- American billionaire Stanley Druckenmiller is betting that the US dollar will weaken, and expects a Democratic ‘blue wave’ this election to be a long-term drag on stocks, Bloomberg reported.
- At a virtual conference on Tuesday, the hedge-fund manager said higher taxes and inflation will hurt equities in the coming years.
- “We have borrowed so much that I’m sceptical that three to five years out that equities will give us any kind of return,” Druckenmiller said at the Robin Hood Investors Conference.
- He expects retail investors to put their money in beaten-down stocks in the travel industry, including airlines and cruise lines, in the first quarter, while technology stocks will pare some recent gains.
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Billionaire investor Stanley Druckenmiller is said to be shorting the US dollar, and he believes a Democratic sweep in the upcoming election could hurt stocks in the long-term, a Bloomberg report said.
“We have borrowed so much that I’m sceptical that three to five years out that equities will give us any kind of return,” Bloomberg reported Druckenmiller saying at the virtual Robin Hood Investors Conference on Tuesday.
He said the prospect of higher taxes and inflation will weaken equities in the coming years.
Druckenmiller, whose net worth is around $US5.8 billion, told some conference attendees that he was shorting the US dollar, as US Treasuries have seen record amounts of overseas selling in the past few months, Bloomberg said, citing sources.
If a successful COVID-19 vaccine and fiscal stimulus boost is delivered, some stocks should perform better in the next few months, he said.
Druckenmiller’s Duquesne Family Office portfolio saw an over 30% jump in the second quarter this year. He suggested that now, there is hope for unloved stocks, such as airlines and cruise lines.
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Retail investors will snap up travel industry stocks in the first quarter, and could trim some of their holdings of technology stocks, which got a boost earlier this year from the mass-shift towards remote working, he said.
Democratic nominee Joe Biden still has a healthy lead over President Donald Trump nationally, and is ahead by about 9 percentage points.FiveThirtyEight’s polling average has Biden up 9.2 points. Polls have tightened slightly this week in Pennsylvania, one of the most crucial states for both Trump and Biden.
Druckenmiller foresees that in the next four years, inflation will top 4%, gold prices and bond yields will rise, while the US unemployment rate will fall only gradually, to 7% from 7.9% currently. He also expects that as inflation rises, any increase in interest rates by the US central bank won’t be quick.