Billionaire macro trader Paul Tudor Jones said investors should buy stocks on the likelihood of new market highs and an interest rate cut.
“We should be long stocks right now,” he said in a Bloomberg Radio interview Wednesday.
President Donald Trump’s tariff battle with China boosts the chances of a Federal Reserve reduction, setting the stage for the strategy. The trade is part of a standard playbook he calls “first rate cut 101,” which includes being long rates, gold and “at some point short the dollar,” Jones said Tuesday in an interview.
Jones said the Fed is “probably on the cusp of the first rate cut after a long hiking cycle.”
Like many traders, he’s gearing up for an aggressive but short rate-lowering cycle. Jones, 64, who runs Tudor Investment Corp., said last June that he expected rates to climb “significantly” by the end of 2018. The central bank went on to hike the federal funds rate three times by year-end, each time by 25 basis points.
“I didn’t think we’d have a first cut in 2019,” Jones said ahead of an event today in New York sponsored by his non-profit organization JUST Capital. “I don’t think we would have had that had we not gotten into this tariff battle, and so it has accelerated everything.”
Trump threatened earlier this week to raise tariffs on China if President Xi Jinping doesn’t meet with him at the upcoming Group of 20 summit in Japan. The U.S. leader told reporters he could impose tariffs of 25% or “much higher” on $300 billion in goods from the world’s second-biggest economy.
“The tariffs are a very material event,” Jones said. “We haven’t had any experience in modern times with them. So you have to re-adjust the entire outlook.”