Paul Tudor Jones Predicts Further Stock Market Declines Despite Potential Tariff Cuts

Paul Tudor Jones Predicts Further Stock Market Declines Despite Potential Tariff Cuts

Even billionaire hedge-fund manager Paul Tudor Jones just last week raised alarms about the stock market’s future. He thinks it can still tank, despite a 50 percent tariff cut on China by none other than Pres. Donald Trump. Jones, best known for his ability to accurately predict and profit from the 1987 stock market crash, made a very important observation. He cautioned that the macroeconomic backdrop is still challenging for equities.

On a recent visit to CNBC’s “Squawk Box,” Jones shared his analysis of the alarming economic trends that are unfolding. It’s not obvious, he told me. It’s pretty clear to me that the big driver here is Trump. Tariffs are primary. The Fed is not going to cut rates aggressively. That’s negative news for the stock market. His prediction is symptomatic of a wider concern among the financial sector, as the impacts of inflationary pressures and geopolitical tensions continue to be felt globally.

As the founder and chief investment officer of Tudor Investment, Jones has developed a reputation for his prescient market insights. Even with the trade tensions eased, he says, stocks are far from being in the clear. We’ll still likely go down to new lows as soon as Trump scales China back to 50%,” claimed Jones. Tariff policy won’t be chump change. He is absolutely convinced that changes will need to be substantial. They will not boost investor confidence or calm jittery stock prices.

Jones further discussed the adverse effects of tariffs. He promised they will be a major jolt of tax hikes to the economic system. He estimated that these measures would decrease growth by about 2% to 3%. “Unless they got really dovish and really, really cut, you’re probably gonna go to new lows,” he said.

The S&P 500 has been in a bit of turmoil recently, as the index faced some dramatic selling pressure only to bounce back and recoup much of its red ink. Now, it’s resting nearly 8% under its all-time high. China just announced that it is considering new trade discussions with U.S. This can make it even more challenging to succeed in navigating this dynamic environment.

Paul Tudor Jones is not a passive investor. He currently chairs Just Capital, a nonprofit that ranks U.S. companies on their social and environmental metrics. It brings his emphasis on ethical business practices into alignment with his investment philosophy and further enshrines his commitment to corporate responsibility and accountability.

Jones got a lot of attention for these comments when he made them at the World Economic Forum in Davos, Switzerland on January 21, 2020. It’s easy to see why so many investors resonate with his insights. Specifically, they are concerned about what the current fiscal policies mean for our country’s economic course and fiscal health in general.

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