• Paul Tudor Jones and Stanley Druckenmiller see US economy slipping into recession
• According to Jones, the US central bank should nevertheless tighten further
• Wall Street legends predict post-recession opportunity for cryptocurrencies
Paul Tudor Jones expects recession
Hedge fund manager Paul Tudor Jones said in a recent interview with CNBC’s Squawk Box that he believes the US is headed for a recession – if it isn’t already. “Most recessions last about 300 days from the time they start,” Jones said. “The stock market is down, say, 10 percent. The first thing that will happen is short interest rates will stop rising and start falling before the stock market actually bottoms.” Jones thinks “we’re probably preparing to run through the recession playbook” and predicted, according to cryptobriefing.com, that the 2020s would be defined by a “focus on debt dynamics”, fiscal deficits, as well as policies “that make people have confidence in the long-term value of a currency.”
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According to Jones, the US Federal Reserve should tighten further
The Tudor Investment founder also believes it will be very difficult for the US Federal Reserve to bring inflation back to its 2% target. “Inflation is a bit like toothpaste. Once you get it out of the tube, it’s hard to get it back in,” echoes CNBC Jones. “The Fed is furiously trying to get that taste out of its mouth. … If we go into a recession, it’s going to have really negative consequences for a variety of assets,” the investor said. Nonetheless, he believes the Fed, which has raised interest rates significantly several times this year, should tighten further to avoid long-term pain in the economy. “If they don’t go ahead and we have high and persistent inflation, I think that will only create more problems in the future,” Jones said. “If we want long-term prosperity, we need a stable currency and a stable way of valuing it. So yes, you have to have long-term inflation of 2 percent and below to have a stable society. So there are short-term ones Pain associated with long-term gain.”
Investor sees opportunities for Bitcoin and Ether after recession
For cryptocurrencies like Bitcoin and Ethereum, which are currently trading well below their highs from last fall, Paul Tudor Jones, who continues to own Bitcoin himself, sees upside potential in a post-recession world. He told CNBC that he believes this asset class could see significant growth in the future. The hedge fund manager sees high inflation rates as a potential catalyst for a crypto surge. “At a time when there is too much money, which is why we have inflation, and too much tax spending, something like crypto – especially bitcoin and ethereum – that has a finite supply will eventually have value,” he admitted make sure.
In addition, Jones believes that a turn in the Fed’s hawkish stance could lead to a rally in global markets. “If [ein Pivot] happens, you’re likely to have a massive rally in a variety of downbeat inflation trades, including crypto,” cryptobriefing.com quoted the investor as saying. When asked if crypto would have a “much higher” value than it does today, Jones said, “I think yes, yes”. At the same time, however, he admitted that he did not know when prices would rise.
Another Wall Street legend awaits recovery for cryptos
Investor and hedge fund manager Stanley Druckenmiller also expects a hard landing for the US economy by the end of 2023. He expects the restrictive monetary policy the US Federal Reserve will plunge the economy into recession. “All of these factors that cause a bull market don’t just stop, each one of them is reversed,” Druckenmiller told CNBC a few weeks ago. “We’re in big trouble.” But he too believes that cryptocurrencies could eventually stage a rebound despite the bleak macroeconomic backdrop and, according to cryptobriefing.com, hinted at a possible crypto “renaissance” if the public starts to lose faith in central banks.
Jones and Druckenmiller’s bullish crypto thesis rests on the idea that Bitcoin can act as a hedge against inflation. As early as autumn last year, Jones joined a group of experts who warned of persistently high inflation and recommended that investors invest in cryptocurrencies rather than gold for hedging.
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