Interviewer (2:48)

Yeah, I mean, you have raised, I think $3 billion over the time since you founded Robinhood for Fighting Poverty in New York. I want to ask about Wall street and specifically about this equity market. I do watch our competition. I saw your interview with Andrew last week. You said this is like October of 1999. But after that, as you pointed out, you know, the stock market doubled. We had a drop in October, like an 11% intraday drop, but then the stock market doubled to March of 2000. Are we still in line for a doubling of this market?

Paul Tudor Jones (3:25)

Well, it is so funny because you'd mentioned that 54% of fund managers think that we're in an AI bubble. If it's a bubble, it's a small one. If you just think about. And again, how do you actually define bubbles? If you think about the bubbles of the past three or four decades, the Nikkei in 89, NASDAQ in 99, biotech 2000, just after 2011, 12, China 2007, all those were 4 to 600% gains. The NASDAQ's up 200% off the bottom. So I don't know whether we're going to blow off like we did in 1999. Is it possible? Are all the ingredients in place? I think clearly they are. For me, the, the one thing that you can never ever forget is that a year from today, assuming that the President gets his wishes, that the Fed funds rate is going to probably be in the two and a half year. I think, I think they would like to see it at two and a quarter. So I think two and a half to 75. Obviously whoever the new Fed chair is going to have to be able to intellectually move that board. A majority of the board. He's probably whoever the new Fed chair, let's say they've got six solid votes, so he'll have to find one more. And I don't think it'll be that hard to do. But if you're, if you're going to have two and a half percent overnight rates or 275, that's a really compelling story for higher equity prices.

Interviewer (5:02)

Well, not just that. I mean, you've got Neil KSAR on our opinion team yesterday laid out the argument that this is not the same as 1999 because these companies are so profitable. Right. 95% of the S&P 500 is expected to post earnings growth next year and the average earnings growth is 16%. It's obviously a lot more for the MAG7 or the GREAT8 plus you don't have the same kind of leverage that you had back then. You have less than 100% debt to equity, and in 1999 it was more than double that.

Paul Tudor Jones (5:32)

Right. Well, the only thing I'd say is I don't think you've got the leverage necessarily in the corporate balance sheet yet you clearly have leverage within the equity ecosystem. And by that I mean you just had a proliferation explosion in derivative products. I want to say that levered ETFs are up 250% since the 2022 bottom. And I want to say there's four or 500 with another, another couple of hundred in the pipeline. So you're clearly creating derivative leverage, whether it's in the options market. We see single stock options, we just see options activity exploding everywhere you look. There's greater leverage again in the equity infrastructure for what has become really trader nation. We have the highest percentage equity holdings by individuals in history. We have again, more levered activity. You don't see it in margin debt because margin debt is actually an old anachronistic tool. You see it more so in the options markets. You see it more so in the levered ETFs. So it's somewhere down the road a little similar. I don't think we're there yet, but somewhere down the road there's going to be. They're going to be some. Yeah, they're going to be some, some real issues with that.

Interviewer (7:02)

Nonetheless. You're long now, right? I mean, at least last time we spoke to you in June, you said your portfolio would be long stocks. You said you'd be long gold. You said you'd be long Bitcoin. And those have been great picks. Check out this chart. Right. Gold alone is a 22% gain, but all of them are well above zero. Do you hold on to that portfolio?

Paul Tudor Jones (7:29)

So I would take them one by one. I think for stocks, the, the critical time is going to be the last week here in October. And we see the. When we see the big tech earnings as well as by that point in time, we'll have greater clarity on the resolution of the US China conflict. I would think that if the NASDAQ is higher going into early November, then you've got a chance for a real ramp in the last two months. What happens between now and then? I kind of think the market's going to be on the defensive until we get to. That's going to be a intersection of just so many really, really important data points. So that's going to be a critical time. They also have a Fed meeting that week. So I would think, you know, my prior is, is that it will resolve the upside. We'll focus on where fed funds will be, the market, look ahead six to nine months and focus on that. Bitcoin and gold are interesting. They're interesting as a pair in the sense that if I just look at since Liberation Day, you've had about $40 billion of inflows into a combination of Bitcoin and Ethereum ETFs and you've had a like amount of inflows into the combination of gold and silver. But if you think about it, the volume adjusted 40 billion that goes into Bitcoin because it's got had say five, six times the volume of gold was really a much, much bigger bet on, on crypto than it was on precious metals. And yet gold is outperformed Bitcoin since that period in time. So clearly retail has made a mistake in terms of trying to figure out which of the two debasement trades were going to outperform. And I have to admit until a couple of weeks ago, I thought bitcoin digital gold was going to outperform again. The historic stores of value, I think they're both probably still good. But my guess is again, we're here in the fourth quarter, momentum into the end of the year, that of those two, it appears that gold and silver are going to outperform crypto. You know, I'm always going to be a trend trader. I'm always going to follow the momentum and I'm not going to be so prideful that I'm going to try to outguess what the market's telling me.

Interviewer (10:10)

But you do think that we continue to see inflation because I've been talking to Neil Dutta from Renaissance Macro. He's pushing back on this. He says inflation hawks need to seek help. But his main point, I think is that housing, that the shelter component is going to come down. And he, he said a note last week, housing prices are likely declining. The fact that homebuyer demand has declined even as rates have dropped, dropped, suggests that a deflationary psychology has infected the housing market. You buy that?

Paul Tudor Jones (10:43)

I think I'm probably looking past current conditions and I'm just thinking about the future. And we're in a fiscally constrained time. So why is it that the President is hell bent on finding Fed chair that's going to have easy money? Because the only way that we can reduce our debt to GDP that you can even begin to deal with a 6% budget deficit is to have the lowest funds rate you can possibly have to lower your interest costs, to stimulate growth, etc. The only way to reduce debt to GDP is to have obviously nominal growth exceed your interest rate. So in a situation like that, particularly given where we are in this economic cycle, where we are now, it's just hard not to see, I think this is what the market's looking ahead to see inflation not be rekindled and start up again. 612 in a more serious fashion 18 months hence. You can kind of see it now. It's again, think of this. We have $370 trillion worth of global financial assets. 370 trillion. So when you come to a market like gold, which is 12 trillion, silver, which is, oh my Lord, a fraction of that Bitcoin crypto, which is say 2 to 3 trillion, it doesn't take very much. Then you start thinking about the copper markets and some of the other rare earth minerals, and you think about just individual commodities. Good gosh, the ability to elevate those prices because we have so much, again, money and financial assets. It just takes a small tweak to really begin to create a rise in the price level. And I think we'll see that assuming that we have a new Fed chair, who's going to take the funds rate down to two and a half percent. And I think, I think the White House is thinking they'd like to see the funds rate at two and a quarter to two and a half.

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Interviewer (13:35)

Will we see a significant drop in the dollar from that? Because we had seen, right in the first half the biggest drop from the dollar since 1973. That's the year I was born, so a long time ago.

Paul Tudor Jones (13:47)

But you're a baby.

Interviewer (13:49)

But we thank you. But we have recently seen the dollar recovering, showing a little bit of strength here as people look for, I think, safe haven in that.

Paul Tudor Jones (13:58)

Well, look, you've got a, you've got an effects, you've got a, you've got a fiat money debasement going on pretty much virtually around the world, right? The bond vigilantes though, are being held in check by, again, central banks and populism that are pushing central bankers to run hot. So the, the currency debasement trade has really turned in to a gold trade and a crypto trade. Right. Bond vigilantes have been, have been shunted to the back told or been put in abeyance, and instead it's manifesting itself in gold and crypto. That's really what's going on. So again, look at the new Prime Minister of Japan. She's already advocating for the BOJ to go slow on normalizing rates. You can't make it up. They've got, they've got negative, they've got negative one and a half percent. And it's all almost like they just want to deny that they have an inflation problem. But so that's what we're seeing. And again, at some point in time, at some point in time, we're going to have some precipitous moments in sovereign debt markets. I don't know whether it's Japanese bond market, the US Bond market, but we're going to have some precipitous times. And if you just think about, we had, we're not even close to that yet. We're not even close to that trust moment we had three years ago where the currency was under attack, the stock market, the bond market was under attack. Just imagine if and when we get to that day, which I think was 6%, budget deficits in the US that day will come. Just imagine what gold and crypto, for that matter, the dollar. Imagine what they're all doing. We're in, we're in good times now, right?

Interviewer (15:56)

Even with the shutdown.

Paul Tudor Jones (15:58)

Even with the shutdown, we're in good times now.

Interviewer (16:00)

I wonder what you think about that. You mentioned rare earths. And even we can't inflate our way out of that problem. Right? J.D. vance said we have the cards, but it seems to me China has us between a rock and a hard place. Meredith Whitney put out a note on Sunday and she says, you know, don't bother being distracted by 100% adjustment additional tariffs that President Trump was talking about because aside from the massive dependence on the US Industrial complex for these rare earth minerals and magnets, the US military is 100% dependent on them and is nearly depleted of its reserves. What can we do about that?

Paul Tudor Jones (16:35)

Yeah, I'm sorry, I don't have a good answer for that one. I wish I did. I really, I don't envy Trump and his Cabinet trying to figure out what's going to happen here in two weeks. I really don't.

Interviewer (16:51)

I just think of the strategy that it looks like the White House is falling. Right. They take a stake in MP Materials, they take a stake in Lithium Americas. They're trying to ramp up mining so they can produce these things and at the same time, they're taking stakes in private companies. How do you feel about that as a long term free market capitalist, the US Government getting in and picking winners and losers?

Paul Tudor Jones (17:15)

I'm not in favor of that. And again, the reason why is it's the same reason my concerns are I see concentration risk everywhere I look. When now we have individual investors with the highest equity allocation they've ever had in the history of the United States, really four times that of the rest of the developed world. So I get nervous about that concentration. I get nervous about the fact that we have 35% of the S&P is now concentrating seven stocks. I get nervous about the fact that this administration, even if all those decisions were smart and correct, again, if you just think about the number one rule of portfolio divert of portfolio management is you want diversification. That's why our founding fathers create us as a democracy, not a monarchy, because you want that contestation of ideas. So I'm nervous when I see concentration virtually in anything again, whether it's in the stock market, whether it's the composition of the stock market, who owns the stock market, or the decision making that's getting made in Washington. It makes me nervous because I don't think in the long run. Right. Even if all the decisions that President Trump making are great, is that going to embolden the next president who may not make as good a decisions to do the same thing? So I look, I'll look at that. And again, it raises caution flags.

Interviewer (18:55)

But you're still, you're still long stocks right now. You're still long the Nasdaq.

Paul Tudor Jones (19:00)

I am, I wouldn't say I'm long at this second. I'm clearly, again, I think there's such a confluence of possibly negative, possibly positive events. I think I want to kind of wait and see where we are and in a week or two time. But, but my, my belief is, is that we'll be substantially higher by the end of the year.

Interviewer (19:23)

All right, so just to end on where we started with the pick a ticker. Yeah. Contest for Robin Hood, I asked you last time, and I'll ask you again for players at home.

Paul Tudor Jones (19:32)

Yeah.

Interviewer (19:33)

What tips would you give us? What would you put?

Paul Tudor Jones (19:37)

I'll probably. So I think it's going to begin November one. I'm sure I'll probably be long. The NASDAQ will be my my long. Remember? You see, it's really interesting because the last 12 months of a bull market, typically you double the annual gains up until that point in time, but that's to the end of the bull market. So we've got this situation confronting us where the best part of the market's possibly straight ahead, but it's also the most dangerous because it could be the top. So, so I would probably long. The NASDAQ would be my long and I've got to think about what my short would be. It could be it might be the bond market again, though that'll be a bit boring.

Interviewer (20:26)

That wouldn't be boring. I'll take it.

Paul Tudor Jones (20:28)

Okay.

Interviewer (20:29)

Paul, thanks so much for joining us. Really appreciate your time. Paul Tudor Jones, co chairman, Chief Investment Officer, of course, of Tudor Investment Corporation and the founder of Robinhood.

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