Newsmax Finance Insider and Reagan White House budget chief David
Stockman warns that there will be a stock-market crash just before
next year’s presidential election.
He said the markets are in for a "rough patch of time" because the
Federal Reserve has reached a "ridiculous point" keeping interest
rates this low for this long,
"To be with emergency zero interest rates this late in the cycle has
simply left the Fed between the biggest rock and hard place that I
think is known in monetary history," he said.
"I suspect unless the market crashes between now and [December],
they will have to raise interest rates by 25 basis points," added
Stockman. "[But] they will try to say one and done and wrap it in
incoherent Fed speech."
The central bank has delayed lifting rates before now since it is
"playing by the seat of their pants." And it's only a matter of time
before its "gibberish and incoherent" language weighs on the market
and brings about the next correction, he told CNBC.
"The market has been cycling back and forth and people are beginning
to realize the whole thing is a farce," he said. "The central banks
have lost control and you have a few daredevils left who are trying
to bid it up," he said. "One of these times we are going to plunge
and there won't be any bid when we go down."
Stockman is far from the lone prominent financial voice to warn
about market troubles ahead.
The Fed “would be ill-advised to begin normalizing interest rates in
December” amid the Paris terroist attacks, Japan's re-emergent
recession, the continued crash in commodities and the softness in
U.S. economic data, warns Ron Insana, a CNBC and MSNBC contributor.
"While no one, myself included, would like to see rates at zero
forever, given what that implies about the state of the global
economy, the Fed must deal with the world as it is, not as it
wishes it to be," Insana, the author of four books on Wall
Street,
wrote on CNBC.com.
"At this tender moment, the world is neither safe, nor
economically secure. This not the moment to test the resilience
of the economy, this is a moment to protect the gains that have
thus far been made," he wrote.
Donald Trump warned that “a lot of bad things can happen,” such
as a recession, when the nation’s central bank finally hikes
interest rates, which he alleges have been kept low for so long
for political reasons.
The Federal Reserve already should have raised interest rates
from the very low levels set during the Great Recession, and he
suspects Fed Chair Janet Yellen has delayed doing it for
political reasons,
USA Today reported.
"When you raise interest rates, I think a lot of bad things can
happen, in terms of recession, everything else," he told the
newspaper, suggesting she wants to wait until the next president
is poised to take over.
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