Ron Paul’s sell-off prediction just got more severe.
The former Republican Congressman from Texas believes escalating dysfunction in Washington will create even more pain for Wall Street.
“A 50 percent pullback is conceivable,” said Paul on “Futures Now” recently. “I don’t believe it’s ten years off. I don’t even believe it’s a year off. “
According to his calculations, it would cut the S&P 500 Index in half, to 1212, and the blue-chip Dow Jones Industrial Average would collapse to 10,837.
“You really have an unpredictable president right now. We have an unpredictable foreign policy right now — more than ever. Who knows what’s going to happen?” he asked.
Paul’s comments came as anxiety grows over whether Congress can successfully work with President Donald Trump on his business-friendly agenda.
Lawmakers have been distancing themselves from Trump, due to controversial remarks he made following the violent protests in Charlottesville, Virginia.
“I’m not a Trump supporter, and I don’t like his policies. But when you look at the people who tear him apart, I mean this does have a political consequence,” he added.
It would come at the expense of businesses who are counting on reforms such as tax cuts and fewer regulations, according to Paul.
“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 ten years to cause all these problems that we’re facing,” he said.
Paul, who is also known for his presidential runs, originally made his case for a somewhat more benign 25 percent downturn on June 29 on “Futures Now.” He argued Wall Street is overestimating the strength of the economy, and the Federal Reserve kept interest rates too low for too long. He said the situation for stocks could turn ugly as soon as October.
Stocks will try to bounce back on Monday from multiple losing weeks in a row. The Nasdaq just saw its fourth consecutive week of losses. Meanwhile, the Dow & S&P 500’s losing streak now sits at two weeks.
If Paul’s vision is right, the damage is bound to worsen.
“I see the foundation of our system built on sand, and a big wind comes along to blow it down,” Paul said.