Because a prudent Stanley Druckenmiller has piled up in the Treasures and in Chinese technology

0
54

The shares seem ready to rebound from yesterday's technological confusion.

We can perhaps thank the President of the Federal Reserve of St. Louis, James Bullard, who said on Monday that interest rates in the United States could be too high due to trade tensions – something the financial markets have shouted about. Note, Tuesday Australia became the first central bank developed to cut rates in 2019, citing, yes, the jitters of global trade.

On our call of the day from the billionaire investor Stanley Druckenmiller, who is also quite convinced that the Fed will cut rates, perhaps even to zero. The famous manager says he bought Treasury bonds and appears to be preaching caution to stock investors, amid threats of trade war.

"When the Trump tweet came out, I went from 93% invested in the net flat and bought a lot of Treasuries," Druckenmiller told Scott Bessent, founder and chief investment officer of Key Square Capital Management at Economic. New York Club.

He was referring to the May 6th tweet of President Donald Trump that threatened Chinese tariffs. It sparked an investor move to sell shares and pour money into the perceived security of government bonds. The tension between China and the United States has worsened from that tweet, among the fears of a full-scale trade war could trigger an American recession, with the recent tariff threat from Trump against Mexico that does not help.

Druckenmiller said he was taken aback by the Trump tweet because he hadn't thought the Chinese trade deal would explode. He said he moved his investments a month ago because he doesn't "want to play in this environment," saying investors need to wait for better opportunities.

The money manager spent years managing a billionaire investor and philanthropist George Soros. He left to focus on his own investment company Duquesne Capital, which reportedly never had a year at a loss and returned 30% annually until its closure in 2010.

"So I think if you are sure of your long-term vision and ability to make money, this is not a great environment to go and bet on the ranch. Not short, not long," Druckenmiller said. It is known for using a downward-looking investment style that involves trading very bullish or very bearish positions based on macroeconomic trends, which is clearly finding it difficult even these days.

"I can no longer do 30% a year and I don't even charge taxes. It's a depressing environment," he said.

This partly explains why he looked for some security in the bonds. He said that if an investor believes that the US economy will deteriorate, the Treasuries will be "the best game in town", while "the gold is not bad". Druckenmiller thinks that the Fed could reduce interest rates to zero in the 18 months and maybe even 50 to 100 basis points in the next year.

It is not at all down on all stocks, however, stating that companies providing goods and services need investors in good times and bad times, known as "secular growth companies" can do well in a nominal environment of growth of 1% "and are a good bet. He once again expressed his passion for cloud-based corporations.

It also owns Chinese Alibaba technology groups

BABA, + 0.44%

is

700, -1.92%

and Ping An insurer

2318, -1.56%

the companies he says are fueled by internal growth.

Druckenmiller has also found the time to launch an arrow to the US government, among the signs that big technology companies are now on its successful list. As explained by the billionaire investor, the future of an economic war with China will be fought with artificial intelligence and the United States should be of assistance, not to damage related companies.

He said China began to relax in the private sector last fall and strongly supported its technology sector. "What are we doing? Oh, we're saving, steel, coal, aluminum. What are we doing with our leading technology companies? We're throwing sand into the gears and making their lives miserable."

You can watch the full interview with Druckenmiller here.

The market

Dow

YMM19, + 0.69%

S & P 500

ESM19, + 0.68%

and Nasdaq

NQM19, + 0.73%

futures are moving higher. This is after the Nasdaq

COMP, -1.61%

finished in the correction territory on Monday.

The yield of the 10-year Treasury note

TMUBMUSD10Y, + 2.29%

it grew to 2.10%, while gold

GCQ19, -0.10%

is higher and the dollar

DXY, + 0.14%

it is constant. Oil

CLN19, -0.41%

looks ready for another losing day.

European stocks

SXXP, + 0.54%

are on the rise, but Asia has largely fallen, with Chinese stocks

SHCOMP, -0.96%

off almost 1%. Australia's inventories increased slightly after the central bank rate cut in almost three years.

The hum

With big technology companies like Alphabet's Google

GOOGL, -6.12%

Facebook

FB, -7.51%

Apple

AAPL, -1.01%

and Amazon

AMZN, -4.64%

now in the sights of the US government, the question is: what is the impact for consumers?

The Trump administration claims that China's officials are misrepresenting why the trade negotiations have stalled between the two countries. Meanwhile, Chipotle restaurant chain

CMG, -2.77%

he says that burrito prices could rise if the US threatens to raise tariffs on Mexico.

The factory orders, which measure the health of the manufacturing sector, will arrive after the opening of the market, but otherwise it is silent in terms of data for Tuesday. Have a look at our preview which includes a look at the data for upcoming Friday jobs.

Random readings

Popular brand drug prices double every seven to eight years, a new study says

The lawsuit alleges that a Trump company failed to pay millions of taxes in Panama

The court states that the founder of WikiLeaks, Julian Assange he should not be extradited to Sweden for rape charges

California regulators say your coffee doesn't hurt you

A deadly flu strain may have killed a healthy young couple from Texas on vacation in Fiji

Need to Know starts early and is updated up to the opening bell, but register here to receive it delivered once in your e-mail box. Be sure to check the Need to Know item. The version sent by email will be sent around 7:30 eastwards.

Follow MarketWatch on chirping, Instagram, Facebook.

.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.