Paul Tudor Jones refutes NFTRH view

Paul Tudor Jones sees stocks going higher upon Fed rate cycle ending

Well, he does not refute my view directly because this market luminary (who is much more respectable than 90% of the other media stars in my view) does not even know I or NFTRH exist. But Paul Tudor Jones is highlighted today at CNBC for the view that the Fed’s rate hike cycle is over (it is, as we noted since May 1) and the markets will finish the year higher from here. You can click the graphic to read the article.

Paul Tudor Jones

Aside from the multitude of macro indicators that have been blown out of whack on the post-2020 inflation cycle (implying that we might think twice before extrapolating the signals of the last couple of decades forward), a traditional indicator of those last couple of decades says that a bear market is coming, or more accurately, a resumption of the bear that began in 2022 is coming.

However, if we should not extrapolate the past to the future, maybe this bearish omen will not play out. Maybe PTJ is right. We noted last year that the 2022 bear phase happened without the signal that preceded the last two major bear markets (2000 & 2008). Stocks took an extended correction even as the Fed (orange T-bill yield proxy shown here) was still in catch-up mode with the 2 year Treasury yield that had painted them and their silly “transitory inflation” story as completely wrongheaded. The last two major bear markets began after the T-bill overshot the 2yr.

Now the negative market signal is in place with the T-bill at 5% and the 2yr at 3.9%. Different this time? According to a legendary investor, yes. According to little old me? I’ll tap the breaks and see how it plays out over the coming weeks/months.

paul tudor jones sees a bull move in stocks

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This Post Has 6 Comments

  1. Bart

    Well he also mentioned 2006-2007, which sounded familiar to me…

    1. Gary

      Very true. The timing on the signal is very much in question.

  2. Bart

    SM crashes are a bit like wars: for them to occur, one needs the last one more or less faded from collective memory. Is 3 years enough? Perhaps.

    1. Gary

      Well, if you saw the TL today you know where I’m at. Just trying to balance cash with long the (perceived) right stuff and some shorts on the (perceived) not right stuff. I do get a creepy feeling about that (perceived) lower probability upside SPX target though.

      One issue I have had is that when I’ve seen the risk signals in the past I’ve let them start guiding me too soon. But like the chart above, they sure can be mushy, timing-wise.

  3. Pachuco

    So if I understand these insights correctly, the market could go up, or on the other hand it could go down.

    1. Gary

      Ha ha ha, funny. Go see a guru for a more definitive answer. Plenty of them out there on auto-predict. It’s call dogmatic bias.

Comments are closed.