Paul Tudor Jones: it’s not an environment to ‘own stocks and bonds’

on May 3, 2022
  • Paul Tudor Jones says investors should prioritize capital preservation for now.
  • He explains his dovish view on stocks and bonds on CNBC's "Squawk Box".
  • Fed is expected to announce a 50 bps increase at its policy meeting on Wed.

A double whammy of record inflation and slowing growth creates an “unchartered” environment for the U.S. Federal Reserve, says famed hedge fund manager Paul Tudor Jones.

Jones’ comments on CNBC’s ‘Squawk Box’

The founder of Tudor Investment Corporation sees now as an environment that’s suitable for owning neither stocks nor bonds. This morning on CNBC’s “Squawk Box”, he said:

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You don’t want to own bonds and stocks in this environment. It’s going to be a very negative situation for either of those asset classes. You can’t think of a worse macro environment than where we are right now for financial assets.

The U.S. central bank is expected to announce a 50 bps increase in interest rates at its policy meeting on Wednesday. It might also begin shrinking its balance sheet by $95 billion a month in May.

Capital preservation should be the goal for now

The U.S. GDP unexpectedly fell at an annualised pace of 1.40% in the first quarter of 2022. On the other hand, however, CPI remains at a multi-decade high of 8.50%. Jones added:

Credit spreads have blown out, stocks are down 13% YTD, dollar is up significantly. Normally, that would evoke the Fed to cut rates. Yet, we’re on the cusp of 200 bps increase in rates by mid-September. So, it’s unchartered territories.

According to the billionaire money manager, investors should silent their desire to make money in this environment and prioritize capital preservation over everything else.

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