Billionaire hedge fund manager Paul Tudor Jones believes the Federal Reserve has finished raising interest rates in its fight against inflation, and the stock market could grind higher this year.
“I definitely think they are done,” Jones said Monday on CNBC’s “Squawk Box” of the Fed’s rate-hiking campaign. “They could probably declare victory now because if you look at CPI, it’s been declining 12 straight months. … That’s never happened before in history.”
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The central bank has raised interest rates 10 times since March 2022, taking the fed funds rate to a target range of 5%-5.25%, the highest since August 2007. The consumer price index has cooled considerably since peaking out around 9% in June 2022. The gauge eased to 4.9% in April.
The longtime investor said the market setup right now is similar to mid-2006 before the global financial crisis, where stocks moved higher for over a year after the Fed stopped tightening monetary policy.
“Equity prices … I think they’re going to continue to go up this year,” Jones said. “I’m not rampantly bullish because I think it’ll be a slow grind.”
Paul Tudor Jones speaking at the World Economic Forum in Davos, Switzerland, January 21, 2020.
Adam Galica | CNBC
For the near term, the investor said there would be some indigestion because of the fight to raise the U.S. debt ceiling, and he would buy the dip on the political volatility.
Jones shot to fame after he predicted and profited from the 1987 stock market crash. He is also the chairman of nonprofit Just Capital, which ranks public U.S. companies based on social and environmental metrics.
He believes that there’s plenty of dry powder that’s ready to be put to work after a particularly dull period for deal-making activities.
“We have no IPOs, no calendar, no secondaries, valuations are at 19 but nobody’s rushing to offer so clearly, something is going on internally in the stock market,” Jones said. “From a flow standpoint, that’s constructive.”
