Druckenmiller new 2022

[tede02]

 

Good discussion with Druck. I always learn something.

 

Edited October 21, 2022 by tede02

[changegonnacome]

Thanks for sharing - had only seen clips.

 

Nice to see Stan pretty consistent with how I think about things moving forward.....the inflation genie is out of the bottle......and its devilishly hard to put back in without serious economic pain.....and the 5yr/5yr forward @ 2.3% doesn't mean jack when various labor union's step into the room to do a pay deal

[Libs]

He makes good points. The thought that nags me: Can we really unwind the distortions created by 14 years of interest rate suppression, in less than a year? There's got to be more payback than this. 

[crs223]

53 minutes ago, Libs said:

He makes good points. The thought that nags me: Can we really unwind the distortions created by 14 years of interest rate suppression, in less than a year? There's got to be more payback than this. 

 

How it plays out:

 

1. Fed jawbones about fighting inflation and raises the fed funds rate.

 

2. If/when a financial market breaks* (e.g. corporate bond market) the federal reserve will intervene with a pioneering new program**
 

3. If a social regime breaks (e.g. students unhappy), congress will intervene with a pioneering new program***

 

4. Nobel prizes for the pioneering programs
 

* financial break = fair market price for “systemically important”instrument is “too low”

 

** fed pioneering program = print money buy up assets that are allegedly too cheap

 

*** congress pioneering program = borrow money and give it to the panicked group/industries

Edited October 22, 2022 by crs223

[scorpioncapital]

something seems to have fundamentally changed. we just can't go back..if anything, maybe the currency is sacrificed. Inflation works by eroding purchasing power. Notice what every governmenet is doing. They are closing all the gates. Even in arb they sew uncertainity from certain profits. they want everyone to have their purchasng power cut by inflation.  If their is an outlet they will kill it. I think they go to some soft capital controls. Once all this is done, the pain is shared by financial repression where rates rise but not enough to counter inflation.  Governments have only one thing they can steal - your time. Everything is time arbitrage. it's infuriating for us short-lived ants )

 

[SharperDingaan]

Different take ....

 

The ranks of the retired are rapidly swelling, the % of portfolios in fixed income is rising, and if those 'retiree's' are not going to be sucking on the public purse - they need higher coupon rates on their bonds, and age friendly part-time employment. Rates back to historic norms (or higher), higher minimum wage, gig worker coverage in benefit plans and pensions, etc. Widespread change versus the current arrangement; those old folks vote, there are a lot of them, and if you want to get elected .... you will do as you are told.

 

We have incredible tech (blockchain, smart contracts, CBDC, etc.) in the wings, waiting to go; but the disruption will be extreme. To implement we need a recession, and economic supports tied into its widespread roll-out. Retiring people early, guaranteed minimum income, retraining dollars, higher minimum wage, new housing tied to minimum wage affordability. Infrastructure rebuild as extensive as that following WWII, fiscal versus monetary policy, and largely domestically financed via higher coupon debt (bought by old folks using the interest to live on!). Less yield chasing in the equities market, and the volatility that goes with it.

 

But .... very different to the monetary policy world that we currently live in, absence of moral suasion, and addiction to the fed 'put' that too many believe is a 'birthright'. Historically the nouveau riche very quickly become the nouveau poor when there is this level of disruption, absent the 'spherical bastards' (Zwicky) who will do well no matter what.  https://www.urbandictionary.com/define.php?term=spherical bastard

 

We would suggest that we're at the beginning of the next industrial revolution, and that implementation has begun.

Great time to be a young person, with practiced 'spherical' skills!

 

May we all do well.

 

SD

  

Edited October 22, 2022 by SharperDingaan