MW Another billionaire investor positions for a Trump win. He's placing 'inflation trades.'

By William Watts

'Bigger question' is whether election prompts recognition of impending fiscal disaster regardless of victor, Paul Tudor Jones says

Legendary investor Paul Tudor Jones said Tuesday he's moved his portfolio in the direction of a victory by Donald Trump in the Nov. 5 presidential election, but warned of a potential reckoning over a burgeoning U.S. debt pile regardless of the victor.

"I have moved in that direction for sure," Jones, who rose to fame by calling the 1987 stock-market crash, told CNBC in an interview, when asked if he had repositioned for a potential victory by Trump, the Republican nominee, over Vice President Kamala Harris, the Democratic candidate.

"It just means more in inflation trades," said Jones, who like a handful of other high-profile investors has emphasized worries over the fiscal trajectory of the U.S. government regardless of the victor, given both candidates' promises on tax cuts and spending.

"I'm long gold (GC00), I'm long bitcoin (BTCUSD). ... Commodities are ridiculously underowned," he said.

The bigger question, Jones said, is whether there will "be some point of recognition, particularly with all the tax cuts that are being promised by both sides [and] the spending plans." He noted that U.S. government debt has grown from 40% of gross domestic product to nearly 100% in 25 years and appears to be on an unsustainable trajectory. As a result, Jones said he's avoiding fixed income and is shorting long-dated bonds.

He's not the only billionaire investor to sound the fiscal alarm; Stanley Druckenmiller earlier this month said he was also shorting bonds. A past donor to Republican presidential candidates, Druckenmiller told an investing-conference audience that he wouldn't vote for either Trump or Harris, warning that "bipartisan fiscal recklessness is on the horizon."

See: Stanley Druckenmiller says he's shorting U.S. bonds and staying out of China

Druckenmiller told Bloomberg Television last week that "the market and the inside of the market is very convinced Trump is going to win. You can see it in the bank stocks, you can see it in crypto, you can even see it in Trump Media & Technology Group Corp., his social-media company." Shares of Trump Media & Technology Group $(DJT)$ have surged 107% in October.

Stocks have largely defied typical election-year seasonal jitters, with the S&P 500 SPX up 1.4% so far in October and 22.5% in the year to date, while the Dow Jones Industrial Average DJIA has rallied nearly 14% in 2024. Both indexes have set numerous records this year, extending a bull market that began a little over two years ago.

However, Treasury yields BX:TMUBMUSD10Y, which move opposite to bond prices, have quickly climbed higher in October, with some market watchers tying the move to growing unease over the U.S. fiscal outlook.

While polls still show a tight race at the national level as well as in the key battleground states that will determine the outcome in the Electoral College, betting markets have increasingly swung in favor of a Trump victory.

"Yeah, certainly the markets are saying [Trump's] going to win," Jones told CNBC. But he echoed concerns that the betting markets are "heavily skewed" by Republican participants. "So I don't know if I necessarily believe the betting markets, but I don't have any great insights," he said.

Need to Know: A French crypto whale backing Trump may be moving markets many times its size

Daniel Loeb's Third Point hedge fund told investors this month that it expected a Trump victory and that the outcome would boost U.S. stock markets. Trump's "America First" policy positions would bolster U.S. manufacturing and drive up infrastructure spending, lifting the prices of certain materials and commodities, according to Third Point.

Billionaire hedge-fund manager Bill Ackman in July endorsed Trump just hours after Tesla Inc. $(TSLA)$ Chief Executive Elon Musk backed the former president. Musk has campaigned for Trump and has given out $1 million cash prizes to randomly chosen swing-state voters who sign his political organization's petition.

Jones, when asked, didn't say whom he planned to vote for in the election.

-William Watts

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October 22, 2024 14:08 ET (18:08 GMT)

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