Paul Tudor Jones is 'Probably' Buying Commodities, Crypto, Gold if Fed Continues to Ignore Inflation Concerns, Endorses Bitcoin (BTC) as a Portfolio Diversifier

June 14, 2021 10:37 AM EDT

Photo via Reuters

News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.

Bitcoin (BTC) price has continued to move higher today to exceed the $40,000 mark on bullish comments from Tesla (TSLA) CEO Elon Musk and renowned investor Paul Tudor Jones.

Over the weekend, Elon Musk stated Tesla could start supporting Bitcoin payments once again in the future if miners use more clean energy. On the other hand, Tudor Jones endorsed Bitcoin.

“I like bitcoin as a portfolio diversifier. Everybody asks me what should I do with my bitcoin? The only thing I know for certain, I want 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities,” Tudor Jones told CNBC.

“For me, it’s just a way of kind of foundationally looking at how do I protect my wealth over time it’s a great diversifier again, I look at bitcoin as a story of wealth. I look at crypto as a story of wealth. Others will argue this is a different ecosystem. It’s transactional in nature.”

Jones also said he will keep a close eye on this week’s upcoming Federal Reserve policy meeting about recent economic data indicating a surge in consumer prices.

“If they treat these numbers - which were material events, they were very material - if they treat them with nonchalance, I think it’s just a green light to bet heavily on every inflation trade,” Jones said.

He plans to go all-in on the inflation trades if the Fed concludes that “things are good”, adding he would invest in commodities, crypto, and gold in that case.

However, Jones said he expects more market uncertainty if the Fed concludes otherwise on Wednesday.

“If they course correct, if they say, ‘We’ve got incoming data, we’ve accomplished our mission or we’re on the way very rapidly to accomplishing our mission on employment,’ then you’re going to get a taper tantrum,” he said. “You’re going to get a sell-off in fixed income. You’re going to get a correction in stocks. That doesn’t necessarily mean it’s over.”

“The idea that inflation is transitory, to me ... that one just doesn’t work the way I see the world,” Jones said.

The Fed’s two-day policy meeting is scheduled to conclude Wednesday, and Chairman Jerome Powell is set to hold a news conference after the central bank releases its statement at 2 PM ET. Jones believes the Fed is risking its credibility by keeping policy so loose.

“The reason why [the meeting is so important] is because we’ve had so much incoming data that challenges both their mission and their model. So how they react to that will be extraordinarily important and I think for investors as to how they should deal with their portfolios going forward.”

In such a setting - which Jones describes as “the craziest mix of fiscal and monetary policy since the Federal Reserve Board was created” - the Fed is putting its reputation on the line.

“It turned economic orthodoxy upside-down, and that’s why this meeting is so important. Things are actually bat-s crazy,” he added. “At some point, we have to say, ‘OK, let’s slow down. We’re going to get back in the lane and we’re going to drive like we used to.”

“It’s an intellectual incongruity that risks damaging their forecasts if they’re wrong on inflation on their inflation forecast,” he said. “At the same time, right now we’re instead quantitative easing and juicing an economy that’s already red hot,” Jones stressed.

Serious News for Serious Traders! Try Premium Free!

You May Also Be Interested In

Related Categories

Cryptocurrency, Hedge Funds, Trader Talk

Related Entities

Tudor Investment Corporation, Tesla, Jerome Powell, Bitcoin