Uh oh! Fed exit may cause 20% stock drop: Boockvar

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When the Federal Reserve ends its latest bond-buying quantitative easing program, stocks could drop 15 percent to 20 percent, said Peter Boockvar, chief market analyst at The Lindsey Group.

That's how much the market dropped when the Fed ended QE1 and QE2, Boockvar said in an interview on CNBC's "Squawk Box."

"I think we're going to see a repeat of that," he said.

"I think we've already seen the rumblings of that in the Russell 2000 [and] a lot of high-flying Nasdaq stocks," he continued. "And I do think it's going to sprinkle into the bigger cap and the Dow names that people have been hiding in."

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"The Fed, of course, has been driving markets up," Boockvar said. "And when they pull back, they're going to drive markets down."

The Fed has scaled back its bond purchases in four, $10 billion moves—now buying at a $45 billion a month pace.

"They're taking away a trillion dollar annualized 'asset price stimulus program' and it's going to zero," he said in making his case for a major stock correction.

Boockvar said the recent action in the bond market is also an omen.

"We saw a flattening of the yield curve after QE1 and QE2 ended. And we're seeing an exact repeat of that," he said.

—By CNBC's Matthew J. Belvedere