- Billionaire Stanley Druckenmiller believes we'll be in a bear market for some time and recession is coming.
- "I assume, and pretty strongly, soon we're going to have a recession sometime in 2023," he said.
- Druckenmiller said his forecast is based on the Fed's approach to fighting inflation.
Billionaire Stanley Druckenmiller is downbeat on the markets right now and says the current bear market has some way to run.
At a 2022 Sohn Investment Conference the investor and chief of Duquesne Family Office said: "My best guess is that we're six months into a bear market," Bloomberg quoted him as saying.
"For those tactically trading, it's possible the first leg of that has ended. But I think it's highly, highly probable that the bear market has a ways to run," he added.
His comments echo the weakness seen in US stock markets, which have tumbled this year. The tech-heavy Nasdaq 100 has dropped 24% year-to-date while the S&P 500 has lost 16%. Stocks continued their descent overnight as investors prepared for key inflation data on Friday.
Druckenmiller said the driver of those losses is down to the Federal Reserve and the central bank's approach in fighting inflation that he says will ultimately lead the US into a recession at some point next year, CNBC reported.
In May, the Fed raised the benchmark rate by 0.5 percentage points, its first double-sized hike since 2000 to bring down inflation and draw a line under years of easy monetary policy.
Geopolitical factors are also putting pressure on stock markets, Druckenmiller said.
"Given the extent of the asset bubble and the destruction in the markets, given what's going on in Ukraine, giving zero Covid policy in China, I don't take a lot of comfort from that," he said. "So I assume, and pretty strongly, soon we're going to have a recession sometime in 2023."
When it comes to investing himself, Druckenmiller said he's taking a step back from trading. "I've lived through enough bear markets, that if you get aggressive in a bear market, on the short side, you can get your head ripped off in rallies. I'm pretty much taking a break," he said.
