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David Stockman: Wall Street 'Misreading Washington,' Will Be 'Spooked' by Government Shutdown

(Getty/Win McNamee)

By    |   Monday, 06 March 2017 08:18 PM

Former Reagan Budget Director David Stockman warns savvy investors to not be fooled by the stock-market honeymoon since Donald Trump was elected president.

The good times are going to come to a sudden end very soon, and you don’t want to be caught in a vulnerable investment position, the former director of the Office of Management and Budget said.

"Wall Street is totally misreading Washington," Stockman told CNBC's "Futures Now" in a recent interview.

"It's pricing in a fantasy about a Trump stimulus that simply isn't going to happen. There will be no tax cut, there will be no 15 or 20 dollar a share reduction in the corporate rate," said Stockman, who was the Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan.

Stockman warned that not many economic gurus are talking about the "debt ceiling trap" that he contended will prevent tax reform, infrastructure and defense spending that have excited so many investors, CNBC.com explained.

Given that "factions" are straining unity in the Republican Party, Stockman warns that political turmoil could erupt.

"We will have a government shutdown," said Stockman. "It is totally unexpected, unpriced in by Wall Street, [and] it will spook everybody," said Stockman, who served as a Republican U.S. Representative from the state of Michigan (1977–1981).

"I see nothing to re-accelerate the economy or profits, and I see a huge mess, bloodbath, fiscal stalemate in Washington that will remove any of the stimulus that any of the traders are expecting from infrastructure and big tax cuts and all the rest," he added.

Stockman isn't the lone voice of alarm.

A majority of business economists disagree with the Trump administration on several key issues, notably immigration, trade and the budget, according to a survey by the National Association for Business Economics.

This is the first survey done by the trade organization since President Trump took office.

The biggest sources of disagreement are trade and immigration, according to the NABE.

Roughly two-thirds of economists want the Trump administration to allow more immigration from high-skill workers for high-paying jobs, under programs like the H1-B visa, the Associated Press reported.

Only 14 percent of economists say the Trump administration should spend more money on deportations and border enforcement -- programs that the White House has emphasized since taking office a month and a half ago. Further, business economists do not consider illegal immigration to be a serious issue.

(Newsmax wires services contributed to this report).

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David Stockman warns savvy investors to not be fooled by the stock-market honeymoon since Donald Trump was elected president.The good times are going to come to a sudden end very soon, and you don't want to be caught in a vulnerable investment position. Wall Street is...
david stockman, stock markets, wall street, washington, trump
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2017-18-06
Monday, 06 March 2017 08:18 PM
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