Stanley Druckenmiller's retiring might be a symptom of how the market is really doing, poorly.
That's the feeling expressed by one of our acquaintances at a hedge fund, who reacted to the news that Druckenmiller is retiring by telling us,
"If Druckenmiller is having that much trouble finding opportunities, it doesn't bode well for the future."
Depressing.
Druckenmiller has had a long career, starting most famously with his being Soros' former star portfolio manager. He seems to be throwing in the towel during a down turn just because it isn't fun anymore, not because he's losing tons of money. His fund is only down 5% YTD, according to his final letter.
Druckenmiller says he's closing Duquesne because, "the challenge of managing an enormous amount of capital was having a clear impact on my ability to perform, as well as my state of being."
So he might see something brewing ahead that average investors don't, or he might just be exhausted right now and plan to return to managing more money when he's more confident in his ability to generate big returns. No matter what, Druckenmiller's retirement is a symptom of market sentiment right now.
The son of the man who is credited as the father of hard-core pornography, is being sued by investors and creditors for having "drained the financial lifeblood" of Private Media Group, a publicly traded porn empire founded by the Swedish father and son. Allegedly, Berth Milton Jr. pilfered more than $10 million from the Nevada-based company, gave himself $600,000 without approval from the board, and fired the CEO when he started looking into Milton's shady activities.
Goldman Sachs' Asset Management unit told their high-net-worth clients to dump gold. No biggie. Only problem is that meanwhile, their precious metals analysts are telling Goldman's not-so-deep-pocketed clients that gold prices are rising and will reach $1,300 an ounce in the next 6 months.
UBS is launching a new ad campaign to repair damaged relations with an unhappy client-base, especially those at the private bank, reports the WSJ. The flagship is "still leaking assets," and the firm's management said "we know that it will take more time and even more effort on our part before we fully regain the trust of our clients.” The new slogan: “We will not rest.”
Bright young Wall Street hopefuls are getting desperate; they're not even bothering to apply for jobs anymore - they're heading straight to Craigslist. Check out the ad placed by a "young, ambitious MBA student" on the sites Casual Encounters section, asking the respondent to find her a job before she "proceeds to anything."
Axiom Capital's Liam Dalton explained his thoughts on the economy and why he's pessimistic, but not scared, about the future on Bloomberg yesterday.
Dalton is big in the hedge fund industry, where many hedge fund managers have seen anaemic returns lately. It seems some have even gotten so frustrated at their inability to profit, they've retired.
Later, during the same interview, Dalton also said that he does not expect systemic failure.
We've already avoided that. A crash would be predicated upon a giant policy mistake like the government stepping away and allowing the thing to try to free trade without their support.
I think they've already poured so much money into the market - all their chips are in the center of the table now. They're all in on this and I think they'll continue to put policies in place that support asset prices the best they can.
Watch:
We've also included their transcript of Bloomberg's entire Dalton conversation, which is very good, if you're interested:
KEENE: I want to talk about some of the reporting that I really thought was off the mark about hedge funds having a tough time. Did Mr. Druckenmiller and Mr. Pellegrini throw in the towel because they were losing money, which I would doubt, or is it because, if you're going to do a hedge fund, you've got to make a certain amount to make the 220 payout? You've got to make a hurdle rate, and making that hurdle rate in this economic environment is going to get tougher and tougher.
DALTON: Well, listen, I mean, those two guys aren't exactly battling for their survival. I mean, they've done incredibly well over time, and so they're proven entities. I think it just happens to be that they decided that it was time to go to the beach, so to speak. On the other hand, there is no doubt that a lot of the market conditions we're confronted with now are not particularly well suited to a wide swath of the hedge fund industry. You know, the equity world is faced with a market that is having very, very wide swings in price action. It's a long-biased industry, let's face it.
KEENE: Right.
DALTON: So when we get this kind of price action, it's very difficult to get on longer-duration positions and hold them. And the same goes for the trending world and the macro world. I mean, these are momentum-driven strategies that are not well tuned to this kind of choppy price action.
KEENE: Yes.
DALTON: So as a result, returns have been rather anemic.
KEENE: When you look at the anemic returns, let's bring it down to our listeners and myself. We're not in hedge funds. Does that just mean you grab the dividend and hope for dividend growth?
DALTON: You know, that's - to tell you the truth, there are worse strategies out there at the moment. I mean, what I think we're watching is markets are gravitating to a world in which we're having sort of deflationary indications, if not outright deflation. And stocks within the universe of equities, which I watch, are basically acting as though the ones that are going to be rewarded best are the companies that are either self-generating cash flow entities or things that can protect their cash flow at a disinflationary environment.
And so, as a result, some of the higher-yielding names, some of the bigger names, obviously the MLP space which provides great dividends, these have been the relative winners in the market. And the things that have been most sensitive to economic activity and consumer activity have the been the worst. And that's kind of true to form when it comes to what we've seen in the data.
KEN PREWITT: There was a long time there, Liam, when nobody much paid attention to dividends.
DALTON: Right. Well, that's true, because we had a world in which there was an underlying growth dynamic providing for guys to basically run stocks up on the assumption that there was a very high quality growth element to the market, which is revenue growth.
And we've had - as we know, over the past few decades we've rolled from growth industry to growth industry, whether it be technology, more recently energy. You know, before that consumer staples, pharmaceuticals. So now we're - we seem to be at a point now where there's really no high-quality source of growth for the aggregate economy.
And then as a result, dividends become a much more interesting feature to the equity stuff, because we're seeing actually a strange dichotomy in that conventional thinking believes that when interest rates are low and valuations are low, you simply buy stocks. And that's a great period to (inaudible) stocks for higher returns later.
I see it a little differently. I mean, I see the fact that these equities have retreated down to rather low valuations as sort of a validation of the slow growth environment we're going into, and that the yield portion of equities is really the protective feature that people should be looking for.
PREWITT: OK. So as we see corporate cash build up and build up and build up, a lot of it's going to go to dividend increases or restorations?
DALTON: I think it will. I mean, corporate America - in fact, it's not that corporate America doesn't work well. It works too well. You know, people think that businesses have suffered largely from this dysfunction that we had in credit, but I think what it did is it forced business to become extremely efficient. And what they've done is they've taken headcount down and overhead down, and as a result they've built up these large cash positions. And their cash flow, which I mentioned before is something corporations will want to defend, are actually spewing it.
And as a result, we have this sort of strange environment where corporate America is doing really well and all the debt has really piled up on the government side. So I think what you're going to see is companies are going to become more active when it comes to either dividend increases, or special dividends, or mergers and acquisitions to try and generate some growth.
KEENE: I know secretly - and folks, if you're just joining us, Liam Dalton, Axiom Management. No secret that it's been a slow summer, not like the boom of '09, when there was a lot of help for Wall Street. What do you see as we enter September here in terms of just the anecdotal evidence you've seen through the summer? What does it look like as we jump into September and October?
PREWITT: Yes. The weight of the evidence suggests that we're - that economy continues to soften. However, as we see this morning, any grain of evidence of a growth dynamic and we're going to lurch upward. And this has sort of been the playbook since the late April high that we had and the data came off. Really, we've been trending down since early April. The only thing that interrupted it and pulled it to the upside were the earnings releases in July which were, once again, a little better than expected, corporate America.
KEENE: Yes, that's a big deal here. There's a presumption here it's going to get slower. Who said that - when you look at the productivity of the nation, who says corporate earnings have to get slower?
DALTON: Well, you know, corporate earnings, in fact, are in a position right now where you look at how strong they've been relative to expectations, and where margins are, and it simply conflicts with the data from the standpoint, particularly on the consumer side of the economy. And we've seen this reflected within the market. I mean, the retail sector and some of the consumer-sensitive sectors have been pounded, while some of the safer sectors and the more defensive issues have been rotated into capital-wise.
So, you know, I think the market is leading me to believe that we've probably seen the best returns relative to expectations, but I think you make a good point, Tom, and that is we're really not set for another collapse.
KEENE: Yes.
DALTON: I mean, you know, systemically, we're out of the woods, I think, and I think there will be some ugly imbalances. But over time, you know, the pig will make its way through the python. It's really more a case of trying to normalize economic conditions. And stocks are having a tough time sort of finding equilibrium relative to this new economic model.
KEENE: Scott e-mailed in a very thoughtful note here on the hedge fund business. Liam, it's a smart note from Scott, who's clearly in the business and makes very clear it's a new world out there, and that managers need more from their investors. Investors really want a lot more information from managers. Is it going to be tougher to handle investors in the future?
DALTON: You know, investors are requesting and frankly requiring a higher level of transparency, a higher level of liquidity. It's all a result of the aftermath of the experiences we've had over the past few years, and frankly with net returns over the last decade being subpar. I don't think it's going to be unmanageable, but I think it's just going to be a matter of the industry answering to the realities of the demand side.
I mean, frankly, it used to be that the managers were really in control of the dynamics, the structural dynamics of the industry. And I think that relationship has now shifted, and I think that the investor base is now firmly in control of the terms under which they'll give capital to outside managers. And that process is unfortunately, possibly right now, swinging a bit too far. The pendulum probably likely flows a little bit backward towards equilibrium, where we can see a better balance of power. But the investor is in control right now.
PREWITT: Well, Liam, that ADP report sort of underscores all this talk about a slowdown in the economy. When do things get back to normal?
DALTON: Well, that gets into the argument of, is this experience we're going through cyclical or is it structural? You know, my argument would be that the employment element of this looks a bit structural, and that is as a result of sort of the efficiencies that corporations can drive.
You know, they can supplant workers with technology and with higher productivity from smaller worker bases with certain exceptions, but this is a dynamic I think that's going to stay with us for a long time.
As far as really where we stand in relation to credit, I mean, this is another structural element that I think is going to put growth limits on us for really a significant amount of time. And that is every major longer-duration expansion we've had since the '20s has been accompanied by credit growth, and we do not have that dynamic now.
Getting rich as a hedge fund manager is a thing of the past, says Gross. Druckenmiller's exit was like a punctuation point at the end of an era.
It's all very dramatic, the way Gross explains it, though the reality is much more boring.
The hedge fund industry mogul saw the industry changing, saw performance lag, and has no hope that it will come back anytime soon. That's why Druckenmiller left Duquesne.
Gross told Bloomberg he thinks it's because Druckenmiller forecasted the end of a time when hedge fund managers can make a lot of money.
"Future investment returns will be far lower than historical averages."
And because we're just like Japan.
“If bond investors believe that the resplendent and abundant capital gains of the past 25 years will be duplicated from yield levels of 2 to 3 percent -- well, they just haven’t been to Japan, have they?”
PIMCO's gone back and forth on their predictions of inflation vs deflation, but here it seems the firm's CEO is siding with the deflation camp.
The names Stanley Druckenmiller, Paul Tudor Jones, Jim Pallotta, and many more might emerge in the wiretap evidence used in the Rajaratnam trial, says the NYPost.
The names expected to emerge from the wiretap evidence are names of big, powerful people. And some of these people are worried that the evidence released will embarass them.
Three anonymous people who the NYPost says "spoke to Raj regularly over the years" wrote the court a memo saying:
"Releasing wiretap information even to the Securities and Exchange Commission could damage the reputation and professional standing of individuals who participate in a wide array of financial, political, legal, and social circles."
A small taste of the kind of evidence we can expect emerged already. Some of it is just funny - not embarassing or repuationally-damaging at all.
For example, Druckenmiller, PTJ, and Jim Pallotta play Fantasy Football together in a league.
Druckenmiller, who made headlines recently with news he's shuttering his fund despite its successes, has never been charged or implicated in any wrongdoing. He and Rajaratnam, founder of hedge-fund firm Galleon Group, spoke frequently because they were in a fantasy football league together, which also included high-profile hedge-fund names like Paul Tudor Jones and Jim Pallotta.
But some of the evidence is somewhat incriminating for the individuals involved.
Raj apparently spoke to Quint Slattery of the hedge fund Symmetry Peak Capital on instant messenger and told him something about seeing ahead of earnings at Computer Associates.
An analyst's flirtations with Raj are also among the wiretaps.
"U looked wonderful yesterday," Rajaratnam tells her before saying that a friend asked for her number. "I told him it would be war," he adds. "It better," she says.
The three anonymous memo-writers hope the embarassing evidence stops there.
Wall Street CEO's and hedge fund managers are loaded.
One of the ways they stay that way is with charity tax write offs. Most of Wall Street's donations are pretty run-of-the-mill. Fighting poverty. Ending hunger. Aiding education.
But some of them invest a large chunk of their time and money to causes they really care about.
You can tell the difference because the causes they donate to are random and specific, like spiritual awareness or golf - you'd have to be a big fan of the cause to donate.
So we've deduced what some of Wall Street's richest REALLY care about, based on their quirky charity donations.
"We want our children to know, not only their living relatives, but those representing past generations for a greater connection to their family and ancestral origin and heritage," the Ackman family said in a press release.
Ackman also cares about Newark, NJ kids.
In 2007 when three students from Delaware State University were murdered in a playground behind Mount Vernon Elementary School in Newark, Ackman put forth $1 million which Newark mayor Cory Booker used to beef police security equipment. Ackman had previously contributed to Booker's campaigns.
Blankfein cares about Harvard
The Lloyd and Laura Blankfein Foundation donated $620,000 to Harvard Law School.
They also donated $500,000 to their sons' school, Ethical Culture Fieldston School and $50,000 to Barnard College, Laura Blankfein’s alma mater.
They made smaller donations of $1,000 to Dorot, a New York nonprofit that cares for the elderly, the Animal Rescue Fund of the Hamptons, and New York Cares.
Art can be considered a donation to the greater good of society, too, in a way.
Since 2000, Steve Cohen has collected everything from Jasper John's "Flag", to Willem de Kooning’s "Woman III", Andy Warhol's "Turquoise Marilyn" and Damien Hirst's "The Physical Impossibility of Death in the Mind of Someone Living". It has been widely reported that he plans to set up a private museum in Connecticut where he lives.
In 2009, 20 of his paintings and sculptures were curated by Sotheby's for a two week exhibit. By doing so, Cohen let the world share in the enjoyment of gazing their eyes on his amazing collection.
In the past year, it's seemed like there was a new hedge fund start-up to write about every day.
Turns out, we could have written about 2 launches per day; seven hundred and fifteen new funds launched in the first nine months of 2010 alone, according to Hedge Fund Research.
Hedge-fund start-ups last year "reached the highest level since the boom" according to the Wall Street Journal.
We won't bore you with the launches that don't have a good story behind them, so get ready to be amazed at 1) the number of high-level traders leaving their firms to become hedge fund entrepreneurs with tons of money under management already. And 2) the weird strategies that prove there's a hedge fund bubble right now.
Turiya Capital, April 2010
Fund name: Turiya Capital
Founder: Davide Erro (the former CEO of Gandhara Capital, he used to be the global portfolio manager of the global value group long/short equity fund at the DB advisors division of Deutsche Bank AG, where he managed a portfolio of €1.25 billion, and he also was the head of the Asia division at Goldman Sachs Equity Arbitrage.)
Trading: long/short global equity, specializing in Asian and European equities
Irene Tse works 80-hour weeks, wakes up in the middle of the night to check bond prices, and she's a concert pianist.
Tse is also JPMorgan's new Chief Investment Officer for the North American region, a huge role.
And Tse is an animal -- it's obvious she's one of the top women on Wall Street right now.
She started as a trader on the government bond trading desk at Goldman Sachs in 1994, where she worked for 14 years.
In 2005, when she was 34, Tse said she that at Goldman, she had worked 80-hour weeks for the past 10 years. And she typically got out of bed two or three times every night just to check bond prices in markets around the world. She told Fast Company:
"I can count on the fingers of one hand the number of days in my career when I didn't want to come to work."
"Every day I wake up, and I can't wait to get here."
At the time, she was in London, where she had moved to take over as head of European government bond trading in 2001, but she soon returned to New York to take on the role of head of government bond trading in 2003. She was named managing director in 2002 and partner in 2004, according to 100 Women in Hedge Funds.
40-year old Tse, a former Goldman partner, left her role as co-head of U.S. rates at Goldman three years ago to join Stanley Druckenmiller's Duquesne Capital, where she was a portfolio manager.
She apparently worked closely with Druckenmiller focusing on various rates, mortgage, credit, foreign exchange, equity, commodity and structured product offerings.
How'd she get the new job at JPMorgan?
Here's an idea.
She's a member of the TBAC, which is, according to Bloomberg, a group that provides quarterly recommendations to the Treasury on managing the government’s debt. It was formed after World War II, made official through a 1972 act of Congress, and now it has many high profile members, who are appointed by the Treasury and the group's chairman.
The group’s chairman is Matthew Zames, the co-head of fixed income at New York-based JPMorgan.
Here's her career advice. She said having diverse interests is important in a 2007 interview with the Financial Times:
“There is no one set of skills that makes a good trader – some of the best are literature majors, while others are mathematics geniuses."
“I chose J.P. Morgan Chase because it is truly a leader in finance and because it offers an extraordinary platform for me and the entire CIO group to invest and manage risk. I’m also grateful to Althea Duersten, who played a critical role in building this outstanding team, and who has been very generous and supportive in bringing me to J.P. Morgan."
The names Stanley Druckenmiller, Paul Tudor Jones, Jim Pallotta, and many more might emerge in the wiretap evidence used in the Rajaratnam trial, warned the NYPost in November.
Months ago, the names of the three powerful men -- and many more power names -- were expected to emerge in the Raj wiretaps. So far, we haven't heard Druckenmiller, PTJ, or Pallotta mentioned.
The men probably aren't breathing a sigh of relief yet. In the fall, the Post reported that some people were worried that the evidence released will embarrass them.
Watching the trial, we've noticed a number of men observing the process for unknown reasons. We suspect that some of the people viewing the trial are doing so for clients that want to make sure nothing about them emerges in the course of the trial.
Three anonymous people who the NYPost says "spoke to Raj regularly over the years" wrote the court a memo saying:
"Releasing wiretap information even to the Securities and Exchange Commission could damage the reputation and professional standing of individuals who participate in a wide array of financial, political, legal, and social circles."
A small taste of the kind of evidence we can expect emerged already. Some of it is just funny - not embarassing or repuationally-damaging at all.
For example, Druckenmiller, PTJ, and Jim Pallotta play Fantasy Football together in a league.
Druckenmiller, who made headlines recently with news he's shuttering his fund despite its successes, has never been charged or implicated in any wrongdoing. He and Rajaratnam, founder of hedge-fund firm Galleon Group, spoke frequently because they were in a fantasy football league together, which also included high-profile hedge-fund names like Paul Tudor Jones and Jim Pallotta.
But some of the evidence is somewhat incriminating for the individuals involved.
Raj apparently spoke to Quint Slattery of the hedge fund Symmetry Peak Capital on instant messenger and told him something about seeing ahead of earnings at Computer Associates.
So far, nothing about Slattery has come up in the trial.
We're covering the trial until the bitter end and we'll keep you posted.
Last night financiers from banking, private equity and the hedge funds world gathered at Cipriani in midtown for the Langone Medical Center Violet Ball. Duquesne Capital's Stanley Druckenmiller said hello to Goldman COO Gary Cohn "before the two waded into a maze of seated guests,"Bloomberg said. He obviously said something else too, because GC is having a giggle.
Cohn was on a table with BlackRock's Larry Fink and Thomas Murphy of Crestview Partners. Ken Langone was also there.
Druckenmiller, who closed his $12 billion Duquesne Capital Management to investors last year, said he'd prefer to see a technical default over a quick raising of the debt ceiling.
He said the latter risks pushing the U.S toward becoming the next Greece because it fails to undertake "fundamental reform" and doesn't fix the the more dangerous problem: mounting debt.
"I think technical default would be horrible," he told the WSJ. "But I don't think it's going to be the end of the world. It's not going to be catastrophic. What's going to be catastrophic is if we don't solve the real problem."
But there's two things you should remember about Mr. Druckenmiller when he advocates technical default:
1. This is a guy who knows how to profit from sovereign debt crises
The man made his name and his money by betting on the collapse of the British pound. Druckenmiller is credited with executing George Soros' legendary shorting of the British Pound in 1992.
Markets know the difference between a default in which a country will not repay its debts and a technical default, in which investors may have to wait a short period for a particular interest payment.
Under the second scenario, he doubts that investors such as the Chinese government would sell their Treasury debt and take losses on the way out—"because I'll guarantee you people like me will buy it immediately."
For now, Druckenmiller is long treasuries, he says.
Venture capitalist Ken Langone gathered with some of the most powerful people on Wall Street last night to try to convince Chris Christie to run for president in 2012, according to POLITICO.
Christie has repeatedly said that he won't run in 2012 (he's thinking 2016), but he's also made a lot of friends on Wall Street.
Many Wall Streeters at the event cited Obama's "class warfare" as the reason they won't vote for him 2012, according to people there.
The outcome was the same -- Christie still insists that he won't run. But he seemed confident that if he did, he would win. He said something to the effect of, I think I would win – not saying I would win, but I could win... And if I were to run, and had this group behind me, I certainly wouldn’t have any problem raising money.
Check out POLITICO for a full summary of what he said.
But that hasn't stopped a small but powerful group of Republicans from trying to persuade Christie that now is the time for him to jump in the race.
The Draft Christie movement, which took hold this summer, has renewed its vigor amid mounting questions about Rick Perry's viability as a candidate. Republicans are now looking for a fiscally conservative alternative to the rabble-rousing Texas Governor, and Christie is their man.
In an article for today's New York Times, campaign finance reporter Nick Confessore takes a look at the charter members of the Christie Fan Club, an influential clique of powerful Northeasterners, including:
Ken Langone, the billionaire founder of Home Depot. Langone who backed former New York Mayor Rudy Giuliani in 2008, is Christie's biggest backer, according to Confessore.
Paul Singer, hedge fund magnate and chairman of the Manhattan Institute. Singer is a big Republican activist and one of the most highly sought GOP donors.
Charles and David Koch, industrialists and the fourth and fifth richest men in America, according to Forbes. The Koch brothers are reportedly the founders and primary funders of Americans for Prosperity, one of the largest Tea Party umbrella groups. David Koch is also the richest man in New York.
Charles Schwab, personal investment mogul and the 67th richest person in the U.S., according to Forbes.
David Tepper, billionaire hedge fund manager and founder of Appaloosa management.
Daniel Loeb, hedge fund manager and one-time Obama supporter.
We imagine this would be a tough group to say no to. Christie's schedule — he's on a three-state fundraising swing that includes a stop at the Reagan Library — indicates that maybe he hasn't said no quite yet.
Chris Christie's brother Todd told the Newark Star Ledger this afternoon that despite escalating pressure to enter the presidential race, there has been no change in the New Jersey governor's decision to sit out the contest.
"I'm sure that he's not going to run," Todd Christie said. "If he's lying to me, I'll be as stunned as I've ever been in my life."
The denial, follows renewed speculation that Christie was reconsidering his longstanding opposition to running for president seeded by Former New Jersey governor Tom Kean.
"He's giving it a lot of thought," former Gov. Tom Kean told the National Review Monday. "I think the odds are a lot better now than they were a couple weeks ago."
Many Republicans — including a group of billionaires— have been trying to get Christie to run for months, promising his campaign would be fully funded and staffed.
But Christie feared he was not well-versed enough in the issues of the day to enter the race so late, looking at Rick Perry's recent missteps as a warning, rather than an opportunity sources said.
Christie's decision to remain on the sidelines will set off a race for the support of those who backed the would-be campaign — though some may hold out hope until the Florida primary filing deadline on October 31.
Last year Christie expressed frustration that the rumors of his candidacy wouldn't stop: "Short of suicide, I don't really know what I'd have to do to convince you people that I'm not running," he said. "I'm not running!"
Christie is set to give a policy speech at the Reagan Library tonight, which many thought would be used to raise his profile before a presidential campaign announcement, but now it seems certain he will offer yet another denial.
Cougar Biotechnology is a development stage biopharmaceutical company that focuses on oncology (in 2009, it had compounds in development for the treatment of prostate cancer, as well as breast cancer and multiple myeloma). Johnson and Johnson bought the company for $1 billion on May 21, 2009 -- a deal that sent shares in Cougar soaring 16%.
Details about SAC's ownership of Cougar shares ahead of the deal and its relationship with MedaCorp, an expert-network that's owned by an investment bank that acted as a financial advisor to Cougar, are explained here.
Regulators also have examined trading around the Cougar takeover by other hedge funds, including Stanley Druckenmiller's Duquesne Capital Management and [Raj Rajaratnam's] Galleon Group. It is unclear whether the examinations are continuing.
BNP Paribas' Emma Sugarman, the head of U.S. capital-introductions, told Bloomberg TV yesterday that since several hedge funds missed the October rally there will "undoubtedly" be more hedge fund closures in 2011.
"I think undoubtedly we are going to see more hedge fund closures this year," Sugarman said.
"I think we started to see it earlier in the year with big bluechip names--people like Stan Druckenmiller at Duquesne and Bruce Kovner stepping back from Caxton."
"It's not as much fun working in the hedge fund market anymore," she said.
Druckenmiller, who is known to be media shy, told Bloomberg TV that he sees "a storm coming, maybe bigger than the storm we had in 2008, 2010" and it has to do with a demographic bubble.
"But the demographic storm is just starting now. It reminds me of '05 when people just extrapolated housing prices going up for 50 years…Everyone sorta lives with their rulers in the past and doesn't look at coming changes," he said.
What's happening, he explained, is we have a working population now where the current workforce pays for the benefits of the seniors. Since 2000, there have been about 4.5 to 4.8 workers per retiree. He said by 2050 it will be only 2.4 workers per retiree.
He told Bloomberg TV that people like him need to speak out about this issue. Just to be clear, he's not against the seniors.
"And let me just say one thing. I am not against seniors, okay. I love seniors. Unfortunately I'm going to be one in the not-too-distant futures. What I am against is current seniors to me stealing from future seniors."
Watch the clip from Ruhle's hour-long interview with Druckenmiller below:
Now Watch: Paul Krugman Says That We Shouldn't Worry About Inflation, But We'll Have To Address Entitlements
Druckenmiller, who called the housing crisis, touched upon a gamut of issues such as entitlement spending, what's going on in Washington, D.C right now and the hedge fund industry.
As for the recent economic downturn, here's what he said when he was asked who is to blame:
"It's hard to tell who's going to be blamed-- if we don't act and this occurs…There's plenty of blame to go around. If I had to analyze how do we get into the financial crisis, I would say it started way back in the '90s when then-Chairman Greenspan refused to address the dot-com bubble, came up with some new theory of productivity and therefore we're not going to have a problem, so all these NASDAQ companies who were never going to earn money went to hundreds-of-times earnings and then of course, we had a major bust. And instead of taking a recession and having the cleanup…they needed an offset. So they created the housing bubble. So now by hindsight, everybody says, 'Well, you had these horrible Wall Street actors,' and I'm sure there were quite a few horrible Wall Street actors. And I don't doubt that they were part of the problem. In fact, I know they were part of the problem. But I also know it was negative real interest rates for 12 outta 20 years that enabled these actors to do the things they were doing and incented, yes, incented them to go out and gamble the way they were gambling."
A small taste of the kind of evidence we can expect emerged already. Some of it is just funny - not embarassing or repuationally-damaging at all.
But some of the evidence is somewhat incriminating for the individuals involved.
