Billionaire hedge fund manager Paul Tudor Jones is warning that next year could be a brutal one for the stock market.
Speaking on CNBC’s Squawk Box, the founder and chief investment officer of Tudor Investment says a flood of new stock supply from big tech initial public offerings (IPOs) is set to weigh on prices.
Jones says corporate buybacks and mergers and acquisitions have shrunk the supply of shares for most of the four-year bull market, but that tide is now turning.
He points to major offerings ahead from AI firms Anthropic and OpenAI, one just finished for SpaceX and likely secondary offerings from companies raising money for the AI build-out.
Says Jones,
“2027 is going to be really, really challenging for the stock market. You’ve probably got the most negative flow picture for the U.S. stock market that we’ve had, say, since 2002.”
Jones again compares today’s market to 1999, about a year before the dot-com bubble burst.
He also sees the ballooning US fiscal deficit as a danger for stocks.
Says Jones,
“We’re never going to fix these deficits until the market makes us to. It’s going to be just like 2008 and TARP [Troubled Asset Relief Program]. So that’s the reality. No politician is going to voluntarily raise taxes or cut spending. They’re going to be forced to.”
Jones puts the odds that markets are now at that tipping point at 60-40.
He is also long oil and says prices could rally another $20 to $25 after the midterms, a scenario he says the stock market will “hate.”
Jones says the late 1990s and early 2000s were the easiest years to be short because unlocks kept adding supply to the market.
Says Jones,
“I’ll be short the whole year. There just – there’s little value.”
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