Paul Tudor Jones made some waves last week on a CNBC interview:
He’s worried government spending and deficit levels are going to lead to a crisis:
“The question is after this election will we have a Minsky moment here in the United States and U.S. debt markets?” Jones said, referring to shorthand for a dramatic decline in asset prices.
“Will we have a Minsky moment where all of a sudden there’s a point of recognition that what they’re talking about is fiscally impossible, financially impossible?” he continued.
I received a lot of questions about this one. Tudor Jones is a legendary hedge fund manager. He’s articulate, intelligent and well-respected.
I’m not as worried as hedge fund managers are about government debt levels. Could our government spending levels become a problem down the line? Sure, I understand the worry.1
But you also have to understand hedge fund managers are always worried about this kind of stuff.
Here’s Tudor Jones earlier this year:
It sounded smart at the time, yet markets are having one of their best years ever.
And in 2022:
He called for a recession just like everyone else that never came.
He was also warning about the deficit back in 2018 to CNBC:
“I want to own commodities, hard assets, and cash. When would I want to buy stocks? When the deficit is 2%, not 5%, and when real short-term rates are 100bp, not negative. With rates so low, you can’t trust asset prices today.”
The stock market is up 140% since then and the deficit has only increased. Rates are higher too.
How about some other hedge fund manager predictions?
Stanley Druckenmiller wrote a piece for The Wall Street Journal sounding the alarm on government debt all the way back in 2013:
I guess government spending