A big hedge fund event, the Ira Sohn Investment Conference, is happening today. At the event, industry luminaries present their favourite investment ideas, and often deliver some kind of macro thesis.
One big theme: Bernanke hate.
A lot of the big guys HATE him.
Stanley Druckenmiller calls current Fed policy totally outrageous and inappropriate!
Paul Singer says the Fed is creating class warfare!
They’re not alone. If you listen to a lot of old industry veterans, you’ll hear a lot of grousing about Bernanke and QE and all that jazz. Basically, they sound like your typical comments section on a blog.
We talked to trader Mark Dow who sent us his thoughts on the matter.
Some guys don’t understand monetary policy and think he’s doing wrong thing.
Others think it’s immoral aren’t let to clear (meaning, collapse to a point where someone will swoop in and just by). Others are pissed because they missed rally so they blame Bernanke as the exogenous factor that made them wrong. Like “if not for this STUPID policy I’d be making money.”
None of those decisively get at the matter.
Via email, Princeton economist Paul Krugman tells BI:
I don’t really know, although at some level I’m not surprised: finance types just hate, hate easy money policies, although you would think that these policies are often good for their bottom lines. I do wonder in this case whether there’s extra hatred of Bernanke because he keeps proving them wrong: they keep predicting terrible things from QE, runaway inflation, and all that,and instead the bearded academic stuff keeps turning out right.
So it seems to be a combination of things.
Hedge funds are doing badly in this rising-tide-lifts-all-boats market, and they feel that they would be outperforming if the Fed just let things collapse, and they could swoop in when prices “clear.”
The inflation and hyperinflation fantasies are another important aspect here. A lot of these guys cut their teeth during the 80s, when inflation was the enemy, and Volcker was a hero for fighting it. Thus being anti-inflation is kind of a nostalgia trip for them. Also in general, the older people are, the more worried they are about inflation. Also the older people are, the more they are inclined to invest in bonds and risk-free assets, so low rates aren’t fun.