The Stock Market Will Crash, Predicts Famous Hedge Fund Investor

Back in 1987, Paul Tudor Jones predicted the Black Monday market crash. Now, he says another crash is coming for the stock markets, and there is only one way to avoid it. Hedge fund investor Jones is predicting that a crash is imminent for the stock markets. Because President Donald Trump is focused on tariffs and not letting that platform go, and the Chinese government is battling with them over the same issue, the stock markets are bound to collapse. What makes the situation worse, Jones told CNBC on Tuesday, is that the Federal Reserve is adamant about not issuing interest rate cuts. If these three sides stick to their guns and do not waver, then the stock market is going to feel the pressure. We already saw tariffs hit the stock markets hard this year, with steep declines that only recently started to abate. Jones is factoring in that Trump might roll back some of the tariffs, cutting them in half or more as public pressure builds and the stock market trends down. To take some of the pressure off of businesses and the economy, it is likely that Trump will cut his tariffs in the near future, but even that may not be enough to stop the economy from losing a few percentage points of growth. Jones says that the only possibility he sees that will cause the economic situation to improve is if the Fed cuts interest rates. The Fed has already declared that they will only issue two interest rate cuts for the remainder of the year- one in July and another before the end of the year. While the Fed is waiting to issue those cuts, though, the economy may trend down sharply, and by the time the cuts come, it could be too little too late to avoid substantial damage. It is less likely that Trump or China will back off entirely from the trade war and ease the pressure for the U.S. economy. So, it falls to the Fed to take action before the economy drops too hard. The Nasdaq dropped another 0.87% on Tuesday before the markets closed, and the Dow Jones fell by 0.95%. The S&P 500, which ended a long running winning streak, dropped by 0.77% on Tuesday. All of these indices are expected to continue to fall in Wednesday’s trading. The Fed is holding a meeting later today and will likely stick to its two-cuts plan moving forward, but Jones is not the only investor saying that this could be a bad move.