Stanley Druckenmiller has turned bullish on the economy in light of the election of Donald Trump as president. The major reasons: He believes Trump will remove a lot of regulations and slash taxes.
“This economy is so overregulated and people are just drowning in red tape,” he said Thursday during an interview on CNBC. “I’m expecting serious tax reform, with cuts to the corporate tax rate, maybe a blended rate of under 10 percent to repatriate capital.” As a result, Druckenmiller said, he is “quite optimistic” on the economy. Druckenmiller shut down his hedge fund, Duquesne Capital Management, several years ago because he did not want to meet new regulatory requirements to register his firm with the Securities and Exchange Commission.
In the CNBC interview, Druckenmiller said accelerated growth will lead to much higher interest rates worldwide. So, he is betting against a wide variety of fixed-income instruments worldwide. “I’m short bubbles,” he told the television audience. “I’m short bunds, I’m short gilts, I’m short Italian bonds, I’m short U.S. bonds,” he added. “That’s all reflective of not some disaster with deficits but with stronger growth.”
He also said he likes the sectors in the stock market that respond to growth, such as value and materials. “Not things like staples and traditional growth stocks that don’t respond with the economy,” he added. Druckenmiller also said he likes the dollar, especially against the euro.
As for gold, he said he is bearish on the metal, telling the audience he sold all of his gold the night of the election. “All the reasons I have owned it for the last couple of years, it seems to me they may be ending,” he said. “They’re ending globally. This is a worldwide phenomenon we’re looking at.”
Said Druckenmiller: “It’s been very frustrating to watch monetary radicalism the last four years be the only thing addressing our issues. And every time I’ve talked anywhere I said could we just try deregulation and tax reform? Could we just try it? And it looks very likely we’re going to get that.”
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Dan Loeb’s Third Point cut its stake in drug maker Allergan, its third-largest U.S. long, but aggressively boosted its positions in social media giant Facebook, its fourth-largest long, and internet search giant Google, its fifth-largest position, according to its third-quarter 13F filing. The hedge fund firm stood pat with its two largest U.S. longs: health care giant Baxter International and Dow Chemical.
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Baupost Group liquidated its stake in Chipmos Technologies Bermuda as of October 31. The hedge fund firm had owned 3.75 million shares of the provider of semiconductor testing and assembly services at the end of the second quarter.
Baupost also slashed its stake in Kindred Biosciences by more than two-thirds, to about 965,000 shares, or 4.85 percent of the total outstanding. It had owned three million shares of the development stage biopharmaceutical company at the end of the second quarter.
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Vermillion, a hedge fund operated by the Carlyle Group, lost $400 million it invested in a Moroccan oil-refinery deal, according to the Wall Street Journal, citing a securities filing and people familiar with the matter. It seems the fund was supposed to receive a share of the revenue at the refinery. But Moroccan authorities seized it after it had run into financial trouble last year. According to the report, this year the refinery, Societe Anonyme Marocaine de l’Industrie du Raffinage, was put into liquidation. Carlyle’s quarterly report filed last week said the private equity firm believes $400 million in petroleum commodities were “misappropriated by third parties outside the U.S.”
