Legendary hedge fund manager Paul Tudor Jones said on Tuesday that the Nasdaq Composite Index is expected to rise before year-end amid expectations of lower interest rates, injecting optimism into a previously weakening market.
On October 14th local time, in an interview with Bloomberg TV, the billionaire investor predicted that if major tech companies report positive earnings and trade conflicts can be resolved by the end of October, the stock market will have "a real opportunity for genuine gains in the final two months."
These bullish comments came as U.S. stock index futures weakened in overnight trading but suddenly reversed their decline in Tuesday's early session. Analysts believe Jones's positive commentary was one of the factors driving market optimism and triggering the rebound.
Jones specifically identified late October to early November as a critical turning point. If the Nasdaq remains strong at that time, there will be an opportunity for a robust rally toward year-end. He further emphasized that this period starting November 1st could either represent the final "blow-off top phase" of the bull market (the best scenario) or a dangerous moment when peak risks accumulate.
Jones also warned about concentration risks and revealed that he personally currently holds no long equity positions, preferring to wait "one to two weeks" before making decisions. A few days ago, Jones had issued warnings that the market was showing "melt-up" characteristics—where gains are front-loaded and followed by sharp reversals.
Jones also noted that currency debasement trades have evolved into gold and bitcoin trades, and when the real debt moment arrives, gold and cryptocurrencies will demonstrate their true value.
Rate Cut Expectations Drive Tech Stock Gains
Jones's predictions are based on the Federal Reserve's continued accommodative policy. He expects the Fed's benchmark rate to decline from the current 4%-4.25% range to around 2.5% by next year.
The Federal Reserve conducted its first rate cut this year last month, and Federal Open Market Committee meeting minutes show officials expect two more 25 basis point cuts by year-end.
According to Bloomberg, Jones believes the current global economic situation can be described as "fiat currency debasement occurring almost worldwide," with central banks being pushed toward accommodative policies while maintaining "vigilance" in bond markets.
This macroeconomic environment provides favorable support for tech stocks. The Nasdaq's strong performance this year has been primarily driven by artificial intelligence concept stocks, with investors maintaining high optimism about AI technology prospects.
The Final Celebration? Warning of Concentration Risks
Despite maintaining optimism about year-end market performance, Jones repeatedly emphasized that concentration risk is the biggest threat facing current markets. He noted that individual investors' stock allocation has reached historical highs, with approximately 35% of the S&P 500's gains driven by seven stocks.
Jones acknowledged that he currently holds no long equity positions, choosing instead to "wait another one to two weeks" before making decisions.
A few days ago, Jones had warned that the market might be in the final phase of a bull market, characterized by a "melt-up"—the most rewarding but also most volatile period, signaling accelerating risk accumulation.
He pointed out that the final year of bull markets often generates the most substantial returns, followed by sharp reversals.
Gold and Silver Are Stronger "Debasement Trade" Trends
Paul Tudor Jones also stated that the world is entering a "physically constrained era"—with limited growth potential and high debt burdens. Facing this situation, governments are striving to maintain low interest rates to prevent debt pressures from spiraling out of control.
He pointed out that the White House is now "determined" to find a more dovish Federal Reserve chair, fundamentally because only by keeping rates as low as possible can interest expenses be reduced and nominal growth stimulated, thereby lowering the debt-to-GDP ratio. In other words, policymakers hope to "grow their way out of debt" rather than truly cut spending.
However, Jones warned that markets are beginning to "see through" this logic. When capital costs are artificially suppressed while liquidity remains abundant, inflation will inevitably return—he expects inflation to be reignited within the next 18 months. With approximately $370 trillion in global financial assets, while gold, silver, and bitcoin markets remain relatively small, "just a small capital flow is enough to push prices higher."
He further noted that under populism and political pressure, central banks generally choose to "continue monetary easing," causing systematic currency debasement globally. The "bond vigilantes" that once served as checks on government fiscal policy have been suppressed, replaced by rising gold and cryptocurrency prices. "Currency debasement trades have become gold and bitcoin trades," Jones said.
Taking Japan as an example, the new Prime Minister still calls for the Bank of Japan to "slowly exit accommodation," unwilling to raise rates even amid obvious inflation problems, showing that all countries are avoiding the costs of tightening. Jones warned that this trend will ultimately lead to severe turbulence in sovereign debt markets—whether Japan or the United States, both could potentially replay the "confidence crisis" of the UK's Truss government period in 2022.
"We're still in the good times now," he said, "but when the real debt moment arrives, gold and cryptocurrencies will show their true value."