Paul Tudor Jones says inflation could be worse than feared, biggest threat to markets and society

Billionaire hedge fund manager Paul Tudor Jones believes inflation is here to stay, posing a major threat to the U.S. markets and economy.

“I think to me the No. 1 issue facing Main Street investors is inflation, and it’s pretty clear to me that inflation is not transitory,” Jones said Wednesday on CNBC’s “Squawk Box.” “It’s probably the single biggest threat to certainly financial markets and I think to society just in general.”

Jones said the trillions of dollars in fiscal and monetary stimulus is the impetus for inflation to run hotter for longer. To rescue the economy from the Covid-19 pandemic, the Federal Reserve has added more than $4 trillion to its balance sheet through its open-ended quantitative easing program, while the U.S. government has unleashed over $5 trillion in fiscal stimulus.

“Inflation can be much worse than what we fear. We have the demand side of the equation … and that is $3.5 trillion greater than what it normally would have … just sitting in liquid deposits,” Jones said. “They can go into stocks, or crypto, or real state, or be consumed, so that’s a huge amount of dry powder just sitting waiting to be utilized at some point, which is why inflation is not going away.”

The longtime trader said price pressures will continue to rise in the coming months. Inflation ran at a fresh 30-year high in September amid supply chain disruptions and extraordinarily strong demand.

The core personal consumption expenditures price index, which is the Fed’s preferred measure of inflation, increased 0.3% in August and was up 3.6% from a year ago.

Read more at CNBC

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