“If you think about where we are right now, the Federal Reserve Board is fighting something that it hasn’t seen really in almost four decades, which is inflation. Inflation is a bit like toothpaste: once you get it out of the tube, it’s hard to get it back in, right?”
— Paul Tudor Jones
Billionaire hedge-fund investor Paul Tudor Jones, founder of Tudor Investment Corporation, said investors looking to time the bottom in stocks should keep a close eye on short-term Treasury yields. Speaking Monday during an interview with CNBC’s “Squawk Box,” Jones said he expects stocks and bonds will continue to sink as the U.S. economy slides into a recession in the months ahead.
But while retail investors book losses on both their stocks and bonds, the explosion of volatility across markets is creating plenty of opportunities for macro traders like Jones, who tend to outperform when markets turn choppy. “These are spectacular times for macro, and great times for macro are generally not great times for general investment,” Jones said. “Macro works when everything is broken a bit. That’s when you have the volatility that’s really best for the type of trading that I do.” Volatility has soared across asset classes and markets as the Federal Reserve has begun the process of shrinking the size of its nearly $9 trillion balance sheet while hiking interest rates at the most aggressive pace since the 1980s. The Fed isn’t alone, of course — dozens of central banks around the world are raising interest rates as well.
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