Stanley Druckenmiller is a billionaire hedge fund investor. On June7, 2019, he remarked that adding up corporate debt would put US in a critical position in the time of recession. He also thinks that Fed should have increased the rates back during 2016 when they had an opportunity. But, they did not. And that led the corporate cost to take a huge shape of $10 trillion. Currently, Fed is also left with less power to fight back this economic condition.
He also said that things have taken worse shape at the moment than the situation when things would have slowed down. According to him, the then Fed Chair Janet, Yellen had caused the biggest problem. At that point the economy was going smooth, if not great. Fed should have tried at least to get 3.5 or 4, but they did not. They should have better sneaked in one or more times in order to keep checking until they reached a standard rate. However, they decided not to do that as well. Druckenmiller also said that Jerome Powell when he took the chair, it was already in a sensitive position. And when confidence gets down, it gets even more difficult. Powell has right now inherited a very tough situation.
He talked about the importance of hurtle rate for investment in a capitalist society. The rate needs to be up by 3.5% to 4%. Otherwise, people, investors, corporations etc are all going to turn crazy. Powell has declared during previous month that corporate debt has reached its height and causing threat to financial system. Druckenmiller commented that he is in doubt regarding the market’s graph. The Dow Jones Industrial Average was decided to open at approximately 100 points.
Druckenmiller is the previous President and Chairman of Duquesne Capital and presently Duquesne Family House’ CEO.