director James Comey’s testimony with the Senate Intelligence Committee.  As markets try to decipher what to expect from the White House, Stockman urged what he believed Wall Street should be paying attention to.

When the CNBC host began with asking for Stockman’s impression of the hearing he held nothing back stating, “First of all, I think the testimony was one one big fat nothingburger. There was nothing new. There was nothing about obstruction of justice. It was the same self-serving tommyrot that Comey has been leaking for weeks.”

David Stockman is a form member of Ronald Reagan’s White House cabinet where he served as the Director of the Office of Management and Budget. He is also a two term Congressman from Michigan. The economist and finance expert has released his latest book TRUMPED! A Nation on the Brink… And How to Bring it Back where he explores what every American should know in the current political and economic climate.

“On the other hand, I don’t take any assurance from that. The “all clear,” I think, is the wrong conclusion. If the Senate can involve itself in something this groundless, that’s backed in more hysteria about RussiaGate that holds no evidence… If they can bog themselves down in this, we have a dysfunctional, ungovernable situation in Washington.”

“The idea that there’s only seven weeks left before the August recess and they’re going to be succumbing soon to a debt ceiling crisis… that in that environment, if you think there’s going to be tax reform, infrastructure, stimulus or even a functioning government and not a shut down come August or September when they have no borrowing authority, I don’t know what Wall Street is smoking.”

“They ought to be getting out of the casino while it’s still safe yet there’s this idea that since President Trump wasn’t incriminated today that proves that we can move on. I think it’s crazy.”

When the CNBC host turned focus to the impact to the Trump Administration Stockman urged, “This is a total distraction. But it tells us that we don’t really even have a president. We have a non-functional government. This is a huge nothingburger but you don’t take comfort from that, you should get worried. Because the system is determined to unseat Donald Trump. In that environment… that means we’re in big trouble.”

The host then prompted the economist on why market participants are buying into such distractions he shot back, “I don’t think they’re buying in. I think the robo-machines and the day traders are just tagging points on the charts. We touched 2,439 points in the S&P the other day and they’re trying to do it again. It is completely meaningless.”

“One of these days somebody is going to wake up to find that we don’t have a government, we don’t have a fiscal plan, we have a Fed that is going to be disunited and fragmented very soon as new people come on. Those in the markets are going to get scared to death, they’re going to start selling. There will be no support below. This is one of the most dangerous market environments we’ve ever been in. This is the calm before a gigantic storm that I don’t think is too far down the road.”

When asked by another CNBC panel guest how much Stockman might forecast the market to be hit he responded on the S&P , “I think it could easily fall to 1,600 or below. I mean, the idea that people are trading at twenty five times reported earnings after 100 months after an expansion in the economy with no government, a Fed that’s out of dry powder, a world economy that’s still shaking, a situation in China that’s going to get a lot worse before it gets better and flair ups all over the world… If in that environment you want to keep hitting the “buy” key, be my guest but there is really no basis for it.”

The conversation then turned to the global environment and improving signals in the U.S, speaking from a contrarian platform Stockman replied, “I think the machines are buying because they’ve been rewarded in buying the dips. That will work until it doesn’t. There is nothing rational about this market. This is a machine-trading driven bubble that’s nearing an all-time mania.”

When asked by another host, Jim Luorio, on whether Trump could actually be pushed from office and whether a potential Pence administration would offer any calm to the market Stockman offered, “It’s going to happen. It won’t be for a while because the Republican elders will not move against him until they see the polls showing a complete wipeout in November 2018. When they get to that point, which may be late this Fall or early next winter, they’ll find a way to invoke the 25th Amendment just like they did Nixon.”

Finally when asked what the trigger event he expects to set markets off the former Reagan cabinet member rallied, “I think the trigger event is going to be the debt ceiling firestorm which is going to be within weeks. Remember, there’s only seven weeks left before August. There’s $150 billion left on the Treasury cash drawer which is down $130 billion since late April. They’ll be out of cash, out of debt ceiling space and currently have no plan organized preparation for a debt ceiling increase.”

“The government is going to go into crisis before the market even realizes what’s happening, at a time when the White House is going to be totally on the defensive.”

“This is not August 2011 where you had a president who believed more debt is better and a middle-of-the-road Republican leader who was willing to capitulate when “push came to shove.” Right now the Freedom Caucus controls the House and they will not vote for a debt ceiling increase. That means we’re going to be in a crisis and shutdown mode within seventy days.”

Find the full CNBC interview here and learn more on how to get your FREE copy of David Stockman’s book here.

Regards,

Craig Wilson, @craig_wilson7
for the Daily Reckoning

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