Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: We welcome our TV and radio audiences for a conversation
Speaker 2: with one of the most respected traders on Wall Street.
Speaker 2: Paul Tutor Jones is known for his foresight. He shot
Speaker 2: to fame after anticipating the Black Monday crash in nineteen
Speaker 2: eighty seven.
Speaker 3: He then went on to make a series of.
Speaker 2: Successful global macro trades, like shorting tech stocks ahead of
Speaker 2: the dot com bubble, but also big in philanthropy. He
Speaker 2: founded the Robin Hood Foundation, a charitable organization committed to
Speaker 2: fighting poverty in New York City. Every year, the Foundation
Speaker 2: enlists the boldest names and finance in a stock picking
Speaker 2: contest known as Pick a Ticker and Paul Tutor Jones,
Speaker 2: I'm happy to say joins us now here at the desk.
Speaker 3: Paul, thanks so much for your time.
Speaker 2: I want to first ask you about robin Hood before
Speaker 2: we get to the markets, because I know you have
Speaker 2: a big conference with JP Morgan tomorrow, right we do.
Speaker 4: We have a conference tomorrow.
Speaker 1: There's still a few tickets that are available.
Speaker 4: We have some great, great speakers.
Speaker 1: I'll be interviewing Dario Amity, who's the CEO of Anthropics.
Speaker 1: So Actually he's the person that should be answering your
Speaker 1: AI questions, not not me. I can't what there's so
Speaker 1: many I want to ask him on a We've also got.
Speaker 4: Ken Griffin and Jamie Dimmond.
Speaker 1: It's gonna be it's gonna be your fantastic and very
Speaker 1: informative and educational debt.
Speaker 2: Will all of those guys participate in pick a ticker
Speaker 2: because this is a contest you do with Bloomberg.
Speaker 1: Right right, So pick a ticker is you pick one long,
Speaker 1: one short. It's a six month it's a six month contest.
Speaker 1: Think of fantasy football meets the markets. Because this year
Speaker 1: we're going to allow you to change your picks.
Speaker 4: Uh, I think two or three.
Speaker 1: Times during the six month process. So you have you
Speaker 1: put in ten thousand bucks, it's going to go to charity.
Speaker 1: It's gonna seventy five percent is going to go to
Speaker 1: robin Hood to help the least among us in New
Speaker 1: York City, which sadly has twice the national poverty rate.
Speaker 1: And I think we've all got a vested interest in
Speaker 1: making sure New York not just survives but thrives. Because
Speaker 1: obviously Wall Street, which is the I guess the reason
Speaker 1: for so much financial wealth that all your viewers have
Speaker 1: is something that we need to be able to in
Speaker 1: New York City have again a thriving city, because the
Speaker 1: most important city in this country has got to always succeed.
Speaker 3: Yeah.
Speaker 2: I mean you have raised I think three billion dollars
Speaker 2: over the time since you founded robin Hood for fighting
Speaker 2: poverty in New York. I want to ask about Wall
Speaker 2: Street and specifically about this equity market. I do watch
Speaker 2: our competition, and I saw your interview with Andrew last week.
Speaker 3: You said this is like October of nineteen ninety nine.
Speaker 2: But after that, as you pointed out, you know, the
Speaker 2: stock market doubled. We had a drop in October, like
Speaker 2: an eleven cent inter day drop, but then the stock
Speaker 2: market doubled to March of two thousand. Are we still
Speaker 2: in line for a doubling of this market?
Speaker 1: Well, it's so funny because you had mentioned that fifty
Speaker 1: four percent of fund managers think that we're in an
Speaker 1: AI bubble.
Speaker 4: If it's a bubble, it's it's a small one.
Speaker 1: If you just think about and again, how do you
Speaker 1: actually define bubbles? If you think about the bubbles of
Speaker 1: the past three or four decades, the nikkiing eighty nine,
Speaker 1: nasdek of ninety nine, Biotech two thousand and just after
Speaker 1: twenty eleven, twelve, China two thousand and seven. All those
Speaker 1: were four to six hundred percent gains. The Nasdaq's up
Speaker 1: two hundred percent off the bottom. So I don't know
Speaker 1: whether we're going to blow off like we did in
Speaker 1: nineteen ninety nine. Is it possible or all the ingredients
Speaker 1: in place, I think clearly they are.
Speaker 4: For me.
Speaker 1: The one thing that you can never ever forget is
Speaker 1: that a year from today, assuming that the President gets
Speaker 1: his wishes, that the FED funds rates can probably be
Speaker 1: and then two and a half. You know, I think
Speaker 1: they're I think they would like to see that two
Speaker 1: and a quarter. So I think two and a half,
Speaker 1: two seventy five. Obviously, whoever the new FED chair is
Speaker 1: going to have to be able to intellectually move that board.
Speaker 1: A majority of the board, he's probably whoever the new
Speaker 1: FED chair, Let's say they've got six solid votes, so
Speaker 1: he'll have to find one more.
Speaker 4: And I don't think it'll be that hard to do.
Speaker 1: But if you're going to have two and a half
Speaker 1: percent overnight rates or two seventy five, that's a really
Speaker 1: compelling story for higher equity prices.
Speaker 3: Well, not just that.
Speaker 2: I mean you've got Neil Casar on our opinion team
Speaker 2: yesterday laid out the argument that this is not the
Speaker 2: same as nineteen ninety nine because these companies are so profitable. Right,
Speaker 2: ninety five percent of the S and P five hundred
Speaker 2: is expected to post innings growth next year, and the
Speaker 2: average earnings growth is sixteen percent. It's obviously a lot
Speaker 2: more for the mag seven or the Great eight. Plus,
Speaker 2: you don't have the same kind of leverage that you
Speaker 2: had back then. You have less than one hundred percent
Speaker 2: debt to equity, and in nineteen ninety nine it was
Speaker 2: more than double that.
Speaker 4: Right.
Speaker 1: Well, the only thing I'd say is I don't think
Speaker 1: you've got the leverage necessarily in the corporate balance sheetshet
Speaker 1: you clearly have leverage within the equity ecosystem, And by
Speaker 1: that I mean you just had a proliferation and explosion
Speaker 1: in derivative products. I want to say that lebty tfs
Speaker 1: are of two hundred and fifty percent since the twenty
Speaker 1: twenty two bottom, and I want to say that there's
Speaker 1: four or five hundred, with another another couple one hundred
Speaker 1: in the pipeline. So you're clearly creating derivative leverage. Whether
Speaker 1: it's in the options market, we see single stock options.
Speaker 1: We just see options activity exploding.
Speaker 4: Everywhere you look.
Speaker 1: There's greater leverage again in the equity infrastructure.
Speaker 4: For what has become a really trader nation.
Speaker 1: We have the highest percentage equity holdings by individuals in history.
Speaker 1: We have again more levered activity. You don't see it
Speaker 1: in margin debt because margin debt is actually an old,
Speaker 1: anachronistic tool.
Speaker 4: You see it more so.
Speaker 1: In the options markets. You see it more so in
Speaker 1: the Lebrety ETFs. So it's somewhere down the road a
Speaker 1: little similar. I don't think we're there yet, but somewhere
Speaker 1: down the road there's gonna be There're gonna be some
Speaker 1: there're gonna be some real issues with that.
Speaker 2: Nonetheless, you're long now, right, I mean, at least last
Speaker 2: time we spoke to you in June, you said your
Speaker 2: portfolio would be long stocks. You said you'd be long gold,
Speaker 2: you said you'd be long bitcoin, and those have been
Speaker 2: great picks.
Speaker 3: Check out this chart.
Speaker 2: Right, gold alone is a twenty two percent gain, but
Speaker 2: all of them are well above zero.
Speaker 3: Do you hold onto that portfolio.
Speaker 1: So I would take them one by one. I think
Speaker 1: for stocks, the critical time is going to be the
Speaker 1: last week here in October and when we see the
Speaker 1: big tech earnings as well as by that point in
Speaker 1: time will have greater clarity on the resolution.
Speaker 4: Of the US China conflict.
Speaker 1: I would think that if the Nasdaq is higher going
Speaker 1: into early November, then you've got a chance for a
Speaker 1: real ramp in the last two months. What happens between
Speaker 1: now and then, I kind of think the market's going
Speaker 1: to be the defensive until we get to that's going
Speaker 1: to be a intersection of just so many really really
Speaker 1: important data points, so that's going to be a critical time.
Speaker 1: They also have a FED meeting that week, so I
Speaker 1: would think, you know, my prior is that it will
Speaker 1: resolve to the upside. We'll focus on where FED funds
Speaker 1: will be. The market will look ahead six to nine
Speaker 1: months and focus on that. Bitcoin gold are interesting. They're
Speaker 1: interesting as a pair in the sense that if I
Speaker 1: just look at since Liberation Day, you've had about forty
Speaker 1: billion dollars of inflows into a combination of bitcoin and
Speaker 1: theory metfs, and you've had a like amount of inflows
Speaker 1: into the combination of gold and silver.
Speaker 4: But if you think.
Speaker 1: About it, the VALL adjusted forty billion that goes into
Speaker 1: bitcoin because it's got had, say five six times the
Speaker 1: VALL of gold was really.
Speaker 4: A much much bigger.
Speaker 1: Bet on crypto than it was on precious metals.
Speaker 4: And yet.
Speaker 1: Gold has outperformed Bitcoin since that period in time. So
Speaker 1: clearly retail has made a mistake in terms of trying
Speaker 1: to figure out which of the two debasement trades were
Speaker 1: going to outperform. And I have to admit, until a
Speaker 1: couple of weeks ago, I thought bitcoin digital goal was
Speaker 1: going to outperform again the historic stores of value. I
Speaker 1: think they're both probably still good. But my guess is,
Speaker 1: again we're here in the fourth quarter momentum into the
Speaker 1: end of the year that of those two it appears
Speaker 1: that gold and silver are going to outperform crypto. You know,
Speaker 1: I'm always going to be a trend trader. I'm always
Speaker 1: going to follow the momentum, and I'm not going to
Speaker 1: be so prideful that I'm going to try to outguess
Speaker 1: what the market's telling me.
Speaker 2: But you do think that we continue to see infleetion
Speaker 2: Because I've been talking to Neil Dudda from Renaissance Macker.
Speaker 2: He's pushing back on this. He says inflation hawks need
Speaker 2: to seek help. But his main point, I think is
Speaker 2: that housing, that the shelter component is going to come down.
Speaker 2: And he said a note last week housing prices are
Speaker 2: likely declining. The fact that home buyer demand has declined
Speaker 2: even as rates have dropped suggests that a deflationary psychology
Speaker 2: has infected the housing market.
Speaker 1: By that, I think, I'm probably looking past current conditions
Speaker 1: and I'm just thinking about the future. And we're we're
Speaker 1: in a fiscally constrained time. So why is it that
Speaker 1: the president is hell bent on finding a fed share
Speaker 1: that's going to have easy money. Because the only way
Speaker 1: that we can reduce our debt to GDP, that you
Speaker 1: could even begin to deal with a six percent budget
Speaker 1: deficit is to have the lowest funds rates you can
Speaker 1: possibly have, to lower your interest costs to stimulate growth,
Speaker 1: et cetera. The only way to reduce that the GDP
Speaker 1: is to have obviously nominal growth exceed your interest rate.
Speaker 1: So in a situation like that, particularly given where we
Speaker 1: are in this economic cycle where we are now, it's
Speaker 1: just hard not to see and I think this is
Speaker 1: what the market's looking ahead to see inflation not be
Speaker 1: rekindled and start up again six twelve in a more
Speaker 1: serious fashion eighteen months.
Speaker 4: Hence you can kind.
Speaker 1: Of see it now. It's again think of this. We
Speaker 1: have three hundred and seventy trillion dollars worth of global
Speaker 1: financial assets.
Speaker 4: Three hundred and seventy trillion.
Speaker 1: So when you come to a market like goal, which
Speaker 1: is twelve trillion silver, which is, oh my lord, a
Speaker 1: fraction of that bitcoin crypto, which is say two to
Speaker 1: three trillion, it doesn't take very much. Then you start
Speaker 1: thinking about the copper markets and some of the other
Speaker 1: rare earth minerals, and you think about just individual commodities.
Speaker 1: Good gosh, the ability to elevate those prices. Because we
Speaker 1: have so much again money and financial assets, it just
Speaker 1: takes a small tweak to really begin to create a
Speaker 1: rise in the price level. And I think we'll see
Speaker 1: that assuming that we have a new FED chair who's
Speaker 1: going to take the funds rate down to two and
Speaker 1: a half percent, and I think the White House is
Speaker 1: thinking they'd like to see the funds rate at two
Speaker 1: and a quarter to two and a half.
Speaker 2: Will we see a significant dropping the dollar from that
Speaker 2: because we had seen right in the first half, the
Speaker 2: biggest drop for the dollars since nineteen seventy three, that's
Speaker 2: the year I was born, so a long time.
Speaker 3: Ago, but we're obeyed, but we have.
Speaker 2: But we have recently seen the dollar recovering, showing a
Speaker 2: little bit of strength here as people look for I
Speaker 2: think safe haven in that.
Speaker 1: Well, look, you've got a you've got an FX, you've
Speaker 1: got to you've got a fiat money debasement going on
Speaker 1: pretty much virtually around the world.
Speaker 4: Right.
Speaker 1: The bond vigilantes, though, are being held in check by
Speaker 1: again central banks and populism that are pushing central bankers
Speaker 1: to run hot. So the the currency debasement trade has
Speaker 1: really turned into a gold trade and a crypto trade. Right,
Speaker 1: Bond vigilantes have been have been shunted to the back,
Speaker 1: told or been put in abeyance, and instead it's manifesting
Speaker 1: itself in gold and crypto.
Speaker 4: That's really what's going on.
Speaker 1: So uh again, look at the new Prime Issu of Japan,
Speaker 1: she's all read advocating for the boj to go slow
Speaker 1: on normalizing rates. You can't make it up. They got
Speaker 1: they've gotten negative, they've got negative one and a half percent,
Speaker 1: and it's almost like they just want to deny that
Speaker 1: they have an inflation problem. But so that's what we're seeing.
Speaker 1: And again, at some point in time, at some point
Speaker 1: in time, we're going to have some precipitous moments in
Speaker 1: sovereign debt markets. I don't know whether it's Japanese bond market,
Speaker 1: the US bond market, but we're going to have some
Speaker 1: precipitous times. And if you just think about we had,
Speaker 1: we're not even close to that yet. We're not even
Speaker 1: close to that trust moment we had three years ago
Speaker 1: where the currency was under attack, the stock market, the
Speaker 1: bond market was under attack. Just imagine if and when
Speaker 1: we get to that day, which I think with six
Speaker 1: percent budget deficits in the US, that day will come.
Speaker 4: Just imagine what.
Speaker 1: Gold and crypto for that matter of the dollar, imagine
Speaker 1: what they're all doing. We're in good times now, right,
Speaker 1: even with a shutdown. Yea, even with the shutdown, we're
Speaker 1: in good times now.
Speaker 3: I wonder what you think about that.
Speaker 2: You mentioned rare Earth's and even we can't inflate our
Speaker 2: way out of that problem, right, JD. Van said, we
Speaker 2: have the cards, but it seems to me China has
Speaker 2: us between a rock and a hard place. Mereth Whitney
Speaker 2: put out a note on Sunday and she says, you know,
Speaker 2: don't bother being distracted by one hundred percent additional tariffs
Speaker 2: that President Trump was talking about, because aside from the
Speaker 2: massive dependence on the US industrial complex for these rare
Speaker 2: earth minerals and magnets, the US military is one hundred
Speaker 2: percent dependent on them and is.
Speaker 3: Nearly depleted of its reserves. What can we do about that?
Speaker 1: Yeah, I'm sorry, I don't have a good answer for
Speaker 1: that one.
Speaker 4: I wish I did.
Speaker 1: I really I don't envying Trump in his cabinet trying
Speaker 1: to figure out what's going to happen here in two weeks.
Speaker 4: I really don't.
Speaker 2: I just think of the strategy that it looks like
Speaker 2: the White House is falling.
Speaker 3: Right.
Speaker 2: They take a steak in MP materials, they take a
Speaker 2: steak in lithium Americas. They're trying to ramp up mining
Speaker 2: so they can produce these things, and at the same
Speaker 2: time they're taking steaks in private companies. How do you
Speaker 2: feel about that? As a long term free market capitalist?
Speaker 2: The US government getting in and picking winners and losers.
Speaker 4: I'm not in favor of that.
Speaker 1: And again, the reason why is it's the same reason
Speaker 1: my concerns are. I see concentration risk everywhere.
Speaker 4: I'll look.
Speaker 1: Well, now we have individual investors with the highest equity
Speaker 1: allocation they've ever had in the history of the United States,
Speaker 1: really four times that of the rest of the developed world.
Speaker 1: So I get nervous about that concentration. I get nervous
Speaker 1: about the fact that we have thirty five percent of
Speaker 1: the SMP's now concentrating the seven stocks. I get nervous
Speaker 1: about the fact that this administration, even if all those decisions.
Speaker 4: Were smart and correct.
Speaker 1: Again, if you just think about the number one rule
Speaker 1: of portfolio of portfolio management is you want diversification. That's
Speaker 1: why our founding fathers create us as a democracy, not
Speaker 1: a monarchy, because you want that contestation of ideas. So
Speaker 1: I'm nervous when I see concentration.
Speaker 4: Virtually in anything.
Speaker 1: Again, whether it's in the stock market, whether it's the
Speaker 1: composition of the stock market, who owns the stock market,
Speaker 1: or the decision making that's getting made in Washington. It
Speaker 1: makes me nervous because I don't think in the long run, right,
Speaker 1: even if all the decisions that President Trump making are great?
Speaker 1: Is that going to embolden the next president who may
Speaker 1: not make as good as decisions to do the same thing.
Speaker 1: So I'll look, I'll look at that, and again it
Speaker 1: raises caution flags.
Speaker 2: But you're still you're still long stocks right now, You're
Speaker 2: still long the Nasdaq.
Speaker 1: I am. I wouldn't say I'm long at this second.
Speaker 1: I'm clearly again, I think there's such a confluence of
Speaker 1: possibly negative, possibly positive events. I think I want to
Speaker 1: kind of wait and see where we are and in
Speaker 1: a week or two times, but my belief is that
Speaker 1: we'll be substantially hired by the end of the year.
Speaker 2: All right, So just to end on where we started
Speaker 2: with the pick a ticker contest for Robinhood, I asked
Speaker 2: you last time, and I'll ask you again.
Speaker 3: For players at home. Yeah, what tips would you give us?
Speaker 3: What would you put?
Speaker 1: I'll probably so, I think it's going to begin November one,
Speaker 1: I'm sure I'll probably be long. The Nasdaq will be
Speaker 1: my long remember.
Speaker 4: You See, it's really interesting because.
Speaker 1: The last twelve months of a bull market typically you
Speaker 1: double the annual gains up until.
Speaker 4: That point in time. But that's to the end of
Speaker 4: the bull market.
Speaker 1: So we've got this situation confronting us where the best
Speaker 1: part of the market's possibly straight ahead, but it's also
Speaker 1: the most dangerous because it could be the top. So
Speaker 1: I would probably be long. The Nasdaq would be my long,
Speaker 1: and I'm I've got to think about what my short
Speaker 1: would be.
Speaker 4: It could be.
Speaker 1: H it might be the bond market again, though that'll
Speaker 1: be a bit boring.
Speaker 3: Now, that wouldn't be boring.
Speaker 2: I'll take it, okay, Paul, thanks so much for joining us.
Speaker 3: Really appreciate your time.
Speaker 2: Paul Tutor Jones, Coach, chairman, the chief investment Officer of
Speaker 2: course of Tutor Investment Corporation and the founder of Robin
Speaker 2: Hood