Paul Tudor Jones, the hedge fund manager who famously predicted the 1987 “Black Monday” stock market crash, has issued a grim warning for investors. Jones believes that the stock market is poised to hit new lows, driven by tariffs and a lack of rate cuts from the Federal Reserve. Jones points specifically to tariffs imposed by President Donald Trump, particularly against China.
He argues that even if these tariffs are reduced, the stock market is still likely to suffer. According to Jones, even a reduction to 50% of their current level will not be enough to prevent a market decline. “For me, it’s pretty clear.
You have Trump who’s locked in on tariffs. You have the Fed who’s locked in on not cutting rates.
Market lows prediction by Jones
That’s not good for the stock market,” Jones stated. He also mentioned that if Trump were to roll back tariffs on China to around 40-50%, it would still be one of the largest tax increases since the 1960s, shaving off 2-3% of growth from the market. Jones indicated that the only scenario he sees preventing new market lows is a decisive intervention by the Federal Reserve through sharp rate cuts.
However, he is skeptical about this happening in time to avert a downturn. “While I believe the Fed will ultimately cut rates, it will likely only happen after the market has hit or is near the bottom,” he said. Jones predicts that the significant market decline will force both the Federal Reserve and President Trump to take action.
“When we’re at new lows, the hard day will start to follow, and it’ll probably create the Fed to move, create Trump to move. And then we’ll get some kind of reality.”
Jones’s dire prediction comes as a sobering reminder to investors that tariffs and monetary policy remain critical factors in the health of the stock market.
Image Credits: Photo by Ayadi Ghaith on Unsplash
