Hedge fund titan Paul Tudor Jones: The Nasdaq will rise

Hedge fund titan Paul Tudor Jones: The Nasdaq will rise by the end of the year, while gold and silver represent a stronger depreciation trade trend.

Jones explicitly pointed out that the period from late October to early November is a critical turning point. If the Nasdaq remains strong during that time, there could be an opportunity for a robust year-end rally. He further emphasized that this phase, starting on November 1, could either represent the final peak surge of the bull market or a perilous moment when risks at the top accumulate. Jones also noted that currency depreciation trades have evolved into gold and Bitcoin trades, and only when the true debt crisis arrives will gold and cryptocurrencies reveal their value.

Legendary hedge fund manager Paul Tudor Jones stated on Tuesday that, against the backdrop of anticipated lower interest rates,$Nasdaq Composite Index (.IXIC.US)$is expected to rise by the end of the year, injecting a dose of optimism into what had been a sluggish market.

On October 14 local time, during an interview with Bloomberg Television, the billionaire investor predicted that if large technology companies report positive earnings and trade conflicts can be resolved by the end of October, the stock market will have the opportunity to see a significant rally in the final two months.

This bullish commentary came as U.S. stock index futures weakened during overnight trading but suddenly reversed losses in early trading on Tuesday. Analysts believe that Jones positive remarks were one of the factors driving market optimism and triggering the rebound.

Jones specifically pointed out that the period from the end of October to early November would be a critical turning point. If the Nasdaq remains strong at that time, it could see a strong year-end rally. He further emphasized that the market phase starting on November 1 could either represent the final blow-off top stage of a bull market (the best-case scenario) or a dangerous moment where peak risks accumulate.

Jones also warned about concentration risk, revealing that he personally does not currently hold any long positions in stocks and prefers to wait for one to two weeks before making a decision. A few days ago, Jones had issued a warning, stating that the market has already shown signs of a melt-upwhere gains are pre-emptively realized, followed by a sharp reversal.

Jones also noted that currency depreciation trades have shifted towards gold and Bitcoin, and when the real debt crisis arrives, gold and cryptocurrencies will reveal their true value.

Rate cut expectations boost tech stocks.

Jones forecast is based on the Federal Reserves continued accommodative policy. He expects the Feds benchmark interest rate to fall from the current range of 4%-4.25% to around 2.5% next year.

The Federal Reserve made its first rate cut last month, and the minutes of the Federal Open Market Committee meeting showed that officials expect two more rate cuts by the end of the year, each by 25 basis points.

According to Bloomberg, Jones described the current state of the global economy as a depreciation of fiat currency across nearly the entire world, with central banks being pushed toward accommodative policies while remaining vigilant in the bond markets.

This macroeconomic environment has provided strong support for technology stocks. The robust performance of Nasdaq this year has been primarily driven by artificial intelligence-related stocks, with investors remaining highly optimistic about the prospects of AI technology.

The Final Frenzy? A Warning on Concentration Risk

Despite maintaining an optimistic outlook for the year-end market performance, Jones repeatedly emphasized that concentration risk is the biggest threat currently facing the market. He pointed out that individual investors current stock allocation has reached a historical high,$SP 500 Index (.SPX.US)$with approximately 35% of the gains driven by seven stocks.

Jones admitted that he currently does not hold any long positions in stocks, opting instead to wait one or two more weeks before making a decision.

As previously noted by Wall Street News, a few days ago, Jones warned that the market may be entering the final phase of a bull run, characterized by a melt-updelivering the most lucrative returns but also marked by extreme volatility, signaling an accelerating accumulation of risks.

He pointed out that the final year of a bull market often generates the most substantial gains, but is typically followed by a sharp reversal.

Gold and Silver: Stronger Trends in Depreciation Trades

Paul Tudor Jones also stated that the world is entering an era of physical constraintswith limited room for growth and high debt burdens. In response to this situation, governments are striving to maintain low interest rates to prevent debt pressures from spiraling out of control.

He noted that the White House is now adamantly seeking a more dovish Federal Reserve chair, primarily because only by keeping interest rates as low as possible can interest expenses be reduced, nominal growth stimulated, and the debt-to-GDP ratio kept in check. In other words, policymakers are banking on growth combating debt rather than truly cutting expenditures.

However, Jones reminded that the market has started to see through this logic. When the cost of capital is artificially suppressed and liquidity remains abundant, inflation is bound to make a comebackhe predicts that inflation will be reignited within the next 18 months. Globally, there are approximately $370 trillion in financial assets, while markets for gold, silver, Bitcoin, and others are relatively small in comparison. Just a slight flow of funds is enough to push up price levels.

He further pointed out that under the pressures of populism and political forces, central banks have generally chosen to continue easing, leading to a systemic devaluation of global currencies. The bond vigilantes, originally meant to counterbalance government fiscal policies, have been subdued, giving way instead to the rise of gold and cryptocurrencies. The currency devaluation trade has now become a trade in gold and Bitcoin, Jones said.

Take Japan as an example: the new Prime Minister still urges the Bank of Japan to gradually exit easing, even refusing to raise interest rates despite evident inflationary pressures, demonstrating how countries are avoiding the costs of tightening. Jones warned that this trend will eventually lead to severe turbulence in sovereign debt marketswhether in Japan or the United States, a confidence crisis similar to what occurred during the Truss administration in the UK in 2022 could repeat itself.

We are still in good times now, he said. But when the real debt moment arrives, gold and cryptocurrencies will reveal their true value.