Paul Tudor Jones avverte: il 2027 potrebbe essere un anno davvero difficile per il mercato azionario

We are in Midtown Manhattan at Good Shepherd Services, which is a beneficiary of the Robin Hood Foundation. Join us right now in

Foundation. Join us right now in exclusive interviews legendary investor Paul Tudor Jones. Of course, he's the founder and chief investment officer of the Tudor Investment Corporation. He's

also of course the founder and board member of the Robin Hood Foundation, which is hosting its annual investor conference next week. You got a huge lineup and it's great to see you and and by the way, great to be here at Good

Shepherd Services, which is a foundation that Robin Hood has long supported.

We supported them for over 30 years.

They're kind of like the the the Kobe or the Shaq of not-for-profits in New York City. They serve 30,000 kids.

Just a spectacular organization. I first

met them and it was run by Sister Paulette. And if you met her, you would

Paulette. And if you met her, you would want to hug her. She was just the most brilliant, loving, warm human being. She

and she says she's retired, but she's not.

She's still working and has new ideas and Mich- Michelle who runs the place now plays catch with her all the time. So, it's

great place. This and and and again, the the best thing about this is this place it believes so firmly as we do. A

child's circumstance does not determine their future.

I want to talk philanthropy in New York City and Robin Hood and and this conference as well, but I want to talk markets. If you if you'd indulge me

markets. If you if you'd indulge me because we have bank earnings coming out this morning, but I was thinking back to a conversation that we had about a year ago around this same time.

Right.

And I had said something to the effect to you of where do you think we are in the market cycle?

Mhm.

And you said something to the effect of maybe it's like 1999, but remember that the market still went up another 40% after 1999. So,

here we are a year later.

Where do you think we really are?

Boy, it it's it's still feels like 1999, a two-speed market. You got it completely, perfectly bifurcated in the sense that you have, obviously,

everything that's adopting AI and everything that's not, and they're going in opposite directions. And that was pretty much the case in 1999. I'll tell

you, it was so crazy. I did this conference about a week ago, uh and we were going through, you know, what period does this remind you of? And

we're talking about 1999. So, I asked everyone at the conference, I said, "How many of you here were trading in 1999?" There's

probably 200 people there. What percent

do you think were trading in 1999?

Oh, goodness. I I'm thinking, just the way you're asking, I'm going to go with 10%.

about 20%. I thought, "Oh my gosh."

Because for me, it's just so clear that again, we're on this path that that could be great short-term, but may not

be so great long-term. Uh and I just was I I I I forget I guess I'm dating myself. I forget that so many people

myself. I forget that so many people haven't lived this, but um what were you doing in 1999? How old

were you in 1999?

In 1999, I was just graduating from college. I was writing about mergers and

college. I was writing about mergers and acquisitions, the height of the height of the boom in the M&A.

business for the New York Times. That's

what I was doing. And this was it was a heck of a time.

It it So, anyway, we are literally exactly like 1999 in the sense that we have kind of a two-speed economy.

What does that mean to you again? You

know, I remember you saying this idea that the market still has 40% to run.

Does that mean that, in terms of this thing cresting, um we are still years away, or we're still months away, and and then therefore how do you trade that?

So, I think that for me the most interesting thing, and I can it's it's hard for me to see

professionally much beyond December 31st because that's going to be really important obviously for a fund.

So, I'm I'm I'm trying to tactically think of what what I want to do for the rest of the year. Clearly,

if you kind of just go back and look at midterm cycles, a whole variety of things, it would tell you that we should have a really really strong fourth quarter coming out of the midterms. The

market typically bottoms sometime late October, early November. And then

you get to fourth quarter push. I kind

of look at positioning and think that's very that's very possible.

At the same time, uh if I if I was thinking for a year from now, 2027 is going to be really really challenging for the stock

market. And I say that

market. And I say that Because?

Because if I just look at the flows, and that's probably what we look at the most, uh it's what I look at the most, you probably got the most negative flow

picture for the US stock market that we've had say since 2002. And by that I mean if we sum up all the buybacks, M&A, all the

positive things that has powered this market so much for the past, say since 2009. If I sum up all those,

2009. If I sum up all those, Right.

and then I subtract from that the IPOs, secondaries, unlocks, etc., then you've got the certainly the most negative flow

picture since 2009.

Um so, that underlying corporate support that was there year in, year out is now really shifted when you think about the two trillion dollar space X, the coming

Anthropic and Open AI, it shifts the math and and and makes it more difficult for the more confident by the way are you in the math of the valuations of some of these big AI

companies? There was obviously a bit of

companies? There was obviously a bit of a freak out last week as it related to Open AI's valuation.

Right.

Um we have Anthropic coming up likely in November. I don't know how you think

November. I don't know how you think that's going to trade.

Well, I think Anthropic will do well. I

think Open AI's a lot of it will rest on what Anthropic does.

You know, the the the reason why you're seeing I think multiple compression in that space in in the whole tech space is because obviously

with all the concerns about AI safety and certainly with the uh rhetoric that's coming out of the

administration that you're going to be responsible if you make a mistake everyone's kind of reassessing. You can

have these spectacular earnings, spectacular revenue streams, great projections, but if all of a sudden we wake up one day and a model has gone rogue

or bad actor has used it maliciously and you've got a donut, it it's it's it's it's it makes But you've been warning about that issue for a long time. We've you we've had you on the broadcast where I remember we

started the conversation. We were

starting to go in one way and then all of a sudden you said, "No, no, I just was at an AI conference and the people there genuinely I mean you may be one of the first people who who said that on our air in terms of the sort of true

risk. How big a risk actually is it in

risk. How big a risk actually is it in your mind?

So we run three quant teams internally and then I have another business, sports analytics, and so we've been using neural nets forever AI uh

forms of AI forever and again the difficulty with it is that you you know what the output is but you don't know why or how you got there. That's what

happens when you have billions and trillions of permutations. You don't

know why we got there and so that's why AI safety's always been a concern for me because interpretability what generates that outcome. If you

don't know how or why it happens it's it's got to be a great concern and and what I would say I look at AI safety much the same way. I think it's exactly

the same thing as as border security in the sense that if you think about border security this nation was built on immigration that very famous photograph

I think from the end of September with President Trump and the 20 AI leaders Right.

all there.

Of those 20 nine are naturalized Americans. Three are children of first

Americans. Three are children of first generation immigrants. So immigration is

generation immigrants. So immigration is responsible for the most powerful technology and it's driving the US economy right now. So when you think

about border security we had unfettered under regulation unregulated immigration 2020-2024.

It was too much of a good thing and the country revolted because we did not have the economic resources to deal with it nor did we have the the cultural and

social desire to. So we obviously created a

desire to. So we obviously created a political path to change that. Now

intelligence which is the basis of AI intelligence has been the hallmark of why the US has been so great from the founding fathers to mainframes in the

'60s, personal computers in the '80s, internet in the '90s, and now artificial intelligence today. So, intelligence is

intelligence today. So, intelligence is what this country's based on, but unfettered Right.

unregulated intelligence is not a good thing. It can actually too much of it can be a bad thing. And 85%

of Americans right now want AI regulation, and one way or another they're going to get it politically.

Let me ask you about another risk. Um

Wait, can I just say one last thing?

The best thing that gives me the greatest hope was President Trump's appointment of Jay Clayton. Jay Clayton,

I've known him for 20 years. This guy's

solid. He's smart. He's going to put humanity's first.

If President Trump lets him do his job, oh my gosh, it will be You you can't have a better pick to help us navigate these really challenging times.

Now, we've known Jay. He's been a friend of the show for a long time.

Yeah.

I want to ask you about a different risk. As I was leaving the studio to

risk. As I was leaving the studio to come visit you, uh Joe and Becky and I were talking, and I don't know if you recall, when we were in Davos many years ago, right before the pandemic, Mhm.

you called it as an issue that we needed to focus on.

Mhm.

And we were curious how you think about this plague situation in Russia. Is that

Is that something you think we should be focused on?

At the moment it's it's um it's not on my radar, but look, I'm a macro guy. You're always looking for

macro guy. You're always looking for tails, right? So,

tails, right? So, I know we have a biosafety expert whose full-time job is to look at that right now. Right now, he's concerned,

now. Right now, he's concerned, but he just says there's just not enough information. But But there's a lot

information. But But there's a lot There's a lot of smoke there, right? So,

you have to pay attention, but it's not impacting my investment strategy.

Okay, talking about macro and smoke, [clears throat] um tell me how you're thinking about uh oil prices and the situation in Iran.

Um um long oil, bullish on oil.

Uh I think it can rally another 20 or 25 bucks.

Um But But if that rallies another 20 25 bucks, do you think that do you think that the equity market Oh, well it'll hate it. Right.

Absolutely totally hate it, but I I'm just saying if something to ameliorate the situation was going to happen, it would have happened already before the midterms,

right? So, now

right? So, now after the midterms there's I assume we're going to go I assume the president has an idea of how to resolve

this.

And I And I It's kind of like the sword of Damocles is sitting over the oil market post the midterms, cuz you've got to think if there's a a tougher way to find

resolution that might be the time that gets exercised. Again, if there was a a soft

exercised. Again, if there was a a soft way of doing it, you'd think we'd we'd have seen it right now. So, I think you've got to give the benefit of doubt short term the upside.

But you think that there's a good chance that the situation in the Middle East gets resolved in the next couple of months, or you think this is something that's going to extend out past even the the Trump administration?

No, I I I assume the president has a plan post the election. Again, I don't know.

the election. Again, I don't know.

Right. I'm not privy to it, but I I assume that he has a plan because clearly what's going on is untenable.

It's not sustainable, I don't think, in the long run.

Uh let me ask you separately uh just about interest rates, right? Because

that's the other big issue. We're living

with $40 trillion debt on our books. Um

where do you think interest rates go this year? What do you think happens

this year? What do you think happens next year?

So so Julius Caesar I'm sure you remember Shakespeare's Julius Caesar where Mark Antony after Caesar gets assassinated says

Cry havoc let let loose the dogs of war. Let slip

the dogs of war. And

I kind of feel like that's what's going on in the debt markets right now.

In the sense that the hyperscaler AI related issuance is up 50% since 2000 corporate issuance up 50% since 2022.

And in a in a global debt market that's already being crowded by sovereign debt.

Um I think that the corporate issuance is the tipping point. And

I kind of feel like it's possible that sovereign debt is in play.

When you say in play?

Well, meaning that we're we're going to go to to to final resolution on these unsustainable fiscal deficits.

And what's final resolution look like?

Well, final resolution means that something breaks. That that fixed income

something breaks. That that fixed income market at some point in time says, "I can't take it anymore." And you get prices that are so unsustainable they break

the stock market. I had an interesting conversation with a house with the Senate majority leader who I'll leave unnamed. One of the parties.

Okay.

About 8 or 10 years ago. He said,

"Listen um I can just tell you right now, we're never going to fix these deficits until the market makes us to. It's going to be just like 2008 and TARP."

So that's the reality. No politician is going to voluntarily uh raise taxes or cut spending. They're

going to be forced to. and the only question is is are we now at that tipping point where the market's about to do that? And if you

put a gun to my head, I'd say 60/40 we're down that path.

60/40 we're down that path?

We're down that path.

But does that mean it has to happen tomorrow, or does it mean it's a year or two out?

you'd asked me in 1994, I would have said it's going to happen in the next year or so.

I just truth I've been thinking about this for way too long, and yet it seems like we always expand. What what what

investors will tolerate. I mean, look at what debt to GDP did in Japan. So, yes,

maybe the markets will continue to kick the can down the road. I think what's different this time is the combination of

the AI-related issuance. It's going to be something like 3.6% of GDP if these forecasts are met. So, that's

50% more than railroads.

Triple that of highways, telecommunications, the other big infrastructure build-outs in history. So,

history. So, that competition Right.

between AI build-out and sovereigns. It may take us to the tipping point. And then again, now that we've elevated interest rates

by 100 basis points. If you just take the CBO baseline from last year, you've got to add 120 billion to the deficit because of the 100 basis point jump in

interest rates.

Warsh, though, what do you do?

Ooh, I'm so happy I'm not in his position.

Historically, what happens is that you have the central bank become fiscally dominated, and they inflate their way out of it. It's which is what Japan has

done. Kevin, I think, is cut from a

done. Kevin, I think, is cut from a different path. I think he'll he won't

different path. I think he'll he won't do that. And I think it's going to

do that. And I think it's going to That's why I'm saying it's going to be challenging. It's going to be really

challenging. It's going to be really challenging and the possibility of something breaking down the road uh and particularly when I look at how the flow

pictures shifted. And if you think about

pictures shifted. And if you think about it, we've seen what the high hyperscaler issuance in the debt markets have done to corporate prices, corporate bond

prices, right? Now, all of a sudden,

prices, right? Now, all of a sudden, we're getting that same issuance but in the equity markets, right? SpaceX,

OpenAI, Anthropic. Is there going to be a

Anthropic. Is there going to be a crowding out effect there? Is that going to create a bear market 27? I I'm I'm

I'm sure 27, some point, I'll be short the whole year. There's

short the whole year? There's little

doubt in my mind.

whole year?

Oh.

Well, again, if I go back to 2000, Yeah.

You remember it. If I go back to 2000, so you had all this issuance, all these IPOs in '98 and '99. And

really 2000, 2001, 2002, those were the easiest years to be short because you kept having these unlocks that just

kept adding supply to the market. And

I've got to think that on these unlocks, um we all say, "Oh, well, we're we're not going to sell that. We're going to hold that. We're not going to sell

hold that. We're not going to sell that."

that." If my net worth was tied up in something where I had no visibility. See, that's

the reason again why I think you're seeing all the multiple compression.

When you have no visibility in what future er Forget earnings. What what our business

Forget earnings. What what our business is going to look like because of the rapidly evolving Right.

uh landscape because of AI, then then again you got to wonder. I think these guys I I would certainly diversify. I'd want to I'd want to reduce my position. So, I

think you'll see a lot of that stock being sold.

What have you been doing right now? I

ask because I think last May you were talking about buying a lot of the hyperscalers and buying a lot of the AI-related tech stocks.

Still there?

Um at this moment, no.

Again, for me the the tactical professional question is are we going to get the fourth quarter run for the roses? After these midterms, are we and

roses? After these midterms, are we and maybe after Anthropic comes, are we going to get just the craziness that we typically see in December and January?

And and I'd say right now I'm that's kind of my playbook.

Right.

Short-term weakness, uh intermediate-term strength in the year end, and then 27's going to be really interesting.

If you If you're that worried, what do you think about the tools that Treasury Secretary Yellen has or doesn't have?

And the reason I ask is he's talked about being the house. He's talked about um the buybacks uh or buying back Treasuries. Uh I don't know if you think

Treasuries. Uh I don't know if you think that that can actually make a difference. Uh folks like Stan

difference. Uh folks like Stan Druckenmiller have suggested that's a bad idea.

Right. So, uh well, first of all, uh Scott's really smart, knows markets probably better than any Treasury Secretary we've ever had.

I do think it's a lot like uh the intervention with the Bank of Japan on the yen in the sense that um they kept coming with intervention, new

ideas, but it wasn't dealing with the structural issues that Japan had. So,

there's no doubt in my mind that if let's say let's say yields were going to be substantially higher down the road.

If we just took that as a given and let's assume that Secretary Bessen is going to try to do everything he can

to stop that. I think his interventions will have short-term salutary effects.

But in the long run, the only way you're really going to change the ultimate path of Treasury prices is to fix the deficit. Right now, I mean

again, if I just take CBO projections and I add in the 100 basis points that we had a rise in yields, we go from a

what was projected to be a 6 and 1/2% deficit in 2036 to eight now. So so it's you know like Herbert Stein said, if something

can't go up forever, it doesn't.

I mentioned Scott Bessen. I also

mentioned Stan Druckenmiller. Those are

two, but just two of the folks headlining this remarkable conference you have coming up in about a week. Tell

us about it.

Well, it's it's going to be it's going to be it's a it's one of our best lineups ever. We have

lineups ever. We have Dina Powell, who's now at Meta. President at Meta.

at Meta. President at Meta.

So she I'm going to interview her. I

haven't seen her in a long time.

Um but I'm very excited to meta her again.

Uh I can't I can't wait to talk to her about AI.

Uh I'm interviewing Stan. So that

that'll be 45 minutes of listening to his laconic answers. Um but he's always unbelievably interesting. And then we've

unbelievably interesting. And then we've got Steve Cohen and we've got David Einhorn and we've got Philip Laffont.

It's just it's going to be really good.

And if you want to do good in New York City, what a better way than buying a ticket or just giving to Robin Hood. The the

thing that's going on in New York right now Yeah, what do you what do you think about what's going on in New York right now? Let's talk about that.

now? Let's talk about that.

Okay, I just I the biggest problem we've got is that you have wealth making extreme wealth making a new all-time

high. At the same time poverty in New

high. At the same time poverty in New York is making an all-time new high even in this economy. Our poverty rate is the highest it's been since we've been

tracking it at Robin Hood and that's before there's recession. So, that's the gap that we need to close. That that

really is the gap that we need to close.

We've gotten so good as a society at measuring prosperity by net worth. You know, all you see is all

net worth. You know, all you see is all what's who's worth 150 billion, who's worth a trillion, etc. But [clears throat] it doesn't talk about the prosperity of

the heart and the soul.

And the only way that you're going to increase that wealth is not by uh it's not by what you keep, it's by what you give.

So, we're trying to close that gap between extreme wealth and between extreme poverty. And New

York City's got the highest poverty rate, twice the national average.

So, it's it's really important uh and and I'll tell you I think if I just look and another great example would be what

is overall giving done in America. So,

since 2020, household wealth is almost double from 100 trillion to 109 trillion.

Charitable giving as a percentage that has actually dropped dropped from .5

to .38. And that's that's just it's it's it's un-American. This country was built

it's un-American. This country was built on volunteerism. That we're number one

on volunteerism. That we're number one in the world. So,

I think if you really are a patriot, if you believe in capital and free markets, you got to give back.

Paul Tudor Jones, thank you for the conversation and thank you for giving back. We always appreciate talking to

back. We always appreciate talking to you. We wish you a lot of luck with the

you. We wish you a lot of luck with the conference next week and so much more.

So, thank you.

Thanks so much.

Appreciate it. Thank you.