The interest rates growth, influenced by the economic growth acceleration after the tax caut in the United States might lead to the corporate bubble to burst, billionaire investor Paul Tudor Jones warned.
“We will expose the corporate debt market to a stress-test the first time, - Jones said at Greenwich, Connecticut economic forum on Thursday. - From the markets’ point of view, that would be interesting. Probably, the corporate securities segment would be really scary sometimes”.
Jones, leading Tudior Investment Group with assets for 7 billion U.S. dollars, noted that zero and negative interest rates were encouraging exuberant lending, putting the markets in a risky position. He said that today’s levels of the leverage could be systematicly dangerous, even if the regulator would react in a proper way.
Shares, bonds, currencies and real estate are overvalued, he said.
The hedge-funds manager told that the next trading strategy would be ‘a strategy of short-term interest rates’, trying to forecast when the central bank would stop hiking the interest rates. Although the economic growth might slow down next year, shares would not struggle immediately. In otehr times when the Federal Reserve paused the monetary policy tightening, shares kept climning to new highs.
“This does not necessarily mean that we will enter the bear phase. - he said. - But who the hell knows.”