Former Republican congressman and two-time GOP presidential candidate Ron Paul warns that a hefty plunge looms for the stock market, but savvy investors can hardly blame President Donald Trump for the carnage.
The former Republican Congressman from Texas blames a buildup of political dysfunction in Washington over recent years.
"A 50 percent pullback is conceivable," Paul told recently CNBC. "I don't believe it's 10 years off. I don't even believe it's a year off. "
The Newsmax Insider fears such a market plunge would cut the S&P 500 Index in half, to 1212, and the blue-chip Dow Jones Industrial Average would collapse to 10,837.
Paul noted that there's a lot of chaos in Washington right now, with an "unpredictable president" and those who are inclined to "tear him apart" but if the market takes that big of a tumble, he doesn't see it as Trump's fault.
"It's all man-made. It's not the fault of Donald Trump in the last week. If the market crashes tomorrow and we have a great depression, he didn't do it in six months. It took more like six or 10 years to cause all these problems that we're facing," he said.
"I see the foundation of our system built on sand, and a big wind comes along to blow it down," Paul said.
The Trump-fed rally in stocks, lately showing signs of faltering as the long Wall Street summer nears its end, faces a key test in the weeks ahead with the approach of a historically unkind season for equities and a clutch of issues - such as raising the debt ceiling - awaiting the return of lawmakers to Washington.
With September, typically the worst month in the year for stocks, on the doorstep, investors are likely to be nervous that cracks seen in the more than-eight year bull run in equities will turn into a steeper selloff, Reuters reported.
"September is historically one of the most volatile months of the year," said Michael Purves, chief global strategist at Weeden & Co in New York. "Why do you want to chase the S&P right now if there's a good shot that September can be an ugly, volatile month."
Friday on Wall Street. the Dow Jones Industrial Average fell 76.22 points, or 0.35 percent, to close Friday at 21,674.51, the S&P 500 lost 4.46 points, or 0.18 percent, to 2,425.55 and the Nasdaq Composite dropped 5.39 points, or 0.09 percent, to 6,216.53.
Friday’s losses capped a White House-focused week that raised more questions about the Trump administration's ability to implement its pro-growth agenda, Reuters reported.
Friday marked the first time stocks haven't risen the day after a more than 1 percent drop since Donald Trump was elected president on Nov. 8.
The week's losses further dented the post-election rally, which was built on Trump's promises of tax cuts and higher infrastructure spending.
Thursday's 1.5-percent drop in the S&P 500 came a week after a similar fall, and while the benchmark index still is up 13.4 percent since the election, it is down 2.1 percent in the last two weeks. That's the most since the two weeks before the election.
"While this mini correction we're seeing may not amount to much, it's probably caused by this escalation in doubt of all of these things that seemed hopeful to investors at the beginning of the Trump administration," said J. Bryant Evan, investment advisor and portfolio manager at Cozad Asset Management, in Champaign, Illinois.
Ron Paul is a physician, author, and former Republican congressman. Paul also is a two-time Republican presidential candidate, and the presidential nominee of the Libertarian Party in the 1988 U.S. presidential election. His latest book is “Swords into Plowshares." For more of Ron Paul's reports, Go Here Now.
(Newsmax wires services contributed to this report).
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