Druckenmiller: `I’ve Been Really Wrong on Bonds’

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Sept. 11 (Bloomberg) –- Duquesne Capital Management Founder and Former CEO Stanley Druckenmiller discusses how he anticipated the decline in the bond market, but didn’t expect it to happen while the economy was softening. He speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Stan, here's a question for you.

Your george soros former business partner and you were together for many years.

A couple of years he tell me hedge funds can be very destructive to economies in particular because they're looking for weak points.

Now that he is not speculating any longer, he is on the side of the angels.

What is your view on hedge funds?

Are they a force for good or evil?

I would say they are neither.

I'm surprised george said that.

I'm sorry i missed that show.

What i would say, and because george is more in the macro world, is that specifically, he's probably talking about currencies.

I would think that is the best example.

I have made some currency bets and if you don't have the fundamentals with you him a they're not right, you may win for little while, but you're going to lose.

I will always believe you brought up the risk around -- you're talking about the aussie dollar.

At that was a good event for britain.

On the other hand, -- why, because it hasten the inevitable?

Because they were linked to the german economy, which had just done reification.

They were exploding.

Britain had a housing problem.

Interest rates were too high.

You could not have had two more dissimilar economies and they should not have been linked.

What happened when they broke the pound, they were freed up to follow in interest-rate policy that was consistent with their own country's needs.

In fact, not to be an apologist, but that came to be known as white wednesday a year later as opposed to black wednesday.

The stock market went crazy.

The british economy recovered.

On the other hand, i have made some bets that have been dead wrong and the market punished me.

I want to go back to qe.

If you think about what asset classes been manipulated most because of it, would you say stocks or bonds?

I would say stocks.

I have been really wrong on the bond market in the last three or four months.


I have been waiting for this decline for two years and completely missed it.

First of all, the stuff we were talking about earlier in the show, that is too far down the road, my opinion, for the bond market to pay attention.

I have always found in bonds, if you can predict a relative change in the economy, relative to consensus, you will make money in bonds if you get that equation right.

Even in a world of qe.


In two or three months ago, i thought people were overly optimistic on the u.s. economy.

It is my judgment that assessment turned out to be correct.

But bonds went down anyway for not economic reasons because we have the unwind going on.

For whatever reason, while i anticipated down the road, i did not think he would happen while the economy was softening.

Are you concerned we're not quite a be focused on the economy again or at least those in d.c. because we have serious to focus on?

I think we will always be focused on the economy.

I am a little concerned that the fed chairmanship could be hung up.

It has become a complete circus.

You have economists and politicians and newspaper people pining on it.

My god, obama should just go in the rose garden and appoint whoever he wants to appoint.

That is his privilege.

And his job.


We will be back in a couple of

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