Facebook pixel Skip to main content

Business Insider: Paul Tudor Jones Rings the Bubble Alarm, Warns the Fed Could Tank the Economy

January 12, 2022
market Bubble

Article by Theron Mohamed in Business Insider

The billionaire trader and founder of Tudor Investment Corporation warned asset prices could plunge, and the economy could suffer if the Federal Reserve hikes interest rates and tapers bond purchases as expected. He singled out the pandemic's winners — a group that includes meme stocks and cryptocurrencies — and predicted they would be hit the hardest by tighter monetary policies.

Jones also called out the heady valuation of the US stock market today, and predicted that commodities would outperform financial assets over the next few years.

Here are Jones' six best quotes from the interview, lightly edited and condensed for clarity:

1. "US equities are really extraordinarily valued relative to GDP." — Jones pointed to the current Buffett indicator reading of more than 200%, which suggests the stock market is hugely overpriced relative to the size of the economy.

2. "Can the Fed unwind what appears to be a financial bubble without there being huge, negative economic consequences? It'll be interesting to see. I'm nervous because we're at such lofty heights."

3. "Jay Powell has to do a lot of catching up to deal with the inflation problem he has right now. We're getting ready to see a major shift, and it's going to have a lot of consequences for a variety of asset prices." — referring to Jerome Powell, the chair of the Federal Reserve.

4. "It's going to be tough sledding for the inflation trades of the pandemic going forward. The things that performed the best since March 2020 are probably going to perform the worst as we go through this tightening cycle." — Jones noted some companies are still gorging themselves on cheap debt, and predicted their stock prices would fall as interest rates climb to 2% over the next couple of years.

5. "Commodities are so incredibly undervalued relative to financial assets. One would think on a relative basis, as we go through this tightening, that commodities would outperform financial assets by .......

To read this article in Business Insider in its entirety, click here.

Find out how Gold can bolster your portfolio!

Gold Kit

Complete this form to get more information and to receive a FREE Gold Kit.

or Call Now 800-576-9355
By clicking the below button, you agree that Lear Capital can contact you at the e-mail and telephone number provided with marketing offers. Msg. and data rates apply. Your consent to such contact is not required for purchase.
We respect your Privacy
Google general page pixel