Stanley Druckenmiller CALLS BS on Bessent

**Michael Zuber** (0:01)
To say Stanley Druckenmiller is a legend on Wall Street is to be understated. He is one of the kings of the kings of the business. He's been in the game for a better part of 50 years, and his track record really speaks for itself. Also, it's probably important to know that both Kevin Warsh and Scott Bessent worked directly for Stanley Druckenmiller. I believe Scott Bessent worked for him twice for about eight years, and Kevin Warsh, frankly, is Kevin Warsh because of Stanley Druckenmiller. While working with Stanley after spending time at the Fed, Kevin Warsh's wealth exploded to over $100 million.
To say that both Kevin Warsh and Scott Bessent owe Stanley Druckenmiller a lot is again to probably be understated. Why is this important? Well, Stanley Druckenmiller has woken up. He is not happy with what his former employees are doing. We will talk about one catch in this story at the end, but I've been reading a lot of articles about what Stanley Druckenmiller is saying about what Scott Bessent is doing. In this particular Daily Financial News, I've highlighted three. I might highlight some more tomorrow because it is juicy. This is in no particular order. This is just how I read them and how I noted them. First up, Stanley Druckenmiller says, I spent five decades trading a simple premise. Long-term treasury yield, the 30-year, is the most important priced in the world. It is also the only, I'm stressing the word only, fiscal disciplinarian the US has left.
Every basis point of artificial yield suppression is a subsidy to procrastination. What does that mean? Well, it basically means that Scott Bessent's multiple attempts and now threat of using the nearly trillion dollar current accounts to buy the long end is artificial. It is yield management and it is not good. Also, Stanley Druckenmiller points out, again, I stressed the word only, it is also the only fiscal disciplinarian. What does that mean? It means at some point, rates will get so high, the drunk politicians will have to cut back. The 30-year bond, again, in the first line, the long-term treasure, yield, is the most important price in the world.
That is some powerful stuff. I got two more, Stanley Druckenmiller. Once markets believe the treasury, again, Scott Bessent, is defending a price, every rise in yields becomes a test of official resolve and operations. Must grow to survive the test. To which I would ask you to go back and research breaking the bank. Stanley Druckenmiller broke the Bank of England back in the day. The Bank of England was trying to defend a price, and Stanley Druckenmiller and his cronies broke it.
That's basically what he's saying here, is now that you've set a line in the sand, Mr. Scott Bessent, you're going to have to defend it because the market's going to go after you. And then the final thing, and again folks, I will show the other side of the coin in a minute because there is something that could be lurking in the background, but we'll go through one more and then we'll talk about the other side. The last thing I noted is rising interest rates are a signal of trouble ahead. Artificially suppressing them heightens the danger.
Again, you could think of this as being a hose that has the water running that you try to crimp. It gets more and more pressure builds and ultimately what comes out is far more dangerous in the beginning. All right, let's take the other side. Stanley Druckenmiller is a legend on Wall Street. He knows how to use his voice and his reputation. Maybe, just maybe, we have a citadel situation going on. If you guys don't remember, Citadel announced a surprise rate hike, which ultimately started the cascade of wiping out Leopold, which then allowed Citadel to buy Leopold on the cheap. Maybe, maybe Stanley Druckenmiller is on the wrong side, and he is getting hurt by seeing rates fall. Who knows? Is Stanley Druckenmiller being, I don't know, a good steward in sharing his true opinions, or is he just another greedy Wall Street banker who is on the wrong side, and knows that he can use his reputation to maybe save his trade? I don't know what the answer is. Leave the comments below if you want to take a guess. Is Stanley Druckenmiller really trying to help Scott Bessent see the error of his ways, or is he just a whiny billionaire who got caught on the wrong side?
All right, what else is going on? Well, Scott Bessent went on national TV and started talking tough. He's definitely going after Iran. Economic fury is in full force. Anyone who helps Iran will be removed from the US dollar system. Forgive me if I call BS on that. I do believe that Iran's probably closest ally or one of them is going to be China. And I don't think we want to do anything to really highlight the battle there, but we shall see.