Billionaire Goes Bullish on Trump
Billionaire investor and Quantum Fund alumni Stanley Druckenmiller appeared on CNBC on Thursday, arguing that stocks could skyrocket during a Trump presidency.
In a sharp turn from his comments earlier this year, Druckenmiller issued a range of calls which sum up to a bullish position on the U.S. economy. (Source: “Billionaire Druckenmiller says he’s ‘quite, quite optimistic,’ betting on economic growth,” CNBC, November 10, 2016.)
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For instance, the founder and former chairman of Duquesne Capital says he is shorting bonds and going long on stocks and the U.S. dollar.
But his biggest surprise came in the commodity space. While speaking in a “Squawk Box” interview, Druckenmiller said, “I sold all my gold on the night of the election.”
Some may have thought he was foolish, since gold prices surged the day after the election, but those gains were washed away on Thursday morning. Trump’s inclusive acceptance speech and cordial meeting with outgoing President Barack Obama provided the kind of stability that markets are so fond of.
Moreover, this kind of stability puts the U.S. economy back on track for higher interest rates. The Federal Reserve will only raise interest rates if economic growth stays upbeat and a Trump presidency assures that kind of growth, says Druckenmiller.
Although he doesn’t think “Donald Trump is Ronald Reagan,” the billionaire investor is confident that Trump can pass tax reforms and repeal onerous legislation that weigh down the U.S. economy.
“I hope economic policy is deferred to Mike Pence and Paul Ryan,” he said, referring to the vice president-elect and the speaker of the House. Ryan is a staunch economic libertarian who believes in smaller government and less regulation, so those are likely to be priorities for the new Congress.
Moreover, Druckenmiller thinks the country is ready for reconstruction after such a bitter election.“It’s as hopeful as I’ve been in a long time,” he said, adding, “I would not be surprised if we’re not looking at the peak of the divisiveness.”
Having Americans come together to end an unprecedented era of partisanship could allow for more compromise in Washington. Considering that Democrats still have the ability to filibuster in the Senate, compromise is the only way of getting anything done, so it is necessary.
Druckenmiller is betting on the U.S. dollar and equities because he says that a Trump victory edges the country toward greater harmony in the long term but, more importantly, because it does not sway the Fed from raising interest rates in the near term.
