1 00:00:02,400 --> 00:00:07,960 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Now we want to 2 00:00:08,000 --> 00:00:09,799 Speaker 1: turn to that big interview that we had promised you. 3 00:00:09,920 --> 00:00:13,640 Speaker 1: I want to welcome in our Bloomberg television and radio 4 00:00:13,720 --> 00:00:16,680 Speaker 1: audiences to the special episode of Bloomberg Markets seated here 5 00:00:16,680 --> 00:00:19,440 Speaker 1: with an exclusive interview with chair and CEO of Duquine 6 00:00:19,440 --> 00:00:25,320 Speaker 1: Family Office, billionaire investor Stanley Drackenmiller. Now, stan In twenty 7 00:00:25,360 --> 00:00:27,640 Speaker 1: twenty one, you had written an opinion paper in the 8 00:00:27,640 --> 00:00:30,480 Speaker 1: Wall Street Journal that said the FED is playing with fire, 9 00:00:31,000 --> 00:00:33,199 Speaker 1: and a couple of weeks ago you wrote to me 10 00:00:33,280 --> 00:00:35,120 Speaker 1: and you said that you hope that the FED is 11 00:00:35,159 --> 00:00:38,080 Speaker 1: not making the same mistake that it had made in 12 00:00:38,159 --> 00:00:41,720 Speaker 1: twenty twenty one, the mistake of being trapped by forward guidance. 13 00:00:42,000 --> 00:00:44,040 Speaker 1: What's at steak here? Why are you so concerned? 14 00:00:45,280 --> 00:00:51,040 Speaker 2: Thanks, Chanel, It's nice to be here. In twenty twenty one, 15 00:00:51,400 --> 00:00:55,160 Speaker 2: I think the FED did a great job. When we 16 00:00:55,200 --> 00:00:58,080 Speaker 2: were facing a black hole in COVID in twenty twenty, 17 00:00:59,160 --> 00:01:03,000 Speaker 2: they took some very aggressive actions. One of those actions 18 00:01:03,120 --> 00:01:07,000 Speaker 2: was for a guidance where they to try and settle 19 00:01:07,040 --> 00:01:10,679 Speaker 2: markets guided ahead to basically a zero interest rate policy. 20 00:01:11,240 --> 00:01:15,320 Speaker 2: I think it's was frankly for three years. We were 21 00:01:15,360 --> 00:01:18,720 Speaker 2: all fooled by COVID. I was too when when it 22 00:01:18,760 --> 00:01:22,119 Speaker 2: first happened, We're wondering, you know, are we sinking into 23 00:01:22,120 --> 00:01:26,039 Speaker 2: a black hole? But it was pretty obvious I'd say 24 00:01:26,480 --> 00:01:29,360 Speaker 2: a month or two after vaccine confirmation, which was the 25 00:01:29,400 --> 00:01:33,160 Speaker 2: fall of twenty that we weren't going into a black hole. Unemployment, 26 00:01:33,160 --> 00:01:36,160 Speaker 2: which I think had been around fourteen percent, started to 27 00:01:36,280 --> 00:01:41,040 Speaker 2: drop precipitously the economy came back. We wrote the article 28 00:01:41,200 --> 00:01:45,440 Speaker 2: in the spring of twenty one because at this point 29 00:01:45,560 --> 00:01:48,280 Speaker 2: we felt we were like booming, and it was. It 30 00:01:48,320 --> 00:01:51,040 Speaker 2: was everywhere in the economy and the companies we talked 31 00:01:51,040 --> 00:01:56,600 Speaker 2: to in unemployment rate everywhere, and the FED wasn't adjusting, 32 00:01:56,760 --> 00:01:58,760 Speaker 2: so they were buying I think one hundred and twenty 33 00:01:58,800 --> 00:02:00,960 Speaker 2: billion a month. It's secure. It might have been down 34 00:02:01,000 --> 00:02:03,640 Speaker 2: to ninety five a month by that time period and 35 00:02:03,760 --> 00:02:07,920 Speaker 2: rates were still zero. And I think had they had 36 00:02:07,960 --> 00:02:11,160 Speaker 2: a clean slate, they would have never have been buying 37 00:02:11,200 --> 00:02:13,280 Speaker 2: bonds to that degree with what was going on in 38 00:02:13,320 --> 00:02:17,320 Speaker 2: the economy. But they were trapped, in my opinion, by 39 00:02:17,360 --> 00:02:21,200 Speaker 2: forward guidance. It's pretty incredible from the point we wrote 40 00:02:21,240 --> 00:02:24,119 Speaker 2: the article when it was so obvious that we even 41 00:02:24,160 --> 00:02:29,280 Speaker 2: wrote about it. It was thirteen months from when inflation 42 00:02:29,400 --> 00:02:32,840 Speaker 2: went through two percent to when they finally raised drates. 43 00:02:33,160 --> 00:02:36,000 Speaker 2: They also bought two trillion in bonds during that period. 44 00:02:37,440 --> 00:02:42,760 Speaker 2: So I guess the reason I analogized that today, and 45 00:02:43,000 --> 00:02:46,359 Speaker 2: it's quite different. I had a lot of confidence than 46 00:02:46,360 --> 00:02:48,560 Speaker 2: that they were wrong on inflation. The money supply was 47 00:02:48,600 --> 00:02:51,280 Speaker 2: growing at forty percent, as I said, the economy was booming. 48 00:02:51,919 --> 00:02:57,959 Speaker 2: This one's much more nuanced. However, just look at the 49 00:02:58,000 --> 00:03:04,200 Speaker 2: asymmetry here. Back then, you go thirteen months with inflation through, 50 00:03:04,200 --> 00:03:06,720 Speaker 2: the target goes up to eight and a half percent, 51 00:03:06,760 --> 00:03:08,960 Speaker 2: and you still going, oh the three months, and you're 52 00:03:09,040 --> 00:03:12,480 Speaker 2: keeping rates at zero, and you're buying bonds like crazy, 53 00:03:13,360 --> 00:03:17,519 Speaker 2: and then when you finally move, you move twenty five 54 00:03:17,560 --> 00:03:21,520 Speaker 2: basis points. And your rationale is we need to see 55 00:03:21,520 --> 00:03:24,079 Speaker 2: the whites of inflation's eyes. And you're saying, this one 56 00:03:24,160 --> 00:03:28,560 Speaker 2: is three or four five percent, Okay, Today we're still 57 00:03:28,639 --> 00:03:31,200 Speaker 2: quite a bit above target, depending on which measure you use, 58 00:03:31,280 --> 00:03:33,519 Speaker 2: somewhere between two and a half and three and a quarter. 59 00:03:35,080 --> 00:03:39,440 Speaker 2: The economy. They've come up with this. I guess theory 60 00:03:39,520 --> 00:03:43,760 Speaker 2: that monetary policy is restrictive because of real inflation rates. 61 00:03:44,040 --> 00:03:49,240 Speaker 2: But I don't really go buy theory. I'm a market animal. Frankly, 62 00:03:49,320 --> 00:03:52,480 Speaker 2: We've found over the years that markets are better predictors 63 00:03:52,560 --> 00:03:58,920 Speaker 2: than professors. And when look at the landscape, equities that 64 00:03:58,960 --> 00:04:03,840 Speaker 2: are record high, goal at a record high GDP, above trend, 65 00:04:04,440 --> 00:04:11,200 Speaker 2: credit tight, bank earnings and forecasts look good, we don't 66 00:04:11,240 --> 00:04:15,640 Speaker 2: see any restriction whatsoever. Crypto going crazy, you name it. So, 67 00:04:15,880 --> 00:04:18,480 Speaker 2: all of a sudden, the crowd that said they wanted 68 00:04:18,520 --> 00:04:21,880 Speaker 2: to see the whites of inflation's eyes and they wanted 69 00:04:21,920 --> 00:04:25,080 Speaker 2: to be data dependent as opposed to forward looking, are 70 00:04:25,080 --> 00:04:27,919 Speaker 2: now cutting fifty basis points, not a quarter, which is 71 00:04:27,960 --> 00:04:30,920 Speaker 2: what they started of, and we're not even to target yet. 72 00:04:31,560 --> 00:04:35,920 Speaker 2: And this is all on the theory that monetary policy 73 00:04:36,000 --> 00:04:40,080 Speaker 2: is restrictive. So what I would say is this, I 74 00:04:40,120 --> 00:04:43,240 Speaker 2: don't have the conviction I had in twenty one that 75 00:04:43,279 --> 00:04:45,160 Speaker 2: we wrote that article that the FED is going to 76 00:04:45,240 --> 00:04:49,000 Speaker 2: be wrong, but on a risk reward basis, I just doesn't. 77 00:04:49,160 --> 00:04:52,480 Speaker 2: I don't think it makes any sense at all to 78 00:04:52,600 --> 00:04:56,680 Speaker 2: lay out the cards they've laid out and commit themselves 79 00:04:57,080 --> 00:04:59,760 Speaker 2: through forward guidance once again. And what I was trying 80 00:04:59,800 --> 00:05:03,520 Speaker 2: to say when I was saying it reminds me of 81 00:05:03,560 --> 00:05:07,320 Speaker 2: twenty one. Is I just hope if the data don't 82 00:05:07,360 --> 00:05:10,960 Speaker 2: go with them, and they certainly haven't since they sorted 83 00:05:11,000 --> 00:05:14,279 Speaker 2: this narrative, they adjust this time and they're not trapped 84 00:05:14,320 --> 00:05:16,680 Speaker 2: by the four guidance the way they were in twenty one. 85 00:05:16,960 --> 00:05:20,640 Speaker 1: Listen, does this mean that you thought fifty basis points 86 00:05:20,720 --> 00:05:23,040 Speaker 1: was an absolute mistake? And do you think that there 87 00:05:23,200 --> 00:05:25,760 Speaker 1: is a risk of an inflationary spike in the way 88 00:05:25,880 --> 00:05:27,440 Speaker 1: we saw in the nineteen seventies? 89 00:05:28,480 --> 00:05:31,159 Speaker 2: Yeah, do you have the chart we talked about earlier? 90 00:05:31,279 --> 00:05:32,760 Speaker 1: It see if we can pull that up. There's certainly 91 00:05:32,839 --> 00:05:34,440 Speaker 1: one that investors have been looking at. 92 00:05:34,520 --> 00:05:37,160 Speaker 2: And while you so, even if we don't have the chart. So, 93 00:05:37,920 --> 00:05:41,960 Speaker 2: in the nineteen seventies, inflation came down from a remarkably 94 00:05:42,000 --> 00:05:44,240 Speaker 2: similar level to where it was in twenty one. I 95 00:05:44,279 --> 00:05:46,560 Speaker 2: think twenty one peaked at nine. I think it was eight. 96 00:05:46,720 --> 00:05:50,200 Speaker 2: Back in the seventies, they came down to three. The 97 00:05:50,240 --> 00:05:53,560 Speaker 2: FED was easing because they had the seventy five or session, 98 00:05:54,279 --> 00:05:57,480 Speaker 2: so the FED started using and inflation went right back 99 00:05:57,560 --> 00:06:00,840 Speaker 2: up to I think it peaked at twelve percent when 100 00:06:00,880 --> 00:06:04,200 Speaker 2: Voker came in and smashed it I'm not predicting that, 101 00:06:05,000 --> 00:06:07,680 Speaker 2: but when you're easing into a melt up in financial 102 00:06:07,720 --> 00:06:11,599 Speaker 2: markets and we have the fiscal policy we have going forward, 103 00:06:12,080 --> 00:06:17,279 Speaker 2: it's certainly a risk, and I think it's a mistake 104 00:06:17,520 --> 00:06:20,279 Speaker 2: not to be taking that risk into account. I don't 105 00:06:20,320 --> 00:06:23,479 Speaker 2: really understand the rush of fifty basis points, and I 106 00:06:23,520 --> 00:06:26,760 Speaker 2: think that markets have priced in a ninety seven percent 107 00:06:26,839 --> 00:06:31,560 Speaker 2: cut at the next meeting. That's all through FED guidance. 108 00:06:32,120 --> 00:06:34,800 Speaker 2: It's funny. My friend Jim Grant, who's one of my 109 00:06:34,839 --> 00:06:38,440 Speaker 2: favorite writers, said they're not really data dependent, they're forward 110 00:06:38,440 --> 00:06:42,680 Speaker 2: guidance dependent, and that's what they're showing again. And look, 111 00:06:42,720 --> 00:06:44,680 Speaker 2: he might be right, and I hope he is right, 112 00:06:45,360 --> 00:06:47,880 Speaker 2: but it's a big risk because if in fact they're 113 00:06:47,920 --> 00:06:52,400 Speaker 2: wrong and inflation takes off because monetary policy is in 114 00:06:52,440 --> 00:06:55,400 Speaker 2: fact not restrictive and we have fiscal expansion going on 115 00:06:55,960 --> 00:06:59,599 Speaker 2: and they have to tighten again, I think it could 116 00:06:59,600 --> 00:07:01,919 Speaker 2: be a night for markets and maybe even for the 117 00:07:01,960 --> 00:07:06,960 Speaker 2: independence of the FED. You can't you can't make multiple 118 00:07:07,000 --> 00:07:10,800 Speaker 2: mistakes that that would have been. But I'm not predicting. 119 00:07:10,960 --> 00:07:13,200 Speaker 2: I'm just saying, why did they go fifty and why 120 00:07:13,200 --> 00:07:14,840 Speaker 2: do they need this forward guidance. 121 00:07:15,240 --> 00:07:17,480 Speaker 1: You know, I'm glad you brought up the FED independence. 122 00:07:17,520 --> 00:07:20,160 Speaker 1: I wanted your view on this. Are you concerned about 123 00:07:20,200 --> 00:07:23,000 Speaker 1: the independence in the scenario of a Donald Trump win. 124 00:07:23,200 --> 00:07:26,040 Speaker 1: In an interview just a day ago with Bloomberg editor 125 00:07:26,080 --> 00:07:28,960 Speaker 1: in chief John Mickldwaite, he said that the job at 126 00:07:29,040 --> 00:07:30,760 Speaker 1: the FED is to show up in the office once 127 00:07:30,760 --> 00:07:33,440 Speaker 1: a month and say, let's slip a coin. On the 128 00:07:33,480 --> 00:07:37,000 Speaker 1: other hand, your longtime colleague Scott Bessant has been informally 129 00:07:37,040 --> 00:07:40,080 Speaker 1: advising Trump and floated the idea of a shadow FED chair. 130 00:07:40,600 --> 00:07:43,600 Speaker 1: How compromise is FED independence at this juncture? 131 00:07:45,040 --> 00:07:47,200 Speaker 2: Well, I think is shadow fed and this kind of 132 00:07:47,240 --> 00:07:52,320 Speaker 2: talk is a horrible idea and irresponsible. However, I think 133 00:07:52,640 --> 00:07:57,080 Speaker 2: where Trump to be elected, the institution will hold. I 134 00:07:57,120 --> 00:08:01,000 Speaker 2: think a bigger threat to the FED would be major, 135 00:08:01,080 --> 00:08:04,320 Speaker 2: major mistakes by the FED. I think the FED is 136 00:08:04,360 --> 00:08:09,160 Speaker 2: obsessed with soft landings and fine tuning. To me, that's 137 00:08:09,200 --> 00:08:11,480 Speaker 2: not the real job. The real job is to avoid 138 00:08:11,520 --> 00:08:14,800 Speaker 2: the kind of problems we had with a great financial crisis, 139 00:08:14,840 --> 00:08:16,960 Speaker 2: which in my opinion was because the FED was too 140 00:08:17,000 --> 00:08:19,960 Speaker 2: easy going into them create a housing bubble, and then 141 00:08:20,000 --> 00:08:24,440 Speaker 2: obviously after COVID, not the initial actions, but sticking with 142 00:08:24,520 --> 00:08:26,160 Speaker 2: it for a year and a half, for two years 143 00:08:26,720 --> 00:08:32,920 Speaker 2: buying bonds with the money supply exploding. To me, they've 144 00:08:32,920 --> 00:08:35,280 Speaker 2: got to stop the fine tuning and start looking at 145 00:08:35,280 --> 00:08:40,120 Speaker 2: the bigger picture and committing yourselves now and then. If 146 00:08:40,160 --> 00:08:42,680 Speaker 2: they stick to for a guidance and inflation starts going 147 00:08:42,760 --> 00:08:45,560 Speaker 2: up again, that could lead to a hard landing, not 148 00:08:45,640 --> 00:08:46,520 Speaker 2: a soft landing. 149 00:08:47,720 --> 00:08:51,240 Speaker 1: Speaking of the future, of course, another big uncertainty A 150 00:08:51,240 --> 00:08:55,040 Speaker 1: had beyond federal reserve policies in November election. I'm wondering 151 00:08:55,080 --> 00:08:58,360 Speaker 1: what the Drug and Miller playbook is around this election cycle, 152 00:08:58,480 --> 00:09:01,200 Speaker 1: and what you think the most likely scenario is, and 153 00:09:01,240 --> 00:09:02,400 Speaker 1: how you set up for it. 154 00:09:03,840 --> 00:09:08,680 Speaker 2: Well, it's an evolving situation. I if you had asked 155 00:09:08,720 --> 00:09:10,920 Speaker 2: me this twelve days ago, I would have said, I 156 00:09:10,960 --> 00:09:13,360 Speaker 2: don't have a clue. It's in a total cass up. 157 00:09:13,960 --> 00:09:17,480 Speaker 2: I still don't have conviction who's gonna win on the election. 158 00:09:18,120 --> 00:09:21,640 Speaker 2: But as I said earlier, I like market indicators for 159 00:09:21,720 --> 00:09:25,400 Speaker 2: the economy and for financial restrictiveness. I also liked them 160 00:09:25,440 --> 00:09:28,360 Speaker 2: for elections. I remember how right the market was on 161 00:09:28,480 --> 00:09:31,160 Speaker 2: Ronald Reagan in nineteen eighty despite what the pundits were 162 00:09:31,200 --> 00:09:34,560 Speaker 2: saying and I must say, in the last twelve days, 163 00:09:35,360 --> 00:09:39,440 Speaker 2: the market and the inside of the market is very 164 00:09:39,480 --> 00:09:41,960 Speaker 2: convinced Trump is going to win. You can see it 165 00:09:41,960 --> 00:09:44,160 Speaker 2: in the bank stocks, you can see it in crypto, 166 00:09:44,880 --> 00:09:48,520 Speaker 2: you can even see it in DJT, his social media company. 167 00:09:48,559 --> 00:09:52,600 Speaker 2: But throughout the whole, I would say, the industries that 168 00:09:52,640 --> 00:09:56,480 Speaker 2: are deregulated, I, if we had deregulations, will benefit tru 169 00:09:56,640 --> 00:10:01,800 Speaker 2: from Trump or outperform the others. So if you put 170 00:10:01,800 --> 00:10:03,800 Speaker 2: a gun to my head, and thank god, there's not 171 00:10:03,840 --> 00:10:06,480 Speaker 2: one in my head, so this really doesn't matter, I 172 00:10:06,480 --> 00:10:10,720 Speaker 2: would say that I would have to guess Trump is 173 00:10:10,720 --> 00:10:13,160 Speaker 2: the favorite to win the election now, but who knows 174 00:10:13,160 --> 00:10:15,520 Speaker 2: what these polls even mey no when he even responds 175 00:10:15,559 --> 00:10:19,680 Speaker 2: to them anymore. But that's what we're looking at. I 176 00:10:19,720 --> 00:10:26,480 Speaker 2: think the delta between let's say four outcomes blue sweep, 177 00:10:26,960 --> 00:10:33,120 Speaker 2: red sweep, UH, Trump with a with a blue branch 178 00:10:33,160 --> 00:10:36,720 Speaker 2: of Congress, UH, Harris with a red branch of Congress. 179 00:10:38,440 --> 00:10:41,480 Speaker 2: First of all, I think the blue sleep sweep is 180 00:10:41,559 --> 00:10:47,319 Speaker 2: extremely unlikely, even if Harris wins the presidency. UH. Looking 181 00:10:47,360 --> 00:10:50,760 Speaker 2: at state by state polls, it it looks like the 182 00:10:50,800 --> 00:10:55,600 Speaker 2: Republicans are going to win the Senate, where you get 183 00:10:55,600 --> 00:10:59,480 Speaker 2: a B blue sweep, I think just the math of 184 00:10:59,559 --> 00:11:07,920 Speaker 2: tax is, business confidence, lack of animal spirits, no change 185 00:11:07,920 --> 00:11:11,280 Speaker 2: in the regulation front. In investors' minds, you could get 186 00:11:11,320 --> 00:11:15,559 Speaker 2: a you would have a rough time for equities, I 187 00:11:15,600 --> 00:11:18,640 Speaker 2: would think for three to six months. I think this 188 00:11:18,679 --> 00:11:21,960 Speaker 2: would probably translate in the economy because equity ownership is 189 00:11:21,960 --> 00:11:25,319 Speaker 2: twenty five percent of financial assets at an all time high. 190 00:11:25,360 --> 00:11:28,679 Speaker 2: That was fifteen percent just not that long ago. So 191 00:11:28,760 --> 00:11:32,680 Speaker 2: that's a blue sweep. But the good news or the 192 00:11:32,720 --> 00:11:35,720 Speaker 2: bad news, depending on how you view life, is I 193 00:11:35,720 --> 00:11:39,360 Speaker 2: think it's highly unlikely. So that playbook is probably going 194 00:11:39,400 --> 00:11:40,200 Speaker 2: to be irrelevant. 195 00:11:40,640 --> 00:11:41,760 Speaker 1: So what about a red sweep? 196 00:11:42,520 --> 00:11:45,480 Speaker 2: A red sweep, which I think is probably more likely 197 00:11:45,600 --> 00:11:50,600 Speaker 2: than a Trump presidency with a with a blue Congress, 198 00:11:51,200 --> 00:11:54,080 Speaker 2: because personally, I think anybody that votes for Trump is 199 00:11:54,080 --> 00:11:58,480 Speaker 2: probably not going to switch their change their ballot for 200 00:11:58,679 --> 00:12:02,640 Speaker 2: a Democrat in Congress. A red sweep, I think you 201 00:12:02,800 --> 00:12:09,319 Speaker 2: get animal spirits in the business community, you'd get deregulation, 202 00:12:11,280 --> 00:12:15,640 Speaker 2: and there might be some sort of uplift relative to 203 00:12:15,640 --> 00:12:18,840 Speaker 2: where they were in terms of the business community. So 204 00:12:18,880 --> 00:12:22,760 Speaker 2: I think the economy could be potentially stronger for three 205 00:12:22,760 --> 00:12:27,920 Speaker 2: to six months. My fear would be because of those reasons, 206 00:12:28,400 --> 00:12:31,920 Speaker 2: and because I think vonnyields already don't reflect a proper 207 00:12:31,960 --> 00:12:35,360 Speaker 2: economic outlook, you will probably get a bad response in 208 00:12:35,400 --> 00:12:39,560 Speaker 2: the fixed income markets, which could then snuff out the 209 00:12:39,600 --> 00:12:43,760 Speaker 2: equity rally. But any of you we have a Ducuane 210 00:12:43,760 --> 00:12:48,280 Speaker 2: family office where we're worried about bonds. We're not playing 211 00:12:48,320 --> 00:12:50,120 Speaker 2: it through the stock market. We're playing it through the 212 00:12:50,120 --> 00:12:52,920 Speaker 2: bond market. If you want to go after the cause 213 00:12:53,840 --> 00:12:56,800 Speaker 2: rather than the sentence, there still look like there's stocks 214 00:12:56,840 --> 00:13:00,920 Speaker 2: and things to do. I also think under a red sweep, 215 00:13:01,640 --> 00:13:04,440 Speaker 2: the FED, for the reasons I just ellucinated and maybe 216 00:13:04,480 --> 00:13:09,319 Speaker 2: because of past relationships, would be much more hawkish than 217 00:13:09,360 --> 00:13:14,120 Speaker 2: they would be under Harris administration. So I think that 218 00:13:14,160 --> 00:13:17,000 Speaker 2: would all be in our playbook and their responses to it. 219 00:13:17,480 --> 00:13:24,200 Speaker 2: Under a Harris administration with a Republican Congress, probably not 220 00:13:24,320 --> 00:13:27,040 Speaker 2: a lot of change from the landscape we currently have 221 00:13:27,160 --> 00:13:29,240 Speaker 2: in terms of trying to figure out what's going to happen. 222 00:13:29,840 --> 00:13:31,640 Speaker 1: I want to remind our viewers if you're just tuning 223 00:13:31,679 --> 00:13:34,000 Speaker 1: in right now, I'm standing by with Stanley Druckenmiller for 224 00:13:34,040 --> 00:13:37,640 Speaker 1: our Bloomberg Television and radio offices. Of course, he leads 225 00:13:37,640 --> 00:13:42,000 Speaker 1: the Duquine family office. And you were talking through each 226 00:13:42,080 --> 00:13:45,120 Speaker 1: scenario here, But what about your personal views here? In 227 00:13:45,160 --> 00:13:48,120 Speaker 1: a recent conference, you had mentioned that you wouldn't vote 228 00:13:48,200 --> 00:13:52,800 Speaker 1: for either Kamala Harris or Donald Trump. Which concerns you more? 229 00:13:58,040 --> 00:14:02,679 Speaker 2: Which concerns are more? I like Bret Stevens's lying in 230 00:14:02,720 --> 00:14:04,760 Speaker 2: the New York Times, I haven't decided who I'm going 231 00:14:04,800 --> 00:14:09,960 Speaker 2: to vote against. I can't see my voting self voting 232 00:14:10,000 --> 00:14:12,120 Speaker 2: for either one of them. So it really doesn't matter 233 00:14:12,280 --> 00:14:15,320 Speaker 2: who concerns you were, And I certainly will never would 234 00:14:15,360 --> 00:14:19,680 Speaker 2: never support either one of them. I just think they're 235 00:14:19,720 --> 00:14:23,680 Speaker 2: actually unified on some things like industrial policy. Both of 236 00:14:23,720 --> 00:14:27,040 Speaker 2: them think apparently the government should have a major role 237 00:14:27,080 --> 00:14:32,680 Speaker 2: in allocating capital, which I find, frankly, Shinali bizarre when 238 00:14:32,720 --> 00:14:38,200 Speaker 2: I think back ten or fifteen years. I'm a reader 239 00:14:38,200 --> 00:14:43,120 Speaker 2: of Tom Friedman and quite a good writer, and he 240 00:14:43,200 --> 00:14:47,360 Speaker 2: was constantly pointing out how the Chinese model was potentially 241 00:14:47,480 --> 00:14:50,560 Speaker 2: superior to the US model, talking about how nice their 242 00:14:50,560 --> 00:14:53,520 Speaker 2: airports were, in their roads, and how they could target 243 00:14:54,080 --> 00:14:59,640 Speaker 2: certain industries. Well, my long capitalist suspicions have been confirmed 244 00:14:59,640 --> 00:15:02,520 Speaker 2: and has been as we all know a disaster with 245 00:15:02,600 --> 00:15:09,240 Speaker 2: that model. But somehow both parties Publican and Democrats have 246 00:15:09,360 --> 00:15:13,720 Speaker 2: adopted industrial policy kind of throwing free market Reagan and 247 00:15:13,840 --> 00:15:19,480 Speaker 2: capitalism to the side. So the policies in terms of 248 00:15:19,520 --> 00:15:23,840 Speaker 2: that I find equally bad. I find her policies much 249 00:15:23,880 --> 00:15:27,520 Speaker 2: worse in terms of anti bigness, anti business and regulation. 250 00:15:28,480 --> 00:15:31,760 Speaker 2: But frankly, I grew up in America with a certain 251 00:15:31,800 --> 00:15:37,480 Speaker 2: model of a president George Washington, Thomas Jefferson, Ronald Reagan 252 00:15:37,600 --> 00:15:40,520 Speaker 2: was one in my lifetime where there was a certain 253 00:15:40,560 --> 00:15:44,000 Speaker 2: dignity and behavior in the office. And I don't judge 254 00:15:44,080 --> 00:15:47,640 Speaker 2: anyone who wants to vote for Trump, but for me, 255 00:15:48,920 --> 00:15:51,120 Speaker 2: it's just a red line. So I'll probably write in 256 00:15:51,200 --> 00:15:52,600 Speaker 2: someone when I go to the polse. 257 00:15:53,640 --> 00:15:57,280 Speaker 1: When you think about the policies Donald Trump has put forward. 258 00:15:57,320 --> 00:16:01,360 Speaker 1: A day ago, he said to Bloomberg that tariff is 259 00:16:01,400 --> 00:16:04,920 Speaker 1: the most beautiful word in the dictionary. He's negated the 260 00:16:05,400 --> 00:16:07,960 Speaker 1: idea that many economists believe that this could have many 261 00:16:07,960 --> 00:16:10,000 Speaker 1: punitive impacts on the American consumer. 262 00:16:10,240 --> 00:16:15,200 Speaker 2: How do you see it, Well, I don't like tariffs. 263 00:16:15,440 --> 00:16:19,760 Speaker 2: I just said I'm a free market capitalist. The only 264 00:16:19,800 --> 00:16:21,880 Speaker 2: thing I'll say about Trump, He's just a bit of 265 00:16:21,920 --> 00:16:29,000 Speaker 2: a blowhard, so I don't know whether he's negotiating with 266 00:16:30,120 --> 00:16:35,080 Speaker 2: our foreign advacis and frankly with our foreign partners. I 267 00:16:35,120 --> 00:16:36,600 Speaker 2: don't think it will be the end of the world. 268 00:16:36,640 --> 00:16:39,960 Speaker 2: But I am not in favor of tariffs. I don't 269 00:16:40,000 --> 00:16:40,920 Speaker 2: like them at all. 270 00:16:40,960 --> 00:16:42,120 Speaker 1: You know, it's interesting, by the. 271 00:16:42,120 --> 00:16:47,880 Speaker 2: Way, the Biden administration kept all his tariffs, so it's 272 00:16:47,920 --> 00:16:50,200 Speaker 2: not like I'm a fan of their tariff policy either. 273 00:16:50,960 --> 00:16:53,040 Speaker 1: What about taxation? At the end of the day, you 274 00:16:53,080 --> 00:16:55,880 Speaker 1: have been very, very critical for many years about the 275 00:16:56,040 --> 00:17:00,800 Speaker 1: US debt load, the fiscal situation, and there are analyzes 276 00:17:00,880 --> 00:17:03,560 Speaker 1: that say both candidates would increase the federal debt load. 277 00:17:03,880 --> 00:17:06,720 Speaker 1: The Committee for a Responsible Federal Budget say Trump more 278 00:17:06,800 --> 00:17:10,240 Speaker 1: than the Harris administration would. At the end of the day, 279 00:17:10,680 --> 00:17:15,800 Speaker 1: can Congress get away with extending the tax cuts from 280 00:17:15,840 --> 00:17:18,520 Speaker 1: the Trump era or is there another way to really 281 00:17:18,520 --> 00:17:19,240 Speaker 1: close the gap? 282 00:17:20,960 --> 00:17:25,840 Speaker 2: Look, in my world, the less taxes are better, but 283 00:17:27,240 --> 00:17:30,080 Speaker 2: we live in a world that I hope still includes compromise, 284 00:17:31,040 --> 00:17:34,240 Speaker 2: and if there's some sort of agreement for spending cuts, 285 00:17:35,000 --> 00:17:39,440 Speaker 2: I could definitely tolerate tax increases of balancing. I will 286 00:17:39,480 --> 00:17:42,840 Speaker 2: say one thing I don't I don't really like the 287 00:17:42,920 --> 00:17:50,360 Speaker 2: media narrative which compares fiscal irresponsibility with tax cuts and 288 00:17:50,400 --> 00:17:54,439 Speaker 2: fiscal irresponsibility with spending. And again, you're right, I'm a 289 00:17:54,480 --> 00:17:57,480 Speaker 2: fiscal halk. I'm a lot moreried about We're more worried 290 00:17:57,520 --> 00:18:01,120 Speaker 2: about this and the effect four or five years out 291 00:18:01,160 --> 00:18:03,880 Speaker 2: then whether we have a soft landing in our economy 292 00:18:03,920 --> 00:18:06,480 Speaker 2: grows at one point two or two. This is big 293 00:18:06,520 --> 00:18:10,360 Speaker 2: stuff we're talking about. But tax cuts are a companied 294 00:18:10,400 --> 00:18:15,760 Speaker 2: by an addition to the capital stock. Spending is a 295 00:18:15,840 --> 00:18:19,760 Speaker 2: shrinking in the capital stock replaced by government spending. So 296 00:18:19,920 --> 00:18:25,240 Speaker 2: of the two, the two sins tax cuts are least. 297 00:18:25,440 --> 00:18:28,760 Speaker 2: But personally, if I was in government, you can't just 298 00:18:28,840 --> 00:18:31,439 Speaker 2: do tax cuts if you don't get the spending cuts. 299 00:18:31,800 --> 00:18:35,400 Speaker 2: And it was Trump to me that took entitlements off 300 00:18:35,400 --> 00:18:39,120 Speaker 2: the table in twenty sixteen, and that's where the money is. 301 00:18:39,680 --> 00:18:42,960 Speaker 2: So I gave him an f on fiscal responsibility also. 302 00:18:43,680 --> 00:18:45,920 Speaker 1: So I want to switch gears here because we only 303 00:18:45,960 --> 00:18:47,520 Speaker 1: have a little bit of time left with you. I 304 00:18:47,520 --> 00:18:49,000 Speaker 1: want to talk about the market, and I want to 305 00:18:49,000 --> 00:18:51,560 Speaker 1: talk about how you're looking at certain wagers that you've 306 00:18:51,560 --> 00:18:54,879 Speaker 1: put on. A while ago, we spoke about Nvidia and 307 00:18:54,920 --> 00:18:57,240 Speaker 1: you had said that it would be something that you 308 00:18:57,320 --> 00:18:59,840 Speaker 1: held for years and ever since. Then you held it 309 00:19:00,119 --> 00:19:03,000 Speaker 1: for a while, but more recently you've been selling it off. 310 00:19:03,600 --> 00:19:06,600 Speaker 1: How much do you have left of it? And why 311 00:19:06,640 --> 00:19:08,680 Speaker 1: have you been selling? Can you see yourself getting back 312 00:19:08,680 --> 00:19:09,320 Speaker 1: into it again. 313 00:19:10,760 --> 00:19:14,040 Speaker 2: I've made so many mistakes in my investment career. One 314 00:19:14,080 --> 00:19:18,879 Speaker 2: of them was I sold all my Nvidio probably in 315 00:19:19,000 --> 00:19:22,400 Speaker 2: somewhere between eight hundred and nine fifty. I think it's 316 00:19:22,480 --> 00:19:23,960 Speaker 2: thirteen hundred on that stock. 317 00:19:24,040 --> 00:19:25,359 Speaker 1: Now you own none today. 318 00:19:25,480 --> 00:19:27,720 Speaker 2: I owned none and I own none of the last 319 00:19:27,720 --> 00:19:31,280 Speaker 2: four hundred points. It was a big mistake in terms 320 00:19:31,280 --> 00:19:35,119 Speaker 2: of AI. And by the way, when I saw you 321 00:19:35,119 --> 00:19:38,160 Speaker 2: at that conference, which was eighteen months ago, I fully 322 00:19:38,200 --> 00:19:41,200 Speaker 2: expected to own it for years. But I think it 323 00:19:41,280 --> 00:19:45,840 Speaker 2: was three hundred and change. And as I also said 324 00:19:46,080 --> 00:19:49,000 Speaker 2: at a media interview, I'm not Warren Buffett, so I 325 00:19:49,080 --> 00:19:51,639 Speaker 2: thought I thought I was going on. But what changed 326 00:19:51,960 --> 00:19:54,040 Speaker 2: is it tripled in a year and I thought the 327 00:19:54,119 --> 00:19:58,120 Speaker 2: valuation was rich. We are big term, long term believers 328 00:19:58,160 --> 00:20:02,679 Speaker 2: in AI. There's still many ways we're playing AI, particularly 329 00:20:03,480 --> 00:20:07,000 Speaker 2: the infrastructure that's been built out to support the power needed. 330 00:20:08,560 --> 00:20:10,919 Speaker 2: And yes, I think in Vidio is a wonderful company, 331 00:20:10,960 --> 00:20:13,280 Speaker 2: and where the prices to come down, we get involved again. 332 00:20:14,080 --> 00:20:17,160 Speaker 2: But right now I'm licking my wounds from a bad sale. There. 333 00:20:17,640 --> 00:20:19,240 Speaker 1: You know the other question I have to ask you 334 00:20:19,280 --> 00:20:21,320 Speaker 1: really quickly. We don't have a lot of time, But 335 00:20:21,520 --> 00:20:23,199 Speaker 1: you were saying that you express a lot of your 336 00:20:23,280 --> 00:20:26,000 Speaker 1: views through the bond market. The ten year hit four 337 00:20:26,040 --> 00:20:28,879 Speaker 1: point one percent again recently. Do you think it goes 338 00:20:28,960 --> 00:20:31,680 Speaker 1: much higher? And where do you think it ends next year? 339 00:20:31,840 --> 00:20:33,920 Speaker 1: Would you go very short at this rate? 340 00:20:35,440 --> 00:20:39,680 Speaker 2: I don't know what very short means. We shorted bonds 341 00:20:39,960 --> 00:20:42,159 Speaker 2: the day the Fed cut fifty because we thought it 342 00:20:42,200 --> 00:20:46,520 Speaker 2: was a mistake. We still have that position. It's not 343 00:20:46,640 --> 00:20:52,400 Speaker 2: so much I have a view on where it's going 344 00:20:52,440 --> 00:20:56,560 Speaker 2: to go short term. What I do believe if Pal 345 00:20:56,680 --> 00:21:00,000 Speaker 2: ends up being wrong here and inflation reaccelerates next year, 346 00:21:00,080 --> 00:21:03,760 Speaker 2: your bonds could go up a lot, a lot of 347 00:21:03,800 --> 00:21:08,520 Speaker 2: basis points hundreds, whereas if he's right, you might lose 348 00:21:08,600 --> 00:21:12,000 Speaker 2: twenty five or thirty basis points short. The golden rule 349 00:21:12,040 --> 00:21:15,400 Speaker 2: I've always had is the ten years to trade around 350 00:21:15,440 --> 00:21:18,200 Speaker 2: where nominal GDP is, which is five and a half percent. 351 00:21:19,000 --> 00:21:21,920 Speaker 2: So the risk reward to me is being short bonds. 352 00:21:22,320 --> 00:21:24,480 Speaker 1: Stan we have to leave it there. I'm sorry to 353 00:21:24,560 --> 00:21:27,320 Speaker 1: cut it shorter, but that is billionaire Stanley Druckenmiller of 354 00:21:27,400 --> 00:21:29,800 Speaker 1: Duquane Family Office and a rare sit down. Thank you 355 00:21:29,840 --> 00:21:31,040 Speaker 1: for joining me here on set.