March 4, 2024

Paul Tudor Jones says Fed is done raising rates, stocks to close higher from here

Billionaire hedge fund manager Paul Tudor Jones believes stocks could head higher this year as the Federal Reserve is done raising interest rates to fight inflation.

“I absolutely think they’re done,” Jones said Monday on CNBC’s “Squawk Box” about the Fed’s rate-hiking activities. “They’re probably going to declare victory now because if you look at the CPI, it’s been down for 12 months in a row … that’s never happened in history.”

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The central bank has raised interest rates 10 times since March 2022, bringing the target range for the federal funds rate to 5%-5.25%, the highest since August 2007. The consumer price index has cooled sharply since hitting a high of around 9% in June 2022. The measure eased back to 4.9% in April.

The longtime investor said the current market landscape is similar to mid-2006, before the global financial crisis, when stocks rallied for more than a year after the Federal Reserve stopped tightening monetary policy.

“Stock prices … I think they’re going to keep going up this year,” Jones said. “I’m not wildly bullish because I think it’s going to be a slow process.”

Paul Tudor Jones speaks at the World Economic Forum in Davos, Switzerland, January 21, 2020.

Adam Gallica | CNBC

In the short term, the investor said there will be some indigestion due to the fight to raise the U.S. debt ceiling, and he will be buying dips in political turmoil.

Jones shot to fame after predicting and profiting from the 1987 stock market crash. He is also chairman of Just Capital, a non-profit organization that ranks US public companies based on social and environmental metrics.

He believes there is plenty of dry powder that could be brought to work after a particularly dull period of trading activity.

“We don’t have an IPO, we don’t have a calendar, we don’t have a secondary offering, the valuation is 19, but no one is rushing to make such a clear offer, something is going on inside the stock market,” Jones said. “From a mobility standpoint, it’s constructive.”

Watch CNBC's full interview with legendary trader Paul Tudor Jones on markets and the economy