Druckenmiller Points to a Double Dip

https://www.bloomberg.com/news/articles/2020-05-12/druckenmiller-says-v-shaped-recovery-for-u-s-is-a-fantasy

Stan Druckenmiller said the risk-reward calculation for equities is the worst he’s seen in his career, and that the government stimulus programs won’t be enough to overcome real world economic problems.
“The consensus out there seems to be: ‘Don’t worry, the Fed has your back,’” said Druckenmiller on Tuesday during a webcast held by The Economic Club of New York. “There’s only one problem with that: our analysis says it’s not true.”
“It was basically a combination of transfer payments to individuals, basically paying them more not to work than to work,” he said. “And in addition to that, it was a bunch of payments to zombie companies to keep them alive.”
  • On a relative basis, he’s as bullish on long-short strategies as he’s been in 10 years. “That’s partly because I’m worried about everything else,” he said.
  • Druckenmiller was also bullish on Amazon.com Inc., saying people should be thankful that the company exists right now given the number of jobs created. He also praised its transition to less profitable, essential-needs products without raising prices.

I think we may see a correction of 10 - 20% soon. It's hard to say. There appears to be a second wave of infections in Korea, China. In the western world, opening up too soon appears to encourage re-infection. 

In a prolonged shut down of the economy, all bets are off. There's only so much that governments can do. It might not be able to bail out every company. Bankruptcies will rise. 




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