Why Central Bankers Should Be Worried About Current Stock Valuations
Billionaires, large hedge fund managers, and several institutional investors recently gave insight into their view of the stock market and U.S. economy. Of note, star fund manager Paul Tudor went on to levy a warning to Federal Reserve Chair Janet Yellen about the value of stocks relative to the size of the economy.
But the nervousness feels a bit more urgent now, as Bloomberg reports, legendary macro trader Paul Tudor Jones, who runs the $10 billion Tudor Investment hedge fund, says that years of low interest rates have bloated stock valuations to a level not seen since 2000, right before the Nasdaq tumbled 75 percent over two-plus years.
That measure - the value of the S&P relative to the size of the economy - should be “terrifying” to a central banker, Jones said earlier this month at a closed-door Goldman Sachs Asset Management conference, according to people who heard him.