Trump will scare the hell out of the market, but that's OK: Stockman

Former Reagan administration aide David Stockman has a message for the next president: The markets are going down for the count and you can't do anything about it!

President Ronald Reagan's director of the Office of Management and Budget said in a recent CNBC interview it doesn't matter if Hillary Clinton or Donald Trump gets elected in November — neither will be able to stop the economic meltdown that's looming.

Wall Street seems to have its mind made up about which candidate it prefers. More than 70 percent of respondents to a recent Citigroup poll of institutional clients said the former secretary of state, first lady and New York senator would likely become the U.S.'s 45th president. Just over 10 percent gave Trump the nod, and small business owners appear to be divided between the GOP and Democratic standard bearers.

Stockman, however, doesn't believe either one can prevent what may be on the horizon.

"There's no way the next president can stop a recession that's already baked into the cake," Stockman said Thursday in the "Futures Now" interview. Stockman has been calling for a major market downturn and global recession for some time, but he is more certain than ever that it could happen during this political cycle.

He pointed to depleting earnings, peaked auto sales, inventory ratios and issues in the freight and rail space as some key indicators that the U.S. economy is more unstable than people would like to believe. "The idea that this economy is somehow going to get stronger in the second half, or that the next president can stall a recession I think is wrong," he said.

According to Stockman, there is "plenty of evidence" that the U.S. will slip into a recession by year-end or shortly after. And as he sees it, that could send the S&P 500 spiraling to levels not seen since 2012.

"The market can easily drop to 1,300," Stockman warned. That represents a nearly 40 percent fall from where the large-cap S&P 500 Index is currently trading. "We have been trading in a range for the last 600 days plus or minus days 2,060 on the S&P 500. … Why would you hang in a boiling pot where the upside is 2 percent and the downside is 40?"

Stockman noted that if given a choice between Trump and Clinton, he certainly would not want another Clinton in the White House. Instead, he said America needs a disruptor like Trump to "break the chains of the status quo" and manage the country in a different way than what has been done in the last decade.

Stockman's comments came as doubts have emerged about Trump's economic competency. The real estate mogul caused a stir recently when he appeared to suggest the U.S. could escape its obligations by printing money, comments he later clarified. However, those remarks were made on the heels of comments that suggested the U.S. could renegotiate its debt.

"I think [Trump] will scare the hell out of the markets, but that's OK," said Stockman. "The point of running this country, the point of economic and fiscal policy is not to make stock averages go higher."