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Chapter 1: What is the main topic discussed in this episode?
Hello and welcome. This is The Michelle Hussein Show. I'm Michelle Hussein. I speak with people like Elon Musk. I think I've done enough. And Shonda Rhimes. That's so cute. This will be a place where every weekend you can count on one essential conversation to help make sense of the world.
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We welcome our TV and radio audiences for a conversation with one of the most respected traders on Wall Street. Paul Tudor Jones is known for his foresight. He shot to fame after anticipating the Black Monday crash in 1987. He then went on to make a series of successful global macro trades like shorting tech stocks ahead of the dot-com bubble, but also the big in philanthropy.
He founded the Robin Hood Foundation, a charitable organization committed to fighting poverty in New York City. Every year, the foundation enlists the boldest names in finance in a stock picking contest known as Pick a Ticker. And Paul Tudor Jones, I'm happy to say, joins us now here at the desk. Paul, thanks so much for your time.
I want to first ask you about Robin Hood before we get to the markets, because I know you have a big conference with J.P. Morgan tomorrow, right?
We do. We have a conference tomorrow. There's still a few tickets that are available. We have some great, great speakers. I'll be interviewing Dario Amity, who's the CEO of Anthropic. So actually, he's the person that should be answering your AI questions, not me. There's so many I want to ask him on AI. We've also got Ken Griffin and Jamie Dimon.
It's going to be a fantastic and a very informative and educational day.
Will all of those guys participate in Pick a Ticker? Because this is a contest you do with Bloomberg, right?
Right. So Pick a Ticker is you pick one long, one short. It's a six-month contest. Think of fantasy football meets the markets because this year we're going to allow you to change your picks, I think, two or three times during the six-month process. So you... You put in $10,000, it's going to go to charity.
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Chapter 2: How is the Robin Hood Foundation contributing to social causes?
He's probably, whoever the new Fed chair, let's say they've got six solid votes, so he'll have to find one more. And I don't think it'll be that hard to do. But if you're going to have two and a half percent overnight rates or 275,
uh... that's a really compelling story for higher equity prices well not just that i mean you've got new case are on our opinion team yesterday laid out the argument that this is not the same as nineteen ninety nine because these companies are so profitable right ninety five percent of the s&p five hundred expected to post earnings growth next year in the average earnings growth is sixteen percent it's obviously a lot more for the mag seven or the great eight
Plus, you don't have the same kind of leverage that you had back then. You have less than 100% debt to equity, and in 1999, it was more than double that.
Right. Well, the only thing I'd say is I don't think you've got the leverage necessarily in the corporate balance sheets yet. You clearly have leverage within the equity ecosystem, and by that I mean you just had a proliferation and explosion in derivative products. I want to say that levered ETFs are up 250% since the 2022 bottom.
And I want to say there's four or five hundred with another couple of hundred in the pipeline. So you're clearly creating derivative leverage, whether it's in the options market, we see single stock options, we just see options activity exploding. Everywhere you look, there's greater leverage, again, in the equity infrastructure for what has become a really trader nation.
We have the highest percentage equity holdings by individuals in history. We have, again, more levered activity. You don't see it in margin debt. because margin debt is actually an old anachronistic tool. You see it more so in the options markets. You see it more so in the levered ETFs. So it's somewhere down the road, a little similar.
I don't think we're there yet, but somewhere down the road, there's going to be some real issues with that.
Nonetheless, you're long now, right? I mean, at least last time we spoke to you in June, you said your portfolio would be long stocks. You said you'd be long gold. You said you'd be long Bitcoin. And those have been great picks. Check out this chart, right? Yeah. Gold alone is a 22% gain, but all of them are well above zero. Do you hold onto that portfolio?
So I would take them one by one. I think for stocks, the critical time is going to be the last week here in October. When we see the big tech earnings, as well as by that point in time, we'll have greater clarity on the resolution of the U.S.-China conflict. I would think... that if the NASDAQ is higher going into early November, then you've got a chance for a real ramp in the last two months.
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Chapter 3: How does Paul Tudor Jones compare today's market to 1999?
What can we do about that? Yeah, I'm sorry. I don't have a good answer for that one. I wish I did. I really I don't envy Trump and his cabinet trying to figure out what's going to happen here in two weeks. I really don't.
I just think of the strategy that it looks like the White House is following, right? They take a stake in MP materials. They take a stake in lithium Americas. They're trying to ramp up mining so they can produce these things. And at the same time, they're taking stakes in private companies.
How do you feel about that as a long-term free market capitalist, the US government getting in and picking winners and losers?
I'm not in favor of that. And again, the reason why is it's the same reason my concerns are I see concentration risk everywhere I look. Now we have individual investors with the highest equity allocation they've ever had in the history of the United States. Really four times that of the rest of the developed world. So I get nervous about that concentration.
I get nervous about the fact that we have 35 percent of the S&P is now concentrating seven stocks.
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Chapter 4: What is Paul Tudor Jones' perspective on the current AI bubble?
I get nervous about the fact that this administration, even if all those decisions were smart and correct again. If you just think about the number one rule of portfolio management is you want diversification. That's why our founding fathers created us as a democracy, not a monarchy, because you want that contestation of ideas. So I'm nervous when I see
concentration virtually in anything, again, whether it's in the stock market, whether it's the composition of the stock market, who owns the stock market, or the decision-making that's getting made in Washington. It makes me nervous because I don't think in the long run, right?
Even if all the decisions that President Trump is making are great, is that going to embolden the next president, who may not make as good of decisions, to do the same thing? So I'll look at that, and again, it raises caution flags for me.
But you're still long stocks right now? You're still long the NASDAQ?
I am, I wouldn't say I'm long at this second. I'm clearly, again, I think there's such a confluence of possibly negative, possibly positive events. I think I want to kind of wait and see where we are in a week or two time. But my belief is that we'll be substantially higher by the end of the year.
All right, so just to end on where we started with the pick-a-ticker contest for Robinhood, I asked you last time, and I'll ask you again, for players at home, what tips would you give us? What would you put?
I'll probably, so I think it's going to begin November 1. I'm sure I'll probably be long. The NASDAQ will be my long. Remember, you see, it's really interesting because the last 12 months of a bull market Typically, you double the annual gains up until that point in time. But that's to the end of the bull market.
So we've got this situation confronting us where the best part of the market's possibly straight ahead, but it's also the most dangerous because it could be the top. So I would probably long the NASDAQ would be my long, and I've got to think about what my short would be. It could be... It might be the bond market again, though. That'll be a bit boring. That wouldn't be boring. I'll take it.
Okay. Paul, thanks so much for joining us. Really appreciate your time. Paul Tudor Jones, co-chairman, chief investment officer, of course, of Tudor Investment Corporation and the founder of Robinhood.
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