Stanley Druckenmiller established himself as one of the most successful hedge fund managers of his generation thanks to an uncanny ability for recognizing signals in asset prices that portended an coming recession. So when he warns about rough times ahead, it’s probably worth listening.
Though he’s kept a relatively low profile since closing Duquesne Capital in 2010 and opening a family office based in midtown, Druckenmiller’s name has been popping up in the headlines of the financial press more frequently lately where his criticisms of the Fed were ridiculed (back in September he warned that we we are at the point in the tightening cycle where “bombs are going off”) before they were echoed by no less a figure than the president himself. Over the weekend, Druckenmiller offered his latest contrarian screed against Wall Street pearl clutchers by arguing in an op-ed published with former Fed Gov. Kevin Warsh that Trump has a point, and that the Fed already missed its opportunity to safely tighten monetary policy. Now, the Fed has two choices: either reconsider its plans to raise rates to 3% and beyond over the next year, or risk destabilizing asset markets and the broader economy.
And in an interview that bears similarities to Jeff Gundlachs’ “truth bomb”-strewn chat with CNBC, Druckenmiller sat down with Bloomberg for an hour-long interview where he warned that market conditions are about to get a lot worse.
The only question, in Druckenmiller’s mind, is not whether the selloff will worsen, but by how much? Because the indicators that Druckenmiller used to anticipate the last four downturns are once again turning red, suggesting the “highest probability is that we struggle going forward.”
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