Hedge fund billionaire Paul Tudor Jones likened Jerome Powell’s war against inflation to an attempt at a perfect moon landing, saying the Federal Reserve chair is facing the most challenging economic environment in 40 years.
(Bloomberg) — Hedge fund billionaire Paul Tudor Jones likened Jerome Powell’s war against inflation to an attempt at a perfect moon landing, saying the Federal Reserve chair is facing the most challenging economic environment in 40 years.
“There’s huge amount of savings that consumers have from all the Covid-relief bills and the stimulus that was applied both from a fiscal and monetary standpoint,” Jones, the founder of Tudor Investment Corp., said Tuesday in an interview with CNBC. “He is faced with that very difficult proposition of working that down without breaking things.”
If Powell succeeds, Jones said stocks could climb 7% to 8% this year, but if inflation worsens he’ll need to continue raising rates, increasing the risk of a downturn.
The latest jobs report showed robust hiring and an unemployment rate of 3.5% — a five-decade low. Wage growth also began to slow in December, suggesting the Fed may be making progress in its efforts to tamp down inflation.
“Most of the inflation we’re seeing right now is not because the fact that the American worker is getting their fair share of the pie,” said Jones, 68. “The inflation that we have right now is primarily because of extraordinary fiscal stimulus and extraordinary monetary stimulus.”
The Fed raised rates by 50 basis points in December to the highest level since 2007, and Powell suggested that the central bank would continue its monetary tightening.
–With assistance from Erin Fuchs.
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