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Key Words: ‘No doubt…that we are in a raging mania in all assets’, says Stanley Druckenmiller

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‘I have no doubt, none whatsoever, that we are in a raging mania in all assets. I also have no doubt that I don’t have a clue when that’s going to end.’


— Stanley Druckenmiller, Duquesne Family Office

Billionaire investor Stanley Druckenmiller may be braced for a white-knuckle ride according to his description of the state of financial markets in a Tuesday interview with CNBC. Druckenmiller, who along with George Soros famously made huge, profitable bets against the British pound in 1992, said he remained “long the stock market,” but “not as long, nearly as long, as we were four or five months ago.”

Druckenmiller said he had shifted many of his Duquesne Family Office’s relative bets into commodities, interest rates and the U.S. dollar.

Stocks were under pressure Tuesday, in a selloff that was kicked off by a tumble for large-cap technology shares. The broader U.S. market extended losses by midmorning. The Dow Jones Industrial Average
DJIA,
-1.50%

was down 435 points, or 1.3%, after falling by more than 600 points at its session low. The S&P 500 index
SPX,
-1.05%

was down 0.9%, while the tech-heavy Nasdaq Composite
COMP,
-0.42%
,
which came off its session low, was off 0.3%.

The investor also co-wrote a guest column with Duquesne’s Christian Broda that ran in The Wall Street Journal on Tuesday, warning that the Federal Reserve’s insistence on maintaining “emergency setting” on monetary policy as the COVID-19 pandemic recedes and the economy picks up steam “carries bigger risks for the Fed than missing its inflation target by a few decimal points.”

The Fed’s actions are distorting long-term interest rates, at the peril of the economy, they wrote, warning that foreign selling of U.S. Treasurys may reflect doubts about the soundness of current and past policies.

Fed policies have also enabled financial-market excesses, they said, including “today’s high stock-market valuations, the crypto craze, and the frenzy over special-purpose acquisition companies, or SPACs.”

Druckenmiller told CNBC that he remained comfortable with his prediction that the U.S. dollar risked losing its status as a global reserve currency due to flawed policies. Given the lack of alternatives, the dollar’s replacement is likely to be some sort of crypto asset that probably hasn’t been invented yet but would one day overtake bitcoin
BTCUSD,
+1.65%

and ethereum
ETHUSD,
+3.74%
.

Deep Dive: Why the pullback in semiconductor stocks could offer investors a big opportunity

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