The Trump rally raged on this week with all major U.S. indexes hitting record highs, but despite the historic run, David Stockman is doubling down on his call for investors to sell everything.

"This 5 percent eruption is meaningless. It's some robo machine trying to tag new highs," Stockman said Tuesday on CNBC's "Fast Money," in a dismissal of the S&P 500 rally.

"I see a recession coming down the pike in 2017. The stock market is going to go down and it's going to stay down long and hard because, for the first time in 25 years, there's nothing to bail it out."



This echoed the initial call Stockman made Nov. 3, when he urged investors to sell stocks and bonds before the presidential election.



However, since the Nov. 8 election, the Dow Jones industrial average has gained 4 percent en route to surpassing 19,000. Additionally, the and also hit record highs in the same time period, gaining 3 percent and 4 percent, respectively.

Yet Stockman, who was director of the Office of Management and Budget under President Ronald Reagan, reaffirmed that markets are heading for disaster.



"My call stands. Sell the stocks, sell the bonds, get out of the casino," Stockman explained to CNBC in an off-camera interview. "Bonds have already cratered by nearly $2 trillion worldwide and have miles to go. This isn't a rotation into stocks, either. It's the greatest sucker's rally ever."



Stockman, author of "Trumped: A Nation on the Brink of Ruin... And How to Bring It Back," lamented that there will be no Trump stimulus or Reagan-style boom. He further added that he expects "an unprecedented fiscal bloodbath" resulting from the $20 trillion worth of debt that the U.S. currently has on the books.



"This isn't Ronald Reagan with a clean $1 trillion balance sheet and with a fluke GOP and a Southern Democratic coalition that only materialized because he got shot," Stockman said in reference to John Hinkley Jr. attempting to assassinate Reagan in Washington, D.C., in 1981. "Nor is it LBJ in 1965 with a thundering electoral mandate and a massive congressional majority for the Great Society."



On the contrary, Stockman, who initially predicted that Trump would win the election, added that Washington will be in chaos by June. This is because he anticipates ongoing disruptions from the tea party, which Stockman doesn't foresee as allowing additional deficit increases.



Furthermore, Stockman doesn't believe that Trump can pass a bipartisan stimulus plan without capitulating on his promise to repeal and replace Obamacare. Additionally, Stockman cast serious doubt over Trump's ability to enact a meaningful tax cut or to develop a major infrastructure program. If so, Stockman believes that could very well trigger a civil war within the Republican Party.



"So when the recession hits this summer, the Fed will be out of dry powder and fiscal policy will be paralyzed," concluded Stockman. "This time the market will crash and stay crashed."



Given this prediction, Stockman re-emphasized that gold and cash will be king and urged investors to shift their portfolios accordingly. He also recommend shorting the S&P 500 through ETFs such as the SH or the SDS.

