Brendan McDermid/Reuters
- Stanley Druckenmiller shared his grave concerns about US government debt, stocks, and the economy.
- The billionaire investor said he's betting heavily on 2-year Treasuries, while shorting 30-year bonds.
- Druckenmiller said he owns gold but should probably hold some bitcoin too.
Stanley Druckenmiller has sounded the alarm on America's spiraling debt, warned an economic disaster is looming, and issued a bleak outlook for stocks.
The billionaire investor and head of Duquesne Family Office also disclosed a huge bet on short-term Treasuries, and touted gold and bitcoin as solid bets, during a fireside chat at a recent Robin Hood Foundation event.
Here are Druckenmiller's 10 best quotes, lightly edited for length and clarity:
1. "I guess because we're the reserve currency and for now you can get away with it, we're still spending. The first thing my father taught me is, 'When you're in a ditch, stop digging.' Well, we're still digging." (Druckenmiller was bemoaning the historic amounts of government spending in recent years.)
2. "I think we're already in it. The bond move has already started, and if you're talking about a riot, that could certainly happen from here." (He was responding to elite trader Paul Tudor Jones's suggestion that the bond market could "absolutely riot" once it looks like either Donald Trump or Joe Biden will be reelected.)
3. "Legacy liquidity after the Fed and Congress did their thing in Covid, that's running down rapidly. QE is running down rapidly. Oil, interest rates are up. It all targets toward this has been an ephemeral period when at least the equity market and the economy has ignored stuff. Looking out, particularly in 2025 but maybe in 2024, you have to be open-minded to something breaking."
4. "The stimulus the Biden admin has done is obviously very targeted, most of it toward green economy, the IRA, subsidies and tax breaks. That will create opportunities in the stock market. There's a big thing going on in AI, that will probably create opportunities in the stock market. But that very stimulus puts pressure on rates, which will cause all kinds of other things within the stock market to break."
5. "We had a bubble, we had a QE period for 10 years, and we need to make an adjustment fundamentally and pricewise. 15 times earnings was about right, we're at 20 times earnings. I don't know what we're doing at 20 times earnings." (Druckenmiller was saying the overall stock market is overpriced and valuations will retreat to historic norms.)
6. "You have the fiscal recklessness problem, you have supply-chain problems, you have the worst geopolitical situation I've seen in my lifetime. For the first time, it's a very low probability, but you've got to put the outcome of world war on the table." (He was underscoring how worrying the economic backdrop is today.)
7. "The economic outlook I have is something's going to break. The anecdotal has turned. Oil, interest rates, and the dollar up has never been good for the economy."
8. "I'm now worried about the actual economy. About two to three weeks ago, I started to get really nervous about something breaking. I bought a massive leveraged position in 2-years, so I'm now long a lot of 2-years, and I'm short 30-years." (Druckenmiller is betting heavily on short-dated Treasuries, but betting against long-term bonds.)
9. "Powell talks a good game, but let's see what kind of game he talks if unemployment's 4.5% and going north." (He was referring to the Federal Reserve's chair, Jerome Powell.)
10. "I'm 70 years old, I own gold. I was surprised that bitcoin got going, but it's clear that the young people look at it as a store of value because it's a lot easier to do stuff with. 17 years to me, it's a brand. I like gold because it's a 5,000-year-old brand. I like them both. I don't own any bitcoin to be frank, but I should."