Boosting market sentiment! Hedge fund giant Paul Tudor Jones: The Nasdaq will rise before the end of the year; gold and silver are stronger "depreciation trades" in terms of trends.

Legendary hedge fund manager Paul Tudor Jones said on Tuesday that, with expectations for lower interest rates, the Nasdaq Composite Index is likely to rise before the end of the year—injecting optimism into a market that had been struggling.

On October 14 local time, in an interview with Bloomberg TV, the billionaire investor predicted that if major technology companies report positive earnings and trade disputes are resolved before the end of October, then “the last two months could see a real rally” in the stock market.

These bullish comments came as U.S. stock index futures weakened in overnight trading, but reversed losses sharply in early trading on Tuesday. Some analysts believe Jones’ optimistic remarks were one reason driving market sentiment and triggering the rebound.

Jones specifically pointed out that late October to early November is a key turning point. If the Nasdaq remains strong at that time, there is a chance for a strong rally into year-end. He further emphasized that the market from November 1 onward could be either the final “summit phase” of the bull market (best case), or a dangerous period with risks accumulating at the top.

Jones also warned about concentration risk, and revealed that he personally currently does not hold any long equity positions, and prefers to wait “one to two weeks” before making a decision. A few days ago, Jones warned that the market was showing “melt-up” characteristics—that is, gains are concentrated and front-loaded, followed by sharp reversal risks.

Jones also pointed out that currency devaluation trades have now become gold and bitcoin trades, and when the true debt moment arrives, gold and cryptocurrencies will reveal their value.

Rate cut expectations drive tech stocks higher

Jones' forecasts are based on the Federal Reserve’s continued easy policy. He expects the Fed’s benchmark rate to fall from the current 4%-4.25% range to about 2.5% next year.

Last month, the Fed cut rates for the first time this year, and the FOMC meeting minutes show officials expect to cut rates two more times by year-end, each time by 25 basis points.

According to Bloomberg, Jones said that the current global economic situation can be described as an “almost worldwide fiat currency devaluation,” with central banks being pushed toward easy policies while remaining “cautious” in the bond market.

This macro environment provides strong support for technology stocks. This year’s strong performance by the Nasdaq has been driven mainly by AI-related stocks, with investors maintaining very high optimism about the prospects for AI technology.

Final frenzy? Warns of concentration risk

Although he remains optimistic about year-end trends, Jones repeatedly stressed that concentration risk is the biggest threat to the current market. He pointed out that individual investors now have the highest stock allocations in history, with about 35% of the S&P 500’s gains driven by just seven stocks.

Jones acknowledges that he currently does not hold any long equity positions and has chosen to “wait another one or two weeks” before making a decision.

As previously reported by Wallstreetcn, a few days ago, Jones warned that the market may be in the final stage of a bull market, characterized by a “melt-up”—the richest returns and the most violent volatility, also signaling that risks are accelerating.

He noted that the last year of a bull market often brings the highest returns, but is usually followed by a sharp reversal.

Gold and Silver: Stronger “devaluation trades”

Paul Tudor Jones also stated that the world is entering an era of “physical constraints”—limited growth capacity and high debt load. Faced with this, governments are desperately trying to maintain low interest rates to keep debt pressures from spiraling out of control.

He pointed out that the White House is now “determined” to find a more dovish Fed chair. The fundamental reason is: Only by lowering interest rates as much as possible can interest payments be reduced and nominal growth stimulated, thus suppressing the debt-to-GDP ratio. In other words, policymakers hope to “fight debt with growth” rather than actually cut spending.

But Jones reminded that the market is already “seeing through” this logic. When financing costs are artificially suppressed and liquidity remains abundant, inflation is bound to return—he expects inflation to be reignited within the next 18 months. There are about $370 trillion in global financial assets, but the markets for gold, silver, and bitcoin are relatively small—“just a little capital flow is enough to push prices higher.”

He further noted that under populism and political pressure, central banks have universally chosen to “continue easy policy,” resulting in systematic currency devaluation globally. The traditional “bond market vigilantes” that check government finances have been suppressed, replaced by gains in gold and cryptocurrencies. “The currency devaluation trade has become a gold and bitcoin trade,” Jones said.

Taking Japan as an example, the new Prime Minister still calls for the BOJ to “slowly withdraw from easing,” even though inflation is obvious and still unwilling to raise rates—showing that all countries are avoiding the cost of tightening. Jones warned that this trend will eventually lead to violent turmoil in sovereign debt markets—whether Japan or the U.S., both may repeat the “crisis of confidence” like the U.K. under Liz Truss in 2022.

“We are still in the good times now,” he said, “but when the true debt moment arrives, gold and cryptocurrencies will show their value.”

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