Billionaire hedge fund manager Paul Tudor Jones says he is investing in Bitcoin, gold, commodities, and tech stocks amid inflation concerns post-presidential election. His diversified portfolio is excluding fixed income investments.
The billionaire is concerned about the potential for high inflation following the November election.
“I probably have some basket of gold, Bitcoin, commodities and NASDAQ and I would own zero fixed income,” Jones said in an interview with CNBC.
Inflation Goes Up Eventually
Inflation rates peaked at 9.1% in June 2022 following the COVID-19 pandemic and subsequent economic policies. In response to rising inflation, the U.S. Federal Reserve (Fed) has been tightening monetary policies, including hiking interest rates to curb rampant inflation.
The Fed implemented a total of 11 rate hikes throughout the 2022-2023 period. Since July 2023, the Fed had maintained rates at 5.25% to 5.50%.
The Fed’s inflation target is 2% per year. In August this year, the annual inflation rate in the US decreased to 2.5%, the lowest level since February 2021. Following the August figure, in September, the Fed made an aggressive 50-basis-point cut, lowering interest rates to a range of 4.75% to 5%. This was also the bank’s first reduction since the pandemic onset.
Hard To Believe The Stats
US “official inflation” decreased to 2.4% for the 12-month period, according to September data. While it appears that the Fed is well on track to reach their 2% target, Jones suggests that rising government spending and tax cuts could challenge that.
His estimates make sense since the latest data shows that the median expected inflation rate for one year ahead is 3.0%.
“We’re going to be broke really quickly unless we get serious about dealing with our spending issues,” Jones added, stressing the fiscal situation. The Congressional Budget Office predicts a federal deficit of $1.9 trillion for the fiscal year 2024, with expectations to rise to $2.8 trillion by 2034.
Not only economic pressures, but escalating geopolitical tensions are prompting investors to seek alternative assets like gold and Bitcoin as hedges against currency instability. JPMorgan analysts have identified a trend where investors are increasingly viewing gold and Bitcoin as safe-haven assets in response to economic instability.
Gold At ATHs
Gold recently hit an all-time high of $2,740. Compared to gold, Bitcoin has also experienced a price rally, with its prices hitting a high of $69.500 earlier this week, CoinGecko data shows. The largest cryptocurrency has since retraced, currently hovering around $67,300.
However, market analysts expect some short-term corrections as geopolitical conflicts show no sign of cooling off. Historical data also indicates that Bitcoin tends to slide in brief response to these situations, though prices often recover afterward.
The Bitcoin market is also influenced by the upcoming US presidential election, though analysts at Standard Chartered predict Bitcoin will reclaim its previous all-time high before the next president is determined.
Delusional IMF
Unlike Paul Tudor Jones, IMF chief economist Pierre-Olivier Gourinchas says the battle against inflation is almost won. Speaking recently after the World Economic Outlook’s report, Gourinchas stated that he expected declining global inflation by the end of 2025 as the global economy showed resilience.
The decline in inflation is seen as a positive development, as it could lead to lower interest rates and increased economic growth. However, he noted that the positive outlook might not be achieved due to several risks.
While the IMF views the current situation as an improvement, they are cautious that the global economic outlook remains weak. The growth forecast for many countries has been lowered due to factors such as global conflicts and commodity price risks.
The IMF recommends a “policy triple pivot” to address these challenges and ensure a smooth transition to lower inflation, including adjusting interest rates, managing government spending, and implementing reforms to boost productivity.