Druckenmiller: US dollar rally is in the ‘seventh inning’

Stanley Druckenmiller is on CNBC at the moment saying he doesn’t have a strong opinion on the direction of the market but with innovation surging he said it’s time to focus on individual stocks.

• The economy is ‘very interesting’
• We’re going from the most anti-business administration to the opposite
• CEO’s are somewhere between ‘relieved and giddy’
• The economy looks very, very strong at least for the next six months
• I would say the market is ‘complicated’ despite economy
• There is a push of a strong economy against bond yields that makes me not have a strong opinion on the market
• Earnings yield to bond yield is most-unattractive in 20 years

More:

• Says he’s still short Treasuries. Says it’s likely ‘7th inning’ in bond shorts
• Says fiscal situation is ‘horrendous’
• We’re not expecting lower inflation
• The US will need to turn to consumption tax (tariffs) or income taxes
• Private savings in the US are also far too low
• Thinks 10% range of tariffs limits retaliation
• Scott Bessent is ‘extremely capable’ and is in a great position, he understands the fiscal situation
• That said, he’s not in charge so I don’t know how it’s going to work out
• Deficit is a huge problem, we’re in a mess. Interest expense is an elephant
• We have a 2-3 year infrastructure build out on AI coming. I think we will have AGI by 2035 and the payoff down the line is huge. But valuations are high.
• Highlights that applications in AI, which are ‘limitless’ rather than those building it.
• Politicians aren’t willing to do the needed things for deficits. We need to bond market to send a signal
• I think the tariffs are coming despite the optimism in the WSJ, that should put upward pressure on the US dollar along with ‘animal spirits’. But I think we’re in the 7th inning of USD rally.

Despite his ‘seventh inning’ comments, he also said that you can make a lot of money in the final innings of a move. (For those who don’t know baseball, it’s a nine-inning game).

This article was written by Adam Button at www.forexlive.com.