Investment guru David Stockman warns that stocks would take a nosedive if the U.S. imposes sanctions against Saudi Arabia.

“I think the market will take a big spill,” he recently told Fox Business Network.

President Donald Trump said Thursday it “certainly looks” like missing journalist Jamal Khashoggi is dead and warned of “very severe” consequences for the killing, Bloomberg said.

Trump told reporters Thursday that his administration is “waiting for the results of about three different investigations” as it decides how to respond amid reports that the U.S.-based journalist was ambushed inside the Saudi consulate in Istanbul, then tortured, killed and dismembered.

“I mean, it’s bad, bad stuff,” Trump said. “But we’ll see what happens."

While lawmakers are threatening to sanction the Saudi government, Trump, who has cultivated closer ties to the kingdom, has taken a cautious stance. In his remarks Thursday, Pompeo stressed the long alliance between the U.S. and Saudi Arabia.

“They are an important strategic alliance of the United States and we need to be mindful of that as well,” he said.

Meanwhile, Stockman warned that stocks are overpriced anyway and dancing with doom amid a variety of omens.

“This market is so egregiously overvalued, it is looking for a windshield somewhere in the world to splatter on. If it is Saudi Arabia so be it. If it is rising interest rates, which will keep going up, so be it," Stockman, the former budget director for President Ronald Reagan,
said.

"But it’s time for the fantasy to end and for us recognize we have backed ourselves into a horrible corner. The Fed has printed so much money, they have created so much liquidity, that the market isn't honest anymore. It is just kind of a casino, a gambling joint," said Stockman, who was the Director of the Office of Management and Budget (1981–1985) under Reagan.

Stockman said investors should fear that the price of oil will automatically skyrocket because of tension with Saudi Arabia.

“We have to understand the price of oil is the price of oil. It is a world market. It doesn't matter what Saudi Arabia is doing. We don't need to prop them up. They're not our best ally in a bad neighborhood. They are our worst ally in a bad neighbourhood,” said Stockman, who served as a Republican U.S. Representative from the state of Michigan (1977–1981).

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