Druckenmiller: Long in 2020

Via Bloomie:

A nice interview with Stanley which, with MB’s four horsemen of the apocalypse vanquished by policymakers, makes a good base case for some kind of global bounce in 2020.

We still don’t think it will be a glowing recovery even if the fiscal spending helps, largly because China will keep slowing. We agree on his UK bullishness.

Australia, on the other hand, is going to sit it out entirely!

David Llewellyn-Smith
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  1. As any fool can see, it is solely the liquidity glut that is keeping risk assets propped up.

    But it’s not an issue cause everyone will know when the top is in and get out just in time 😉

    • Yep. No CB intervention, no bull market. It’s that simple.

      It’s fun watching the fake Capitalists cheer, though.

    • Even StevenMEMBER

      Disagree. The liquidity glut is keeping all assets propped up. You seen government bond yields across the developed world lately? Has been MASSIVE flight to safety.

      • Yes, the glut has benefited all assets but no, I hadn’t noticed the massive flight to safety — the yield squeeze is merely a function of central banks taking govt bonds OUT of circulation. while regulatory and speculative demand pushes rates negative.

        The yield curve steepening recently tells you there is no flight to safety. Quite the opposite.

        • Even StevenMEMBER

          In Australia: A-rated corporate bond yields ~2%. AAA-rated government bonds ~1%. ASX average div yield ~4.5%. Equity risk premium is high by historical standards. Taking government bonds out of circulation doesn’t explain the large differential between A-rated and ASX.

          A flight to quality (ie risk aversion) does explain it.

          • Ah, I was really referring to the only equity market that matters: the US, where the equity risk premium is barely a few basis points.

            The strayan stock market has been viewed with the relish that you would licking a beggar’s armpit for ages as people here are more interested in properdy mate and international investors couldn’t be bothered. If you add up the balance sheets of all the major CBs you come to a number north of $15 trillion. All the cash that was invested in those bonds had to find another home.

            $1 trillion is helluva lot of money. $15 trillion is just insane. And all the while the stock of equity has been diminishing via buybacks i.e. even more cash chasing yield. There is no ‘fear’ in the market — the ‘greed’ level has barely been higher in history. The bond market is in a colossal bubble. In the next crisis, I’ll wager there’s a chance that bonds will not be the go-to place for ‘safety’ given what you’re paying for them right now.

  2. You see – policymakers are magical people. They make the 4 horsemen disappear. For good! 😉