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Druckenmiller: "Markets Are Spoiled, And Policy Makers Are Terrified"

Tyler Durden's picture




 

Stanley Druckenmiller is no stranger to the pages of Zero Hedge as he appears immune to the herd-like status-quo-hugging nature of 99% of the financial markets lackeys that strut on TV. His comments today - lengthy, aggressive, and very worried about what the Fed has done - can be summed up in the following chart and his ominous conclusion, "when the Fed ends QE, there'll be a bear market."

 

 

Source: SocGen

 

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Wed, 07/16/2014 - 13:57 | 4963482 Sudden Debt
Sudden Debt's picture

When the fed stops... They'll own it all...

Wed, 07/16/2014 - 14:17 | 4963562 buzzsaw99
buzzsaw99's picture

+1. either they'll own it all or this is a bigger screw job than even i think.

Wed, 07/16/2014 - 15:20 | 4963895 wee-weed up
wee-weed up's picture

Feed the Beast!

Wed, 07/16/2014 - 13:58 | 4963483 ArkansasAngie
ArkansasAngie's picture

Thank God we have Belgium

Wed, 07/16/2014 - 14:01 | 4963493 Sudden Debt
Sudden Debt's picture

Yes you do...

I'm ready to receive your compliments and words of grace now...

Those with the gifts may start first.

Wed, 07/16/2014 - 14:25 | 4963603 frankTHE COIN
frankTHE COIN's picture

Please Accept my gift. It's the Gift that keeps on giving.

Wed, 07/16/2014 - 14:42 | 4963685 NoDebt
NoDebt's picture

Herpes?

Wed, 07/16/2014 - 14:51 | 4963745 frankTHE COIN
frankTHE COIN's picture

No Ointment necessary. Just having having some fun.

Wed, 07/16/2014 - 15:01 | 4963799 SheepDog-One
SheepDog-One's picture

Belgium can go fuck itself, and take that dumb soccer game along with you.

Wed, 07/16/2014 - 15:45 | 4964012 booboo
booboo's picture

I'm mailing you several pre cooked squab and some blood sausage, apple sauce is extra.

Wed, 07/16/2014 - 14:11 | 4963543 Clowns on Acid
Clowns on Acid's picture

The US had to let Belgium win the World Cup game or else they would stop "buying" US bonds.

Wed, 07/16/2014 - 14:22 | 4963592 Sudden Debt
Sudden Debt's picture

No... i don't think so... You just sucked at the game...

Wed, 07/16/2014 - 14:40 | 4963668 gcjohns1971
gcjohns1971's picture

Well at least Belgium will have their football crown to console them when the dollar collapses and they are left destitute.

Wed, 07/16/2014 - 14:45 | 4963697 NoDebt
NoDebt's picture

We figured we'd leave the rest of the world at least one sport that the US doesn't dominate.

<Putting on my flame-retardant underwear>

Wed, 07/16/2014 - 14:01 | 4963494 LawsofPhysics
LawsofPhysics's picture

QE has not stopped folks.  Notice that we didn't here a lot of taper talk today....

Wed, 07/16/2014 - 14:14 | 4963554 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

One day the Fed's pumping will do no good. They will be the last investor in town with any money. Smart money will dump their stock into the Fed and everyone else will get the short end of the stick.

Wed, 07/16/2014 - 14:57 | 4963775 SheepDog-One
SheepDog-One's picture

I always called bullshit on the taper, in reality QE is now probably $120 billion a month.

Wed, 07/16/2014 - 15:04 | 4963814 SheepDog-One
SheepDog-One's picture

Sorry, I don't trust the Feds papers or the words they puke out of their lying mouths.

Wed, 07/16/2014 - 15:21 | 4963864 Headbanger
Headbanger's picture

Here's a more user friendly version of that chart:

http://research.stlouisfed.org/fred2/series/BASENS

 

But do you want to see something really scary?

http://research.stlouisfed.org/fred2/graph/?s[1][id]=M2V

 

But even MOAR scary is Toatal MArket Cap to GDP Ratio!!

https://research.stlouisfed.org/fred2/graph/?graph_id=164130&category_id=0

 

Wed, 07/16/2014 - 15:32 | 4963955 LawsofPhysics
LawsofPhysics's picture

That fact that we are seeing the kind of food and energy inflation that we are with the lowest velocity on record should scare the fuck out of people.

Wed, 07/16/2014 - 15:29 | 4963937 LawsofPhysics
LawsofPhysics's picture

"slowing" is not "stopping", much less decreasing that 4+ trillion dollar balance sheet.

Wed, 07/16/2014 - 16:29 | 4964174 FrankieGoesToHo...
FrankieGoesToHollywood's picture

Slowing is stopping in a world where exponetial acceleration is required to maintain status quo.

Wed, 07/16/2014 - 14:01 | 4963495 bugsmashers
bugsmashers's picture

Ya don't say.

Wed, 07/16/2014 - 14:01 | 4963497 LetsGetPhysical
LetsGetPhysical's picture

Who says it's gonna stop?

Wed, 07/16/2014 - 14:05 | 4963511 buzzsaw99
buzzsaw99's picture

thanks for the chart. there have been so many qe like shenanigans that they all run together anymore causing me to make nomenclature errors.

Wed, 07/16/2014 - 14:08 | 4963527 starman
starman's picture

"When the Fed ends QE" = Never!

IMF has 29 Trillion under this market. Its not your grandfathers stock market anymore. It's the Federal Reserve Monopoly Market! There! 

Wed, 07/16/2014 - 14:10 | 4963536 Bernoulli
Bernoulli's picture

But the chart shows clearly, that everything is under control! The FED balance sheet size will be reduced gradually and the equity indices will normalize accordingly.

A-O.K.

Wed, 07/16/2014 - 14:53 | 4963765 Al Huxley
Al Huxley's picture

I trust them - after all, they are supergeniuses.  I'm just glad they're on the general public's side, otherwise think how bad things might be.  If it means a few bankers have to become trillionaires, I guess that's the price we all pay to save the system.  God bless America and the banking industry (or maybe that's a redundancy now).

Wed, 07/16/2014 - 16:01 | 4964072 Bernoulli
Bernoulli's picture

Amen

Wed, 07/16/2014 - 14:12 | 4963539 JustObserving
JustObserving's picture
"Markets Are Spoiled, And Policy Makers Are Terrified"


You should have complained decades ago when they started faking all the economic statistics to cover up a failing economy and mounting debts. Not to mention, the $6 trillion we blew in the wars in Iraq and Afghanistan.

Corrected for inflation, US GDP may only be $6 to $8 trillion with a debt to GDP of over 300%.  Not to mention, unfunded liabilities of $130 trillion and rising at $7 trillion a year.

But then, if the truth were told, who would touch US treasuries with a 50 foot pole?

Keep telling me those sweet, little lies:

http://www.youtube.com/watch?v=kyE4CLM0QIA

 

Wed, 07/16/2014 - 14:10 | 4963541 RaceToTheBottom
RaceToTheBottom's picture

I liked it better when the Monopoly game was the only fictional financial game out there

Wed, 07/16/2014 - 14:14 | 4963550 agstacks
agstacks's picture

at least some went to jail playing monopoly..

Wed, 07/16/2014 - 14:17 | 4963568 Ness.
Ness.'s picture

You're wasting your breath Stan.  They're #winning, and they have been for years.

Wed, 07/16/2014 - 14:17 | 4963570 orangegeek
orangegeek's picture

fed-head reports to Barry - he's the one who appoints

 

Barry wanted to get re-elected to further his communist manifesto

 

and so here we are

 

my guess is that there is massive infighting within the Fed - the 12 regionals are not liking this

Wed, 07/16/2014 - 14:17 | 4963571 MykeTheVet
MykeTheVet's picture

I love this fu**ing website. I've never learned so much on finance in my life. 

 

Quick question to all reading: does ZeroHedge endorse methods in Austrian economics?

 

Great article, Tyler. Sometimes, your material goes way over my head, but that's what challenges me to pry more. 

And your articles are heavily discussed on a website called "The Daily Paul." Just an FYI ;)

Wed, 07/16/2014 - 14:50 | 4963733 TheRedScourge
TheRedScourge's picture

To answer your question, for the most part yes it does.

Wed, 07/16/2014 - 17:12 | 4964371 Blues Traveler
Blues Traveler's picture

Read de Tocqueville and Nials Ferguson

Wed, 07/16/2014 - 14:19 | 4963574 Callz d Ballz
Callz d Ballz's picture

Looks sustainable. 

Wed, 07/16/2014 - 14:20 | 4963579 Keltner Channel Surf
Keltner Channel Surf's picture

Well . . . at this stage it's more correct to say the shorts are the only ones that truly seem terrified.  A puff of air from algos would easily send this rocketing to a triple digit day, and if so it'd be 80% covering, 20% new buys.  Small caps are back to the hourly 20 MA, standard resting place.  

Even so, my trading sense tells me we get a late afternoon leg down, but what do I know ...

Wed, 07/16/2014 - 14:59 | 4963790 SheepDog-One
SheepDog-One's picture

I have zero belief that there's an army of ultra rich full retard shorts out there getting cornholed daily to drive stocks to new highs every close, utter nonsense, the big shorter is the Fed itself.

Wed, 07/16/2014 - 15:49 | 4964027 Keltner Channel Surf
Keltner Channel Surf's picture

a) no one said "daily", some days definitely have a short-driven up component, and had today rocketed, my sense is it would, at least today, have been more due to shorts with respect to the Dow & S&P;  b) the "ultra rich" shorts aren't the ones covering, thus the low-volume melt-ups on some, but not all,  days c) I'm really a Russell guy, and the late afternoon "leg down" I was forecasting is indeed happening in that index, starting roughly the time of my post.  Whether it ends now or continues for the last 15 min is up to JPY & RVX.  I'd say the odds are 70% we break toward the lows, but turnaround before making it, say at 3:53

Fairly new here and have long found you to be one of the most readable posters here.  Cheers.

Wed, 07/16/2014 - 22:36 | 4965574 hedgiex
hedgiex's picture

Yes. the unleveraged shorts aren't the ones covering and are not terrified...just rolling over options. They are in "risk-in" mode leashing their money managers to preserve wealth and to trade not invest.

Wed, 07/16/2014 - 14:29 | 4963623 astoriajoe
astoriajoe's picture

In the posted chart, maybe it should read "taper" instead of taper.

Wed, 07/16/2014 - 14:30 | 4963628 Itchy and Scratchy
Itchy and Scratchy's picture

Global soverign governments (read: tax payers) & central banks own US$29T in equities!

Wed, 07/16/2014 - 14:51 | 4963751 Yancey Ward
Yancey Ward's picture

There are anecdotal reports that Ma and Pa are getting into the stock market again- stories popped up starting late last week.  If true, that is the sign post of the next bear market.

 

As for QE ending, I don't think it will be ended very long, even if does end, but I would expect another central bank to grab the baton- ECB maybe.

Wed, 07/16/2014 - 14:54 | 4963763 Quinvarius
Quinvarius's picture

The DOW could drop all the way to 14400 and still be in an uptrend.  That is how over stretched it is right now.  The same goes for the NASDAQ to 3500.

Wed, 07/16/2014 - 15:00 | 4963792 gcjohns1971
gcjohns1971's picture

The first leg down will just be people selling to avoid a fallling knife.

THEN people will start to look at long-forgotten fundamentals and realize there's no 'THERE' there, and that they can't determine how much business in these businesses exists in the absence of Fed pumping.

Since we never really had an expansion phase, and no one really knows how much market is hiding under the Fed intervention the THIRD LEG DOWN will be old-fashioned FEAR.

Where will it end?  No telling.  Under those conditions people could decide to abandon the dollar for real assets - hyperinflation - call it what you will.

Wed, 07/16/2014 - 22:55 | 4965639 hedgiex
hedgiex's picture

Yes. On the same page with you. Millions will be made if you get the Third Leg right whether it is hyperinflation, stagflation or deflation. Good news is that you have time to see how the first and second legs develop. Not forgetting 1) how global markets will react and 2) how the top 10% that holds 90% of the wealth plays (they matter however nauseous we think of them).

Wed, 07/16/2014 - 15:02 | 4963805 Al Huxley
Al Huxley's picture

I notice that the 'Taper' tightening has lead to a 12% increase, so it looks to me like they finally got the bugs out of the system that caused it to crash everytime they tried to taper.  Production ready at last... singularity here we come.

Wed, 07/16/2014 - 15:18 | 4963862 undercover brother
undercover brother's picture

I don't agree ending QE will result in a bear market.  QE had the effect of zero interest rates on steroids, with all that liquidity finding the easiest point of entry, stocks.   However, when the QE taper is complete, zero interest rates will remain for the foreseeable future.   cheap money is still available, and that is bullish.   That said, if the fed also begins to uwind its book, those dollars will come out of the system.......and that will take the market down.  

Wed, 07/16/2014 - 16:56 | 4964287 sof_hannibal
sof_hannibal's picture

QE doesn't end. They can't end it. Zero interest rates remain, yes. But, I don't see the FED unwinding their book. I think the best possible way to view this in the long run, and ZH echoes this at times-- QE / low interest rates don't end; ever... So, what is the maximum amount of time the system can handle such circumstances...

I say-- infinity and beyond. DOW 50,000; perception = reality.

Wed, 07/16/2014 - 17:03 | 4964324 Wahooo
Wahooo's picture

Yep. I'm finally going to be a millionaire. Won't be worth much, but I'll be a millionaire. Fuck em.

Wed, 07/16/2014 - 15:17 | 4963871 flysofree
flysofree's picture

You  mean that Druckenrmiller has time away from trolling university campuses and promoting generational wars just so he and other plutocrats can continue to live like Plutocrats forever.

Wed, 07/16/2014 - 16:58 | 4964295 sof_hannibal
sof_hannibal's picture

eaxctly. Someone finally put it in a news-speak way I can understand :-)

Wed, 07/16/2014 - 16:25 | 4964168 tommylicious
tommylicious's picture

buy 'em!

Wed, 07/16/2014 - 18:28 | 4964689 Felix da Kat
Felix da Kat's picture

It's QE infinity or bust. Get over it, already.

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