Druck Calls Out Bessent & Will Jackson Hole Derail The Debasement Trade? | Weekly Roundup

**Felix** (0:00)
Nothing said on Forward Guidance is a recommendation to buy or sell any investments or products.
All right, what's going on, everybody? Welcome back to another summer edition of the roundup on Forward Guidance. We're here in the doldrums of summer. It's almost over, it's almost back to Labor Day. It's Jackson Hole meeting this week. Lots going on in the macro world, to say the very least. Lots going on, Marcus, what's going on, Quinn?

**Quinn** (0:30)
Not much, man. I'm over in San Sebastian, Spain, eating and postponing my health bender that will have to come starting September when I'm back.

**Felix** (0:41)
So you're really focused on markets right now, I bet.

**Quinn** (0:44)
Yeah. Markets and paella.

**Felix** (0:51)
I love Spain. No, I mean, it's the right thing to be doing right now. I mean, yeah, there's a lot of big macro events, but the market structure side of things is still pretty pinned.
We haven't really been doing a whole lot other than outside of the debasement trades, like gold and Bitcoin, like equity markets, it's just kind of chopping around, I guess, probably waiting for, I mean, we got the PC number today, which we'll talk about, and then also NVIDIA earnings this evening, and then the Jackson Hole meeting speech. Seems like markets just is kind of waiting for all that to happen, plus, like, you know, Labor Day to hit and for the big money to get back to their desks, because the big money is in San Sebastian right now.

**Quinn** (1:32)
Definitely, probably, I don't know if I can support myself.

**Felix** (1:38)
Yeah, exactly. No, yeah, I mean, it's always important, I think, at the end of the summer to kind of just not try to make any really aggressive moves until Labor Day, at least. Obviously, we had like this bit of an exception with what happened last week, what we talked about with the golden Bitcoin and precious metals debasement stuff, but otherwise, it's like, yeah, don't overanalyze the tape, I think.

**Quinn** (1:59)
Yeah, it's already low liquidity, low volume.
The policy makers and powers that be are intervening at a extreme pace in a low volume environment. So you're getting bond market invention, oil market intervention, vol compression. It's not a time to make bets against that in a big way, probably, because there's no one here to really sell, but I mean, left tail risk is big if it happens because of that, but we'll get into Warsh and all these things. They're doing everything to remove the left tail, so just bet on the stuff that's pumping. Yeah.

**Felix** (2:43)
Let's get into the meat of this week, which is drama and infighting in the land of macro goats.
We had Stan Druckenmiller, Druck, the absolute legend, and the master who taught all these proteges like Bessent and Warsh, and he wrote an op-ed. We'll talk about the AIS thing in a minute, but let's talk about the substance first, which is that yes, the Druck rendered an unfavorable opinion of Treasury Secretary Scott Bessent's use of buybacks to defend against higher yields in a market that is functioning normally. He said, I've spent five decades trading on a simple premise. Markets aggregate information no committee possesses, and prices are how that information reaches decision makers. The long-term treasury yield is the most important price in the world. It is also the only fiscal disciplinarian the US has left. Every basis point of artificial yield suppression is a subsidy to procrastination. Return buybacks to their state of purpose, small scheduled author of liquidity operations, announce a quarterly refundings, never off-cycle like what just happened. And then the last sentence, which might jump into anybody who has a keen eye for AI slop, if the 30-year must trade a 5.5% to clear that isn't a crisis, it is an invoice.
Obviously, the message was clear, and anybody who's been listening or reading to Druckenmiller over the years will know that him coming out here and being a strong critic of government intervention and further increases in the debt loads, like he's been banging this drum for decades now. So it's not really any surprise. I think what is surprising is that, you know, I wrote this tweet out that I just, there was a moment in time where it felt like there's this really idealistic 40 chess going on, that you have like the, you know, if you have Soros as like the goat of all time of macro, and then all his protegees are now suddenly in places of power, you have, you know, Warsh at the Fed, you have Bessent at the Treasury, and then you maybe have Druckenmiller in the background as the linkage between all these different players, and you know, they're going to come in and solve the big problems. They're going to solve the debt issue. They're going to solve deficits. They're going to unwind yield curve suppression, all this stuff. And so to see him come out and criticize Bessent, like the initial reaction is, okay, well, this is obviously not nearly as coordinated as we thought.