Wall Street can’t sleep, bloody nightmare is near

David Stockman's prophecy over Wall Street seems to announce an Annus Horribilis : "This is one of the most dangerous market environments we've ever been in. It's the calm before a gigantic, horrendous storm that I don't think is too far down the road," he recently said on "Futures Now."

Stockman, a form member of Ronald Reagan’s White House cabinet where he served as the Director of the Office of Management and Budget, made his latest prediction after lawmakers grilled former FBI Director James Comey over whether President Donald Trump tried to influence the Russia investigation.

"This is a huge nothing-burger, but you don't take comfort from that. You get worried about that because the system is determined to unseat Donald Trump," said Stockman.

Stockman argues the latest drama on Capitol Hill is a distraction from the real problems facing the economy.

“The idea that there’s only seven weeks left before the August recess and they’re going to be succumbing soon to a debt ceiling crisis… that in that environment, if you think there’s going to be tax reform, infrastructure, stimulus or even a functioning government and not a shut down come August or September when they have no borrowing authority, I don’t know what Wall Street is smoking.”

Stockman believes the S&P 500 could easily fall to 1,600, about a 34 percent drop from current levels. He's made similar calls like this in the past, but they haven't materialized.

“I think it could easily fall to 1,600 or below. I mean, the idea that people are trading at twenty five times reported earnings after 100 months after an expansion in the economy with no government, a Fed that’s out of dry powder, a world economy that’s still shaking, a situation in China that’s going to get a lot worse before it gets better and flair ups all over the world… If in that environment you want to keep hitting the “buy” key, be my guest but there is really no basis for it.”