Stan Druckenmiller says the risk-reward calculation for equities is the worst he’s seen in his career, and government stimulus programs won’t be enough to overcome the world’s economic problems from the coronavirus downturn.
“The consensus out there seems to be: ‘Don’t worry, the Fed has your back,'” Druckenmiller said on Tuesday during a webcast held by The Economic Club of New York. “There’s only one problem with that: our analysis says it’s not true.”
While traders think there is “massive” liquidity and that the stimulus programs are big enough to solve the problems facing the world’s largest economy, the economic effects of the coronavirus are likely to be long lasting and will lead to a slew of bankruptcies, he said.
“I pray I’m wrong on this, but I just think that the V-out is a fantasy,” the legendary hedge fund manager said, referring to a V-shaped recovery.