Paul Tudor Jones: What to Do When the Fed Cuts Rates

Opt for stocks and gold, and not the US dollar, hedge fund operator says.

Expecting Federal Reserve interest rate cuts soon, hedge fund honcho Paul Tudor Jones says the best investment moves are to go for stocks and gold, and wager against the US dollar.

Billionaire Jones said he didn’t expect the Fed to lower rates this year but has readjusted his timetable due to the escalation of the US-China trade war. “The tariffs are a very material event,” Jones said. “We haven’t had any experience in modern times with them. So you have to readjust the entire outlook.”

The futures market agrees with him on the rate cuts. According to CME Group, there may be as many as three quarter-point reductions in 2019, following four increases last year. The Fed has halted its tightening campaign and indicated that it might loosen policy if the data demand it—meaning economic troubles crop up. Right now, the benchmark federal funds rate ranges from 2.25% to 2.5%.

Until the trade war reignited, “I didn’t think we’d have a first cut in 2019,” Jones told Bloomberg at an investment conference. “I don’t think we would have had that had we not gotten into this tariff battle, and so it has accelerated everything.”

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Jones, whose best investment call was to anticipate the 1987 stock market crash, which tripled his money, is making common-sense recommendations based on his call for lower rates in the near-term.

Lower rates usually are a tonic for stock prices (lower borrowing costs help corporations and stock buyers). They also betoken higher inflation, which tends to drive gold appreciation. And the now-strong dollar should weaken because foreign buyers, especially European ones who have tiny or negative rates, presumably would be less eager to buy US assets, particularly Treasury paper.

Jones also suggested betting on falling interest rates. Vehicles for that, of course, range from interest rate futures to exchange-traded funds.


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Nominate the Best Asset Owners and Managers for the 2019 CIO Innovation Awards

Nominate your best asset owners and managers for this year's 10th annual bash.

Photo by Margarita Corporan


For 10 years, CIO has honored the accomplishments of you, the chief investment officers, with our Industry Innovation Awards

On Thursday, December 12, at the New York Public Library, CIO will once again bring together institutional investors and those who provide for them.

It’s time to nominate deserving asset owners and asset managers/servicers for this year’s awards.

Since we started these awards in 2010, “innovation” has perhaps become an overused buzzword. While others may confuse innovation with change, we do not: Our goal is to highlight the truly innovative approaches to asset management and asset owning, separating the merely different from the meaningful. 

When nominating, ask yourselves, who has done something that is truly different, and that may have changed the way we think about this business?

To nominate, please follow the survey directions here.

What You’ll Need:

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  • To make a nomination, you’ll be asked whether you’re nominating an asset owner or asset manager, the name and title of the person or entity you’re nominating, their location, email address and to choose which category they fall into.
  • The asset owner CIO categories fall into plan size and type, as well as special categories for ESG and Collaboration. Asset manager categories fall into a full array of topics of expertise. You can make more than one nomination, and you’ll do this by indicating if you’re done or ready to nominate another. Please feel free to make as many nominations as you’d like. 


THE DEADLINE TO SUBMIT YOUR NOMINATIONS IS AUGUST 3.

Click here to view CIO’s 2018 Industry Innovation Award winners.

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