Stanley Druckenmiller says no US rate cuts needed
Stanley Druckenmiller has long mentored US Treasury secretary Scott Bessent and Federal Reserve chair Kevin Warsh. Regardless of their status in the current US administration, Druckenmiller is not holding his tongue.
On Thursday, the macro hedge fund manager told a closed-door meeting that rate cuts “are no longer needed”, writes Amelia Pollard.
“Committee members on the Fed who keep saying fed funds rates are restrictive are just ridiculous,” he told a packed crowd of hundreds of Wall Street investors on Thursday morning at a conference hosted by Piper Sandler in New York, according to a transcript seen by the FT and multiple people familiar with the matter.
“I believe in common sense, and all you have to do is look at asset prices around the world,” Druckenmiller said.
His views on US monetary policy matter more now because of his longstanding relationship with Warsh. Although Druckenmiller said he can no longer speak to the Fed chair, he described Warsh as one of his “closest friends” and great at his job.
Investors have long viewed Druckenmiller as one of the brightest economic thinkers on Wall Street. He worked for George Soros in the 1990s during the hedge fund manager’s historic bet against the British pound, and has made a fortune at his own family office, Duquesne Capital, where Warsh worked as a partner before he was confirmed as Fed chair earlier this year.
Most of Duquesne’s recent profits have come from bets on AI instead of traditional macro investments such as currency or bond wagers. But Druckenmiller said that while the firm was bullish on AI companies, it had cut its investments in the industry to 20 per cent of what they were six months ago.
“It’s been an incredible ride on the whole AI thing,” he said. “I think we’re getting late enough in the build-out that one has to start to worry a little.”
However, he said he was “afraid to short the dollar” because of the US’s huge advantage globally in AI development, which he said Europe was “nowhere” on.