Billionaire hedge fund manager Paul Tudor Jones believes the Federal Reserve has finished raising interest rates to fight inflation and the stock market could rise this year.
“I definitely think they’re done,” Jones said of the Fed’s rate-hiking campaign on CNBC’s Squawk Box on Monday. “They could probably declare victory now because if you look at the CPI, it’s down 12 straight months. … This has never happened before in history.”
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The central bank has raised interest rates ten times since March 2022, bringing the policy rate to a target range of 5% to 5.25%, its highest level since August 2007. The consumer price index has cooled significantly since its peak of around 9% in June 2022 The reading fell to 4.9% in April.
The longtime investor said the current market situation is similar to what it was in mid-2006, before the global financial crisis, when stocks rose for over a year after the Fed stopped tightening monetary policy.
“Share prices … I think they’re going to keep going up this year,” Jones said. “I’m not overly optimistic because I think it’s going to be slow going.”
Paul Tudor Jones speaks at the World Economic Forum in Davos, Switzerland on January 21, 2020.
Adam Galica | CNBC
On a short-term basis, the investor said that the struggle to raise the US debt ceiling would cause indigestion and that he would take the drop in political volatility in stride.
Jones rose to fame after predicting and profiting from the 1987 stock market crash. He is also Chairman of Just Capital, a non-profit organization that ranks US public companies on social and environmental metrics.
He believes that after a particularly boring period of doing business, there is still plenty of dry powder ready to use.
“We have no IPOs, no calendar, no secondaries, valuations are 19, but no one is rushing to make offers that clear, there’s something happening internally in the stock market,” Jones said. “It’s constructive from a procedural point of view.”