Billionaire investor Stanley Druckenmiller believes Donald Trump’s re-election renewed a jolt of speculative enthusiasm in the markets and surging optimism within businesses.
“I’ve been doing this for 49 years, and we’re probably going from the most anti-business administration to the opposite,” Druckenmiller said in a recent interview. “We do a lot of talking to CEOs and companies on the ground. And I’d say CEOs are somewhere between relieved and giddy. So we’re a believer in animal spirits.”
While the notable investor remains cautious on the stock market due to elevated bond yields, he is optimistic about the economy in the short term. He revealed that he is holding onto his short against Treasurys, effectively betting that bond prices will fall and yields will rise.
“In terms of the markets, I would say it’s complicated,” Druckenmiller mentioned. “You’re going to have this push of a strong economy versus bond yields rising in response to that strong economy, and that kind of makes me not have a strong opinion one way or the other.”
The S&P 500 surged nearly 6% in November on Trump’s victory, bringing the benchmark’s 2024 gains to 23.3%. Trump’s promised tax cuts and deregulation have boosted risk assets dramatically, especially bank and energy stocks, as well as bitcoin, which just hit another record high.
Druckenmiller stated that he prefers focusing on individual stocks rather than the broader market. He expressed bullishness on companies adopting artificial intelligence to lower costs and drive productivity. He didn’t disclose which AI stocks he’s betting on after selling out of Nvidia and Microsoft.
‘Risks are overblown’
Regarding concerns that Trump’s tariffs could negatively impact the market rally and cause inflation, Druckenmiller believes that the revenue generated by tariffs could alleviate the fiscal challenges in the country.
“We have a fiscal problem, we need revenues,” Druckenmiller explained. “To me, tariffs are simply a consumption tax that foreigners pay for some of it. Now the risk is retaliation, but as long as we stay in the 10% range, …I think the risks are overblown relative to the rewards, the rewards on high.”
Trump’s trade memorandum set to be issued soon would not impose tariffs immediately. His administration is reportedly discussing a schedule of graduated tariffs that would increase gradually on trading partners.
Druckenmiller, known for making a significant bet against the British pound in 1992, has a long history in the investment world. He once managed George Soros’ Quantum Fund and later oversaw significant assets as president of Duquesne Capital Management.