Stanley Druckenmiller sees 'hard landing' in 2023 with a possible deeper recession than many expect

Billionaire investor Stanley Druckenmiller believes the Federal Reserve's effort to rapidly unwind the excesses it helped physique up for a decennary with casual monetary argumentation volition not extremity good for the U.S. economy.

"Our cardinal lawsuit is simply a hard landing by the extremity of '23," Druckenmiller said astatine CNBC's Delivering Alpha Investor Summit successful New York City Wednesday. "I volition beryllium stunned if we don't person recession successful '23. I don't cognize the timing but surely by the extremity of '23. I volition not beryllium amazed if it's not larger than the truthful called mean plot variety."

And the legendary investor, who has ne'er had a down twelvemonth successful the markets, fears it could beryllium thing adjacent worse. "I don't regularisation retired thing truly bad," helium said.

Druckenmiller believes the bonzer quantitative easing and zero involvement rates implicit the past decennary created an plus bubble.

"All those factors that origin a bull market, they're not lone stopping, they're reversing each 1 of them," Druckenmiller said. "We are successful heavy trouble."

The Fed is present successful the mediate of its astir assertive gait of tightening since the 1980s. The cardinal slope past week raised rates by three-quarters of a percent point for a 3rd consecutive time and pledged much hikes to bushed inflation, triggering a large sell-off successful hazard assets. The S&P 500 has taken retired its June debased and reached a caller carnivore marketplace debased Tuesday pursuing a six-day losing streak.

The capitalist said the Fed made a argumentation mistake erstwhile it came up with a "ridiculous mentation of transitory," reasoning ostentation was driven by proviso concatenation and request factors mostly associated with the pandemic.

"When you marque a mistake, you got to admit you're incorrect and determination connected that 9 oregon 10 months, that they conscionable sat determination and bought $120 cardinal successful bonds," Druckenmiller said. "I deliberation the repercussions of that are going to beryllium with america for a long, agelong time."

The user terms scale increased 8.3% successful August twelvemonth implicit year, adjacent a 40-year precocious and coming successful supra statement expectation.

Druckenmiller erstwhile managed George Soros' Quantum Fund and changeable to fame aft helping marque a $10 cardinal stake against the British lb successful 1992. He aboriginal oversaw $12 cardinal arsenic president of Duquesne Capital Management earlier closing his steadfast successful 2010. 

"You don't adjacent request to speech astir Black Swans to beryllium disquieted here. To me, the hazard reward of owning assets doesn't marque a batch of sense," Druckenmiller said.