Tuesday, November 29, 2016

An opposite prediction

Druckenmiller became an overnight bull on hopes the Trump administration would unleash a fiscal stimulus-based  period of growth for the economy, with a a “large bet on economic growth." He also told CNBC that "I’m short bonds, Bunds, Italian bonds, U.S. bonds” a reflection of his expectation of higher deficits and stronger growth.
Fast forward to today, when Stan Druckenmiller spoke at the Robin Hood Investors Conference in Brooklyn, repeated he is bullish on the American economy following the U.S. election, and anticipates a much stronger dollar and higher bond yields. Druckenmiller joined Jeff Gundlach in predicting that US 10Y yields may rise to 6% over the next year or two

Emphasis from Zero Hedge. That ten year number will ultimately be applied to all government debt, the Senate pays the ten year rate. The interest costs will  be something around a trillion per year, from the current 360 billion, at last look. Congress will freeze, as they have done so for three out of the last five presidential regimes. We will be right back at austerity, thank goodness.

Druckenmiller needs to examine possible volatility between the now and his compound growth scenario.  The Swamp moves more like a blob of protoplasm, and this blob has to squeeze through a narrow rate corridor for a decade or more; else it's the drunken pilot.

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