Billionaire investor Paul Tudor Jones called the current geopolitical environment the “most threatening and challenging” he’s ever seen in the wake of Hamas’s attack on Israel over the weekend and predicted the US will enter into a recession early next year.
(Bloomberg) — Billionaire investor Paul Tudor Jones called the current geopolitical environment the “most threatening and challenging” he’s ever seen in the wake of Hamas’s attack on Israel over the weekend and predicted the US will enter into a recession early next year.
“Where this really gets bad is obviously if Iran and Israel get into direct conflict, because then you’ve got the ability to have kind of a First World War cascade, where everyone gets involved,” Jones, founder of Tudor Investment Corp., said in an interview Tuesday on CNBC.
The big question now is if Hamas was a proxy for Iran or was it simply an ally, he added. The US and others have designated Hamas as a terrorist organization.
Read More: What’s Hamas, the Militant Group That Attacked Israel: QuickTake
Jones predicted a recession will start in the first quarter of 2024, saying the US is in its weakest fiscal position since World War II. The country needs to find $1 trillion in savings by 2025 and should raise taxes on most people, cut spending, change Social Security and limit Medicare and Medicaid, he said.
“The bond market, simply through supply and demand, is going to deliver more rate hikes, because we don’t have a clearing price yet for long-term debt,” Jones said. “So those rate hikes are probably going to tip us into recession.”
Given recent geopolitical uncertainty, Jones said, it’s a challenging time to invest in US equities. The stock market typically declines about 12% just before a recession hits, he said, and “that’s probably going to happen at some point, from some level.”
The billionaire said exactly a year ago that the US was already in a recession, or close to being in one. Since then, the S&P 500 Index has surged about 20%. In May, he said the US would enter a recession by the third or fourth quarter of this year.
In his interview Tuesday, Jones also said he “likes” Bitcoin and gold right now because those two investments typically perform well during a recession.
–With assistance from Katherine Burton.
(Updates to include additional details from interview starting in fourth paragraph)
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