Paul Tudor Jones says 2027 could be a really challenging year for the stock market
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Legendary hedge fund manager Paul Tudor Jones tells CNBC that next year could be a challenging one for the stock market because of increased equity supply from big tech IPOs coming down the pipe.
“2027 is going to be really, really challenging for the stock market,” Jones told CNBC’s “Squawk Box” on Tuesday. “You’ve probably got the most negative flow picture for the U.S. stock market that we’ve had, say, since 2002.”
The founder and chief investment officer of Tudor Investment says that corporate buybacks, along with mergers and acquisitions, have been a tailwind for the stock market for most of this four-year bull market as it decreased the equity supply. That is now turning with major offerings ahead in the AI space from Anthropic and OpenAI, along with one just finished in SpaceX. There will also likely be more secondary offerings from companies in order to raise money for the AI buildout, said Tudor Jones.
The bull market is in its fourth year thanks to the transformative potential of AI, with the S&P 500 more than doubling over that time period. But investors worry that the bull market could start to run out of steam as concerns swirl around greater inflation, higher bond yields and a more hawkish Federal Reserve.
In May, the billionaire investor had said that he bought more stocks tied to the AI development, while he watched for parallels to earlier tech booms. But he also likened the current period in the market to 1999, just about a year before the dot-com bubble in 2000.
“I’ll be short the whole year. There just — there’s little value,” Jones said. “You had all this issuance, all these IPOs in ’98 and ’99, and really 2000, 2001, 2002. Those were the easiest years to be short because you kept having these unlocks that just kept adding supply to the market.”
Tudor Jones said he is long oil and that it could rally another $20 to $25 after the midterms. The investor believes if that happens, the stock market will “hate it.”