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According to a well-known billionaire, the government is taking steps that will bring about a super crash. What does he…

Jamie Cameron
12. 10. 2022
4 min read

Well-known personalities of the investment world quite often blame the bad situation on the macroeconomic situation and general world developments. But this time, the legendary Stanley Druckenmiller pointed the finger at a specific culprit!

Stanley Druckenmiller criticizes the government's actions

Billionaire Stanley Druckenmiller has said that he believes the Federal Reserve' s tightening of monetary policy may plunge the United States into a bigger recession than expected next year .

Speaking at the Delivering Alpha conference hosted by CNBC television in New York, Druckenmiller, founder of the Duquesne family office that manages his wealth, said he "would be stunned" if the Fed's monetary tightening did not result in a U.S. recession in 2023.

https://www.youtube.com/watch?v=T1s7O40DDBQ

"Primarily we expect a hard landing by the end of '23," Druckenmiller said. "I won't be surprised if there is a larger than average so-called 'garden variety' recession."

What he meant by that is that this recession could be completely outside any normal framework. Does he then assume something like Burry's famous MOAC - Mother of All Crashes? 🤔

The Fed has raised interest rates by 300 basis points this year as it battles the worst inflation in decades, and policymakers have signaled another jump in rates, rocking bonds and sending US stocks into a bear market.

"Zero to a hundred" might be what one might call the Fed's actions. Source

This chart illustrates the Fed's behavior that Druckenmiller has been criticizing for some time. I wrote more about it in this article:

Don't invest, don't give a damn. Nothing will happen for 10 years now, discourages investment by well-known billionaire

In a nutshell, he said this:

The Federal Reserve has made four interest rate hikes so far this year and is likely to raise them further to tame inflation. It looks like the next hike will be another 75 points.

"They're going from extreme to extreme. First brutal money printing and then the brakes stepped on (in the form of extreme tightening)"

Druckenmiller also criticized British politicians after the country's mini-budget marked an unfunded 45 billion pounds ($48 billion) worth of tax cuts, sparking volatility in the pound and British bonds last week before the Bank of England stepped in to calm markets.

Such sharp swings in currencies are not common

Stanley Druckenmiller's actions

Of course, it's nice when a well-known name warns. More importantly, however, is whether he is also taking action himself in response to his statements. As I wrote above - the management of Stanley Druckenmiller's assets is in the hands of the family office, which is in charge of a huge estate.

The firm divested itself of stakes in big tech companies last quarter, precisely because the billionaire warned that the US was heading for a recession and stocks were stuck in a bear market.

https://www.youtube.com/watch?v=ELlmZ7WAMgU&t=1s

Duquesne Family Office sold its entire $199 million stake in Amazon $AMZN-0.2% in Q2 and divested more than a quarter of its shares in Microsoft $MSFT+0.7%, according to a report released by the Securities and Exchange Commission.

The firm took a similarly bearish stance on big tech in the first quarter, when it divested its $274 million stake in Alphabet $GOOG+0.7%.

Do they have a similar attitude to Burry? That is, that much of the company is still illogically overpriced and it's time to leave the party early?

These 218 companies supposedly have no chance of surviving. Burry unveils list of doomed companies

Druckenmiller has managed his personal wealth through his family office since closing his hedge fund, Duquesne Capital, in 2010. The former lead portfolio manager of George Soros's Quantum fund has a net worth of $10.1 billion, according to Bloomberg's billionaires index .

The well-known investor's fortune is expected to reach $10.1 billion. Source

The investing legend has made his pessimistic investment thesis several times this year. In June, he said it was likely that the bear market in stocks was already six months old and still had a long way to go. And apparently he still maintains his view.

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Disclaimer: This is in no way an investment recommendation. This is purely my summary and analysis based on data from the internet and a few other analyses. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.

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