Stanley Druckenmiller said the risk-reward calculation for equities is the worst he's seen in his career, and that the government stimulus programs won't be enough to overcome real-world economic problems.
"The consensus out there seems to be: 'Don't worry, the Fed has your back,'" Mr. Druckenmiller said 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 U.S., 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.
Mr. Druckenmiller's remarks are among the strongest comments yet by a Wall Street billionaire on the bleak outlook facing the U.S. They also stand in contrast to the optimism that has pushed the S&P 500 index to rally almost 30% since its March low even as the pandemic has brought the economy to a standstill, seized up credit markets and ended the longest bull market in history.
The damage spurred the Federal Reserve to unveil a raft of emergency lending programs and Congress to unleash almost $3 trillion in stimulus funds. But those programs aren't likely to spur future economic growth, Mr. Druckenmiller said.