Paul Tudor Jones sees Second Depression coming if the pandemic isn’t contained within a year.
The Great Depression from 1929 to 1939 was the worst economic downturn in US History.
But could the last Great Depression be eclipsed by the coming economic financial calamity triggered by the 2020 pandemic and the great lockdown?
“Paul Tudor Jones sees Second Depression coming if the pandemic isn’t contained within a year”
THE WEALTH TRAINING COMPANY
Paul Tudor Jones sees second depression coming, but judging from the first quarter of 2020 macroeconomic data it wouldn’t be an exaggeration to say that it has already arrived
Investors have already been hit with a raft of dire macro data coming out of the US, the world’s largest economy.
Already 30 million jobs have been lost in a six-week time frame in an economy that is expected to contract by 4.8% in the first quarter of 2020. Moreover, there are no immediate signs of a V-shaped coronavirus rebound, bearing in mind that the second-quarter consensus is for a steep contraction to continue with the US, second-quarter activity forecast to sink 35% with a 15% unemployment rate.
The old saying goes when the US sneezes the world economy catches a cold maybe should be updated to when China sneezes the world goes into a depression.
In an interconnected world when the world’s largest economy is in trouble that is going to have implications for other economies.
The Bank of England warned in May of the sharpest downturn since 1706.
“Already 30 million jobs have been lost in a six-week time frame in an economy that is expected to contract by 4.8% in the first quarter of 2020”
THE WEALTH TRAINING COMPANY
Paul Tudor Jones sees second depression coming if so emerging economies are likely to fear the worse
Less robust shockproof economies, emerging markets could be worse hit in the coming downturn. There could be many Argentine sovereign debt defaults as governments fail to keep up with interest payments and Venezuelan hyperinflation as many emerging currencies become worthless due to excessive money printing.
The pandemic continuing for more than a year with its huge disruptions is the crux to Paul Tudor Jones sees second depression coming thesis
There isn’t much policymakers could do to save the economy from doom if a second pandemic wave were to hit. If they opt to do nothing, let the virus rip death rates will soar again and fear will keep people from going out and maybe spending money.
If lock-down release cycles are implemented business can’t plan their inventories, investments collapse, and the economy would be doomed.
“We are just again in this craziest monetary and fiscal mix in history. It’s so explosive. It defies imagination” – Paul Tudor Jones
The economy would be in a “Second Depression” if the coronavirus pandemic doesn’t get contained by the year-end
“Just depends on whether unfortunately, this goes to a year with this kind of a lockdown” said Paul Jones in his latest business interview.
Paul Tudor Jones is founder and chief executive at Tudor Investment, the billionaire hedge fund investor is considered to be one of the best macroeconomic traders ever.
He has been successful in predicting a string of economic events, including the 1987 stock market crash, the 2008 financial crisis, and most recently the 2020 stock market crash.
Back in late January, we reported in a piece entitled “Paul Tudor Jones thinks stock prices are crazy” and a little less than one month later in late February, the main Index shed 30% of its value from it’s all-time high in just 4 weeks. February’s stock market crash was the fastest and largest drop in the Dow’s history, which started in the last week of February and ended in March.
“We are just again in this craziest monetary and fiscal mix in history. It’s so explosive. It defies imagination” said Paul Tudor Jones back in January 2020.
Lately, Paul Tudor Jones sees second depression coming, it is a view centered around the pandemic which has eclipsed controversial fiscal and monetary expansion policies
The coronavirus has infected more than 1.3 million people in the US, as of May 11, and claimed 79,528 deaths, according to data from Johns Hopkins University.
New York state is the epicenter of the pandemic, with more than 330,000 cases and over 20,000 deaths.
Paul Tudor Jones highlights the complications of containing a virus in a relatively open, free, and individualistic countries.
Paul Tudor Jones sees America’s love for individual freedoms being its Achilles’ heel.
“I think America’s biggest strength is individualism, its love of freedom. In the case of the pandemic, it’s also our biggest weakness” – Paul Tudor Jones
“They may have trouble following contact tracing and other methods used by other nations to contain the virus quickly because of how Americans feel about individual freedoms” said Paul Tudor Jones.
“Americans are too different. I don’t think we would be able to come together and do that” Jones said. “I think America’s biggest strength is individualism, its love of freedom. In the case of the pandemic, it’s also our biggest weakness. If you look at the Asian countries that are succeeding and beating this, they are doing it because they place a much greater emphasis on social values than they do on individual rights” said Paul Tudor Jones.
With tears in his eyes, Jones said he wants to be able to tell his grandchildren, “when they ask me what did I do during the Second Depression, I would look them in the eye and I want to tell them I did more than I thought I could do”.
Paul Tudor Jones sees second depression, but what assets does he favor which he believes will shelter his wealth in the downturn?
The best trade is going to be gold. If I have to pick my favorite for the next 12-24 months it probably would be gold” said Paul Tudor Jones.
“I think gold goes beyond $1,400… it goes to $1,700 rather quickly. It has everything going for it in a world where rates are conceivably going to zero in the United States” said back in June Paul Tudor Jones back in June, 2019.
Paul Tudor Jones sees second depression and he thinks that bitcoin will also be a good store of value when modern backed government currencies lose their value overtime
Paul Tudor Jones said he has “just over 1% of my assets in bitcoin.
“But I’m very conservative. I’m going to keep a tiny percent of my assets in it and that’s it. It has not stood the test of time, for instance, the way gold has” he said.
