Iconic hedge fund manager Paul Tudor Jones said Tuesday it’s extremely tough to be an investor now amid escalating geopolitical tensions and the dire fiscal position in the U.S.
“It’s a really challenging time to want to be an equity investor and in U.S. stocks right now,” Jones said in an interview on CNBC.
"You’ve got the geopolitical uncertainty... the United States is probably in its weakest fiscal position since certainly World War II with debt-to-GDP at 122%", a number which will keep rising to 195% in 2053 according to the CBO, then keep rising further until the US either defaults or hyperinflates.
On the fiscal side, PTJ echoed our July post, and said that “as interest costs go up in the United States, you get in this vicious circle, where higher interest rates cause higher funding costs, cause higher debt issuance, which cause further bond liquidation, which cause higher rates, which put us in an untenable fiscal position." He also speculated whether the US may be approaching a "Minsky moment in the bond market."
Looking at the precarious geopolitical picture, where he observed that the world now has three major flashpoints, i) the Ukraine war, ii) the Israel war and iii) potentially China and Taiwan, PTJ said that "where this really gets bad is obviously if Iran and Israel get into direct conflict, because then you’ve got the ability to have kind of a First World War cascade, where everyone gets involved."
He added that the big question now is if Hamas was a proxy for Iran or was it simply an ally.
He said he would personally wait for a resolution and evaluate the potential impact of the Israel-Hamas conflict before he jumps into risk assets again. Jones said he hasn’t ruled out the possibility of a nuclear war.
“From a personal standpoint, would I be investing in risk assets now and stocks until I saw what the resolution was with Israel, Iran?” Jones said. “Israel is going to respond in some way, shape or form. The determination of whether Iran was actually responsible is enormous because again, it has the possibility to really escalate into something terrible.”
Turning back to the US, Jones predicted a recession will start in the first quarter of 2024, saying the US is in its weakest fiscal position since World War II. The country needs to find $1 trillion in savings by 2025 and should raise taxes and cut spending, he said; neither has any chance of happening.
“The bond market, simply through supply and demand, is going to deliver more rate hikes, because we don’t have a clearing price yet for long-term debt,” Jones said. “So those rate hikes are probably going to tip us into recession.”
Finally, in terms of trades, the iconic hedge fund manager was loathe to recommend buying stocks saying "it's a really challenging time to be an investor" , adding that "it's hard to like stocks" and instead - in the latest hit to the fiat money fanatics - the billionaire investor said that between the looming recession and geopolitical turmoil, he "likes bitcoin and likes gold" as the US Treasury can no longer offer the same protection it has offered in the past.
The irony here is that with many still calling bitcoin a fraud (mostly Gary Gensler, his Democrats bosses and all others who no longer are getting bribes from SBF), this is hardly lost on Tudor Jones. Yet the fact that he nonetheless recommends it (and gold of course) over fiat alternatives, tells you all you need to know about what the far bigger monetary fraud is.