{"id":37989,"date":"2016-05-13T16:28:45","date_gmt":"2016-05-13T20:28:45","guid":{"rendered":"https:\/\/stateofthenation2012.com\/?p=37989"},"modified":"2016-05-13T16:28:45","modified_gmt":"2016-05-13T20:28:45","slug":"david-stockman-warns-get-out-of-the-casino","status":"publish","type":"post","link":"https:\/\/stateofthenation2012.com\/?p=37989","title":{"rendered":"David Stockman Warns &#8220;Get Out Of The Casino!&#8221;"},"content":{"rendered":"<p><!--more-->ZeroHedge.com<\/p>\n<p>Forget the &#8220;wall of worry,&#8221; former Reagan OMB Director David Stockman warns a shocked CNBC anchorette that <strong><em>&#8220;the frogs are in the boiling water again on Wall Street&#8230;and they don&#8217;t have enough sense to get out.&#8221;<\/em><\/strong> The last 600 days of range-bound trading marks the top he explains adding that &#8220;we have reached the cyclical top in both GDP and earnings,&#8221; which leaves a market trading at extremely expensive levels &#8211; &#8220;why would you stay in?&#8221; Stockman believes that<strong> the world economy is heading into a &#8220;deep and lasting deflationary recession.&#8221; <\/strong>There is no evidence that America is immune, he adds, warning of the <strong>potential for 40% downside and just 2% upside in stocks<\/strong>&#8230;<\/p>\n<p><iframe loading=\"lazy\" src=\"http:\/\/player.cnbc.com\/p\/gZWlPC\/cnbc_global?playertype=synd&amp;byGuid=3000517010&amp;size=530_298\" width=\"530\" height=\"298\"><\/iframe><\/p>\n<p><a href=\"http:\/\/www.zerohedge.com\/news\/2016-05-12\/frogs-are-boiling-again-why-wall-street-stays-pot\">As Stockman recently concluded,<\/a> the <strong>last time the Fed\u2019s money-pumping exercise in bubble finance ran out of steam in 2007, an unmistakable \u201cX\u201d appeared in the labor market data. That is, the index of labor conditions rolled over in January 2007, even as the monthly BLS job count continued to rise, adding nearly 1 million \u201cnew jobs\u201d before peaking 12 months later in January 2008.<\/strong><\/p>\n<p>Alas, another year later 4.5 million of these peak \u201cjobs\u201d had disappeared\u2014\u2013on the way to an eventual plunge of 9 million.<\/p>\n<p>Here\u2019s the thing. <strong>About 90% of Q1 earnings are now in, and the S&amp;P\u2019s LTM EPS has posted at $87 per share. That figure, of course, is the GAAP number reported to the SEC on penalty of jail time.<\/strong><\/p>\n<p>Accordingly, actual\u00a0profits are\u00a0down by <strong>18%<\/strong> from\u00a0the $106 per share peak\u00a0of September 2014, and that\u00a0means Wall Street\u2019s frogs are now boiling in water that has heated to\u00a0<em><strong>23.7X<\/strong><\/em>.<\/p>\n<p><strong>But don\u2019t tell the\u00a0Jeffrey Saut brigade. The abominable \u201cX\u201d is back, too, and even the casino empties out when recession actually hits.<\/strong><\/p>\n<p><a href=\"http:\/\/www.zerohedge.com\/sites\/default\/files\/images\/user3303\/imageroot\/2016\/05\/11\/20160509_jobs.jpg\"><strong><img decoding=\"async\" src=\"http:\/\/www.zerohedge.com\/sites\/default\/files\/images\/user3303\/imageroot\/2016\/05\/11\/20160509_jobs.jpg\" \/><\/strong><\/a><\/p>\n<p>But that\u2019s not the half of it.<strong> Wall Street\u2019s cockeyed faith that another stock market\u00a0bailout is on the way rests on the idea of a post-election return to fiscal stimulus\u2014-since even the casino punters now\u00a0see that the jig is up on ZIRP, NIRP and QE.<\/strong><\/p>\n<p>Here\u2019s the problem. When General (Paul) Ryan gets together in the oval office with either Hillbama or the Donald next February the budget projections will already be deep in trillion dollar deficits under current policy. Therefore what\u00a0will get stimulated, if anything,\u00a0is a colossal political firestorm over who bankrupted the nation.<\/p>\n<p><strong>There will not be another fiscal stimulus this go round. This time the frogs of Wall Street\u00a0will be left to boil.<\/strong><\/p>\n<p>___<br \/>\n<a href=\"http:\/\/www.zerohedge.com\/news\/2016-05-13\/david-stockman-warns-get-out-casino\">http:\/\/www.zerohedge.com\/news\/2016-05-13\/david-stockman-warns-get-out-casino<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-37989","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts\/37989","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=37989"}],"version-history":[{"count":0,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts\/37989\/revisions"}],"wp:attachment":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37989"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37989"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37989"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}