David Stokman, the so-called Father of Reaganomics, once again faced with the latest prediction of Wall Street's death and the wider economy, even when the stock market is testing fresh highs for the year.
72-year-old politician and businessman, who was the director of the Office and the budget, led by President Ronald Reagan in the 1980's, told Fox Business on Thursday that investors should withdraw from the market and retreat to supposed security. treasury bills and cold, hard cash.
Here is the exchange between Cavuto and Stokmen during an almost 8-minute segment in which a businessman warned that the end of the policy of the Federal Reserve System with easy money would ultimately cause the country to seize the debt and boast a growth deficit of a trillion dollars:
Cavuto: When is this the day of calculation? I would like to know
Stockman: I think we are here. I think we are here because the Fed stopped buying bonds two years ago.
Cavuto: Whatever you put in?
Stockman: I think you will leave the market. The bond market, the stock market, put money in the cashier, put money in treasury bills, wait for a collapse, for it will happen
Stockman was a persistent enemy whose predictions have not yet taken place. However, his White House genealogy and fiscal policies have made it difficult for him to ignore his voice regarding the prospects of the market and the economy. [1
Stockman's comments also come as market participants are increasingly concerned about the slowing of economic expansion outside the US, eventually flushing out on American the banks
However, so far the market has been restricted at a higher pace after easing the decline to the end of 2018, which ended with the worst rain falling for Christmas. Dow Jones Industrial Average
DJIA, + 0.58%
increased by 19.4% since then, exceeding the psychologically significant level of 26,000 at the same time and the S & P 500 index
SPX, + 0.51%
advanced 19.5%, Nasdaq Composite Index
COMP, + 0.72%
increased by 22.4%, and the index of small capitalization, focused by Russell 2000, returned more than 25%, according to FactSet.
Much of this reinforcement of the Fed, which signaled that it is likely to slow down the reduction of its balance sheet to 4 trillion. dollars, as soon as this year, and readiness to wait for further increase in the cost of borrowing. Both of these plans were presented as a source of friction for markets.
However, Stockman said the yawning shortage and economic expansion in the US, which makes history its length, are indications that my count is on hand. He says that light money days can not last and have consequences for everyone, arguing that the Fed must normalize its policy at some point:
"My point of view finally catches up with us. We got it over 30 years ago that the Fed monetized debt obligations by purchasing fists.After Grinspin arrived, the Fed's balance was $ 200 billion, at peak it was $ 4.5 trillion, "he said, referring to Alan Greenspan's former Fed boss. 19659002] "We have to wake up and smell the roses here. We are in the 10th year of the longest expansion. I am a business in history, we are increasing the deficit in the most inappropriate time, they claim that this year, $ 900 billion, it will be $ 1.2 trillion of borrowings at the same time that the Fed begins to reduce the balance, which means that they will throw away market bonds, "he said. (The Fed's silver moments indicate that the Fed can stop a reduction in the balance or a quantitative gain by the end of 2019.) Subscribe to the free MarketWatch newsletter. Register here.