The stock market has hit a peak, and the buy-the-dip crowd no longer has
the muscle to push it higher, according to Reagan White House budget
chief David Stockman.
Stockman noted the S&P 500 has struggled to stay above the
2,000 level since for months, with numerous dips, plunges and signs of
weakness since then. Now the clock is striking midnight, in his
estimation.
"After the Fed has spent six years inflating a
new and even more stupendous financial bubble – the third this century –
the market top is in," he declared on his Contra Corner blog.
Stockman believes the timing of the Federal
Reserve's expected monetary tightening, which consensus sees coming no
later than this summer, could hardly be worse — it is coinciding both
with the market top and an emerging downturn in the broader economy.
"The Eccles Building [where the Fed is housed]
has been so petrified of a Wall Street hissy fit that it has cowered its
way right into the worst central bank error in recorded history:
Namely, it is finally attempting to wean Wall Street from its addiction
to free gambling money just in time for the tepid post-crisis business
cycle recovery to exhaust itself," Stockman predicted.
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