Paul Tudor Jones, a hedge-fund luminary, on Monday said the next economic downturn confronted by the U.S. could be an ugly one.
“The next recession is really frightening because we don’t have any stabilizers,” he said, speaking at an event sponsored by Goldman Sachs GS, -0.48% and hosted by its CEO Lloyd Blankfein called “Talk at GS.”
“We’ll have monetary policy, which will exhaust really quickly, but we don’t have any fiscal stabilizers,” Jones said.
The billionaire investor said the dynamic created by the Federal Reserve, as it attempts to normalize interest-rate policy from the 2007-‘09 financial crisis, is unsustainable, referring to valuations for stocks that many on Wall Street view as pricey.
Jones’s comments come after he told CNBC last week that stock market and bond yields are set for a ‘crazy’ rise.
“I think you’ll see rates go up and stocks go up in tandem at the end of the year,” Jones said last Tuesday. He made the case that real rates remain historically low and that rising bond yields, which move inversely to bond prices, won’t deter investors from scooping up stocks.