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Seeking Alpha 2022-10-10 13:38:11

Paul Tudor Jones: Might need recession for long-term prosperity, warns of 'fiscal retrenchment'

Billionaire hedge fund manager Paul Tudor Jones said Monday that the Federal Reserve will likely push the economy into a recession in the near term as part of its battle against inflation, but this move is probably a necessary sacrifice to achieve longer-term stability. "There's going to be short-term pain associated with long-term gain," the CIO of Tudor Investment told CNBC. "More likely than not, if we're going to have long-term prosperity, you have to have a stable currency," he added. "You have to have something 2%-and-under inflation in the very long run to have a stable society."Jones argued that given the current unemployment rates, the economy remains out of a recession at this point. However, he expects that it will likely start in the near term, saying that economists will probably eventually date the downturn as beginning "somewhere within a month or two of now."Given the likelihood of a downturn, Jones advised investors to consider their recession playbooks. As part of this, he noted that most recessions last about 300 days and are associated with a 10% drop in the stock market (SP500) (NYSEARCA:SPY).Meanwhile, once the Fed stops raising interest rates, the market could see "a massive rally in a variety beaten-down inflation trades," the legendary hedge fund manager said. This would include cryptocurrency (BTC-USD) (ETH-USD), an asset class that Jones says he has a "very minor allocation."Looking further ahead, Jo...