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Stanley Druckenmiller says Fed


must pause because the
economy can 'ill afford a major

policy error'
 "The central bank should pause its double-barreled blitz of higher interest rates
and tighter liquidity," Drunkenmiller says in a WSJ op-ed.
 He cites slowing global trade growth and U.S. financial markets selloff,
particularly in bank stocks.
 The U.S. economy can "ill afford a major policy error," either from the Fed or the
rest of the administration, he says.
 Markets are now foreseeing a 78 percent chance of a hike this week.

Yun Li | @YunLi626
Published 3 Hours Ago | Updated 2 Hours Ago

by Taboola

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biggest economic threat
The Federal Reserve should halt its interest rate increases as recent
TRENDING NOW
developments in the markets and economy signal caution, hedge
fund manager Stanley Drunkenmiller said in a commentary for the
the Wall Street Journal over the weekend.
1. The stock market is
on pace for its worst
December since the
"The central bank should pause its double-barreled blitz of higher Great Depression
interest rates and tighter liquidity," Drunkenmiller, a former
member of the Fed Board and now CEO of Duquesne Family Office,
said in the op-ed. 2. Warren Buffett
suggests you read
this 19th century
There are enough indicators to suggest the economy might need poem when the
some monetary accommodation, Drunkenmiller pointed out, citing market is tanking
the slowing global trade growth over the past three months and U.S.
financial markets selloff, particularly in bank stocks. The billionaire 3. S&P 500 drops more
than 2% to new low
investor had managed the George Soros' Quantum Fund and later
for 2018, Dow dives
oversaw $12 billion as president of Duquesne Capital Management.
500 points

4. Four things need to


happen for the stock
market to bottom,
Jim Cramer says

The Fed will likely exercise a 5. Jeffrey Gundlach


says passive

 flexible approach to interest hikes,


strategist says  
4 Hours Ago | 05:39
investing has
reached a 'mania' –
investors should
avoid index funds

"We believe the U.S. economy can sustain strong performance next
year, but it can ill afford a major policy error, either from the Fed or
the rest of the administration. Given recent economic and market
developments, the Fed should cease—for now—its double-barreled
blitz of higher interest rates and tighter liquidity," Drunkenmiller
said.

The S&P 500 is down 11 percent and counting from its record high
hit earlier in the year as recession fears mount. Bank stocks have led
the decline with the financial sector in the S&P 500 down more than
20 percent over that same time span. Other economically sensitive
sectors, like housing, transport and industrials, are down by double
digits, underperforming the broader markets, Drunkenmiller
pointed out in the op-ed.

Markets are now foreseeing a 78 percent chance of a hike when the


Federal Reserve meets on Wednesday and a 38 percent probability
of a move anytime in 2019, according to the CME's tracker. The Fed
has forecast three hikes for 2019, but recent dovish comments from
Fed officials and a more tempered view of the economy for next year
could make them rethink their rate path.

"The Fed should stop this option-limiting exercise entirely. And if


data dependence is the Fed's new mantra, it should actually
incorporate recent data into its forthcoming policy decision,"
Drunkenmiller added.

Click here to view the Wall Street Journal op-ed.

WATCH: In this 2017 interview, Druckenmiller says he's keeping


an open mind on Powell for Fed Chair

Druckenmiller is keeping an open


 mind on Powell for Fed Chair  
5:26 PM ET Tue, 12 Dec 2017 | 02:04

Yun Li
Markets and Investing Reporter

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