“Who knows what these polls even mean. No one even responds to them anymore.”
Stanley Druckenmiller expresses his concerns about the Federal Reserve’s current monetary policy, drawing parallels to his 2021 opinion piece in The Wall Street Journal where he warned the Fed was “playing with fire” due to their commitment to forward guidance. Druckenmiller believes the Fed was trapped by their own guidance in 2021, leading them to buy bonds aggressively even as the economy recovered and inflation rose. He argues that the Fed’s current stance, despite inflation still being above target, is even more concerning due to the asymmetry in their actions and the market conditions.
He believes a blue sweep, where Democrats win both the presidency and the Senate, is unlikely and could negatively impact equities for 3-6 months due to increased taxes and lack of business confidence. A red sweep, where Republicans win both the presidency and the Senate, is more likely and could lead to animal spirits in the business community, deregulation, and a stronger economy for a similar timeframe. However, he warns that a potential bad response in the fixed income markets could snuff out the equity rally. Druckenmiller also mentions his personal views on the election, expressing that he wouldn’t vote for either Kamala Harris or Donald Trump and finding their industrial policy beliefs concerning.
“The 10 year should trade around where nominal GDP is which is 5.5% so the risk reward to me is being short bonds.”