Taps Coogan – June 8th, 2023

Legendary investor Stanley Druckenmiller, likely the most successful fund manager alive today, who produced average annual returns of 30% from 1986 to 2010 without a single down year, recently spoke with Bloomberg about his concerns regarding the US fiscal outlook as well as his bearish outlook on US markets and the economy.

In addition to detailing his well known concerns about US entitlement spending and debt levels, as well as his bearishness on the US outlook for the second half of this year, he elaborated on his China bearishness:

“I was in love with China until about six or seven years ago… The energy in Shanghai was like New York on crack… the entrepreneurs were exciting, they were into it, and then Xi Jinping did his thing. If you look at the rise of China… you had this internal capitalist system… building new businesses in a dynamic economy, but (Xi) has proved he is not a capitalist, he’s definitely not a monopolist – there’s only room for one monopolist in China in his mind and that’s him, …and I honestly think he either doesn’t understand why China succeeded and grew the way it did, or frankly, he doesn’t care in terms of staying in power. I would be looking out ten or 15 years (and) I just don’t see it. Unless there is a change in power there at the top, I think that is going to be a very undynamic economy… If I’m right that makes me more fearful of military action because that’s when dictators become more dangerous. What they are doing now is very simulative. We’re expecting a sugar high and some kind of robust growth there for six or nine months, but looking out I do not look at them as a big challenger to the United States in terms of economic power and growth…”

We couldn’t agree more.