market folly

Legendary investor Stan Druckenmiller, formerly of Soros Fund and Duquese Capital, recently sat down for a fantastic interview with Bloomberg's Stephanie Ruhle.

We highly recommend watching it in its entirety, but here's a few key takeaways:

On interest rates: "My fear is we’re not going to see anything for a year-and-a-half because they set up metrics eight or nine months ago…I have no confidence whatsoever that you’re going to see rate hikes in September or December or whenever because when they lay out metrics and then they change, and then they change again, and then they change again, who knows where -- when they’re going to go."

On oil: "Well, I'm pretty optimistic on crude prices.  I think they’re going to do better than the forward curve.  Well, because as my protégé, Zach Schreiber, said a year ago, the cure for high prices is high prices.  Well, he would also say now the cure for lower prices -- low prices is low prices."

On China:  "The Chinese stock market is up, I don’t know, 140 percent in six months after being in a downtrend for five to seven years, and it’s doing so on record volume with record breadth.  If it was any other stock market or certainly any developed market, I would tell you, being a market observer, there’s a 98 percent chance China will be in a cyclical boom 6 to 12 months from now.  Because it’s China, and we don’t know the nature of what we’re dealing with here relative to normal mature developed markets, I would downgrade that assessment from 95 percent, but I would still hold it over ... I would point out that the H shares in Hong Kong representing China are 10.1 times earnings"

On European stocks he likes:  BMW, Volkswagen, Airbus, Altice

On potential bubbles:  "I think tech valuations, at least in the private market, are kind of crazy."

On market dynamics:  "My first boss asked me a question when I was 22 years old.  Do you know happens to the money when the stock market goes down?  I said, I don’t know.  It goes into the bond market.  He said, no.  It evaporates.  It evaporates.  You know what happens when stock prices go up?  Wealth goes up.  Confidence goes up.  Economic activity generally goes up, so the more, the merrier."

Embedded below is the video of Stan Druckenmiller's interview with Bloomberg:



For more from this investor, we've also previously posted up past thoughts from Druckenmiller.