David Stockman is delivering a fresh round of dire Wall Street warnings.

Even though the markets have been battling back from the Feb. 2 correction, President Ronald Reagan's former OMB director warns the market has hit an inflection point.

"The market is whistling past the graveyard. Trading at 26 times earnings at the top of the business cycle 10 years in is almost a record," he said on CNBC's "Futures Now." "On the theory that earnings have rebounded and will go even higher, I think that's an illusion."

His comments on Thursday came as news hit that President Donald Trump would move forward with the aluminum and steel tariffs. Stockman contends there's nothing but pain ahead for the markets despite Trump's decision not to back down.

From the White House policy side, it's the impact from the tax cuts that really gets Stockman's attention.

"They passed this ridiculous tax cut that no one can really afford. I think the die is cast. We are drifting to – if you don't want to call it an 'iceberg' – call it a 'debtberg.' That's what we have in front of us," Stockman said.

According to Stockman, investors who think the recently-passed GOP tax cut will cause a giant rebound in earnings will be very disappointed.

"They're forgetting about the other side of the equation. We're heading into a massive monetary fiscal collision that will cause a yield shock that will turn the market upside down," he added.

He's referring to the after-effects of quantitative easing. The Federal Reserve is in the beginning stages of unwinding a $14 trillion financial crisis-era trade.

"You're going to have a massive yield shock, and that will offset S&P [500 Index] earnings and almost all of the effect of the tax cut," Stockman said. "People are not factoring that in. It's kind of a skunk in the wood pile that everybody is ignoring."

This is far from the first time Stockman has made stern warnings to investors about the Fed's policies.

On "Futures Now" last September, he said stocks are heading for a 40 to 70 percent plunge. A few months earlier, he predicted a "horrendous storm" would hit stocks — speculating that the S&P 500 could easily drop as low as 1,600, which at the time represented a 34 percent hit. Neither of those predictions have yet come to pass.

"We're in a totally new ball game. A paradigm shift. The Fed is pivoting to quantitative tightening. They are actually draining cash," he said.

"That will create a different pricing environment for the bond market because once the smart people see the Fed is basically selling down its portfolio, they're going to start selling the bond, too," Stockman added.