In an exclusive interview with CNBC, Duquesne Capital Management founder Stan Druckenmiller discussed the market, valuations, QE, IBM, Europe and Japan.
While Druckenmiller wasn’t incredibly bullish on the U.S. market–he says he is investing mainly in Europe and Japan–he wasn’t buying the comparisons of the U.S. economy to the troubles in the 1930s made by Alan Greenspan and Larry Summers. Druckenmiller told Kelly Evans of CNBC that he didn’t agree with the analogy to the period prior to the Great Depression, given that the current economy is characterized by robust retail sales, increasing industrial production and declining unemployment.
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Concerning stocks, valuations are high by historical measures, said Druckenmiller, but that is to be expected because of the monetary policy of the Fed. When asked about a rise in interest rates, Druckenmiller told CNBC, “If I thought rates were going up, I would short bonds.” He added that there would be less of a shock to the markets if the Fed would go ahead and raise rates sooner rather than later; “I think we could handle 25 to 50 basis points which would be still extremely accomodative.”
Druckenmiller disagrees with Warren Buffett about IBM, which he praises for buying back stock. He thinks the Oracle of Omaha believes IBM is experiencing a temporary decline based on a business cycle, while Druckenmiller is not bullish on the stock, and feels it is in a secular decline. When it comes to investment, Druckenmiller is looking to Europe and Japan rather than the U.S., and doesn’t believe that Greece will interfere with the European investment thesis.
