Paul Tudor Jones speaks at the World Economic Forum in Davos, Switzerland, January 21, 2020.
Adam Gallica | CNBC
Billionaire hedge fund manager Paul Tudor Jones believes the Federal Reserve is done raising interest rates in its fight against inflation, and that the stock market could rally this year.
“I definitely think they’re done,” Jones said on CNBC’s “Squawk Box” of the Fed’s rate hike campaign. “They’ll probably declare victory now because if you look at the CPI, it’s been declining for 12 months in a row… Never before in history has this happened.”
The central bank has raised interest rates 10 times since March 2022, bringing the federal funds rate to a target range of 5%-5.25%, the highest level since August 2007. The CPI has eased significantly since peaking around 9% in June. 2022. The gauge fell to 4.9% in April.
The longtime investor said the market setup right now is similar to mid-2006 before the Great Financial Crisis, when stocks rose for more than a year after the Fed stopped tightening monetary policy.
“Stock prices … I think they will continue to go up this year,” Jones said. “I’m not terribly optimistic because I think it’s going to be slow.”
In the near term, the investor said there would be some indigestion due to the fight to raise the US debt ceiling, and that he would buy pullbacks due to political volatility.
Jones rose to fame after predicting and profiting from the stock market crash of 1987. He is also the chairman of the nonprofit Just Capital, which ranks public US companies based on social and environmental metrics.
He believes there is plenty of dry powder ready to run after a particularly tedious period of deal-making activities.
“We don’t have IPOs, we don’t have a calendar, we don’t have secondary payroll, valuations are at 19, but no one is rushing to provide such clarity. There is something going on internally in the stock market,” Jones said. “From a flow standpoint, this is constructive.”
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”