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Paul Tudor Jones Says Trading in the Second Half to Be ‘Phenomenal’

Saijel Kishan
Paul Tudor Jones, co-chairman and chief investment officer of Tudor Investment Corp., speaks during Bloomberg's fourth-annual Year Ahead Summit in New York, U.S., on Tuesday, Oct. 25, 2016. The summit addresses the most urgent topics for 2017 and beyond–how power shifts in global politics will affect free trade and financial markets; industry-moving innovations in AI, robotics, and life sciences; the biggest investment opportunities for 2017; and how organizations are working to increase diversity, solve the skills gap, and decrease the wage gap.

Billionaire hedge fund manager Paul Tudor Jones said the second half of the year is going to be a “phenomenal” trading time when interest rates will move “significantly” higher as will stocks.

Jones said in an interview on CNBC Tuesday that if he ran the Federal Reserve it would increase rates by 150 basis points.

Jones, whose Tudor Investment Corp. has for years struggled to generate profits and keep investors, said that he doesn’t have many macro trades on now because the “reward and risk have diminished at this point in time.”

“I don’t like having positions -- and this is probably a fault of mine at times -- because I think ultimately interest rates are going up or I think the dollar’s going to go higher,” he said. “I much prefer to be leveraged right at that point when they move so I’m not subject to unexpected events overnight or over the course of weeks or months.”

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Tudor’s main fund rose 1.2 percent last month, bringing returns this year to 7.6 percent, according to an investor document. It’s the biggest year-to-date return since 2013. One of Jones’s traders, Dharmesh Maniyar, posted a 13 percent gain this year in his new fund that uses machine-learning algorithms to help make macro trades. The fund, which started in October, got off to a poor start, slumping 8 percent in its first three months.

Trade Issues

Jones, 63, said discussions between global powers on tariffs needed to be put into perspective, describing the issue as a “trade irritant” rather than a trade problem.

“It’s a $40 to $50 billion problem in an $87 trillion world economy,” he said. “The danger is that he’s trying to do away with the bilateral trade deficits country by country,” Jones said, referring to President Donald Trump. “And there’s a problem with that because we are running a structural deficit.”

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Jones described the outcome of the summit between Trump and North Korea’s Kim Jong Un as anti-climactic for markets. But he said an eventual deal may be Trump’s “crowning achievement” more than his tax cuts.

Jones was interviewed by CNBC to promote an exchange-traded fund that Goldman Sachs Group Inc. is starting with him that only invests in U.S. companies that engage in “just business behavior” as defined by his non-profit organization JUST Capital Foundation. The ETF will begin trading Wednesday.

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