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

Legendary hedge fund manager Paul Tudor Jones stated on Tuesday that the Nasdaq Composite Index is expected to rise by the end of the year against the backdrop of anticipated lower interest rates, injecting optimism into a once-weak market.

On October 14 local time, in an interview with Bloomberg Television, the billionaire investor predicted that if large tech companies report positive earnings and trade conflicts can be resolved by the end of October, then the stock market has a chance for a real rally in the "last two months."

This bullish statement came as U.S. stock index futures weakened in overnight trading but suddenly reversed their decline in Tuesday's early session. Some analysts believe that Jones's positive comments are one of the reasons driving market optimism and triggering the rebound.

Jones explicitly pointed out that the end of October to early November is a critical turning point. If the Nasdaq remains strong at that time, there is a chance for a strong rally at the end of the year. He further emphasized that the market starting from November 1 could either be the last "topping phase" of a bull market (best case) or a dangerous moment of accumulating top risks.

Jones also warned about concentration risk while revealing that he personally does not currently hold long positions in stocks, and tends to wait for "one to two weeks" before making a decision. A few days ago, Jones warned that the market has shown characteristics of "melt-up"—where gains are concentrated and realized in advance, followed by a severe reversal.

Jones also noted that currency devaluation trades have turned into gold and Bitcoin trades, and when the real debt moment arrives, gold and cryptocurrencies will show their value.

Rate Cut Expectations Drive Tech Stocks Up

Jones's predictions are based on the Federal Reserve's continued accommodative policy. He expects the Fed's benchmark interest rate to drop from the current range of 4%-4.25% to around 2.5% next year.

The Fed cut rates for the first time this year last month, and the minutes from the Federal Open Market Committee meeting indicated that officials expect to cut rates two more times by the end of the year, each by 25 basis points.

According to Bloomberg, Jones believes the current global economic situation can be described as "fiat currency devaluation occurring almost worldwide," with central banks being pushed toward accommodative policies while remaining "vigilant" in the bond market.

This macro environment provides favorable support for tech stocks. The strong performance of the Nasdaq this year has been primarily driven by AI concept stocks, with investors maintaining high optimism about the prospects of AI technology.

The Final Frenzy? Warning of Concentration Risk

Despite maintaining optimism for the year-end market, Jones repeatedly emphasized that concentration risk is the biggest threat facing the current market. He pointed out that individual investors' stock allocations are at historically high levels, with about 35% of the S&P 500's gains driven by seven stocks.

Jones admitted that he currently does not hold long positions in stocks and has chosen to "wait another one to two weeks" before making a decision.

Wall Street Journal previously mentioned that a few days ago, Jones warned that the market may be in the final stages of a bull market, characterized by "melt-up"—the most rewarding but also the most volatile, indicating that risks are accelerating accumulation He pointed out that the last year of a bull market often produces the most substantial returns, but it will be followed by a severe reversal.

Gold and silver are stronger "devaluation trades"

Paul Tudor Jones also stated that the world is entering an "era of physical constraints"—with limited growth space and high debt burdens. In the face of this situation, governments are striving to maintain low interest rates to avoid uncontrolled debt pressure.

He noted that the U.S. White House is now "determined" to find a more dovish Federal Reserve chairman, fundamentally because: only by lowering interest rates as much as possible can interest expenses be reduced, nominal growth stimulated, and the debt-to-GDP ratio lowered. In other words, policymakers hope to "combat debt with growth," rather than genuinely cutting spending.

However, Jones warned that the market has begun to "see through" this logic. When the cost of capital is artificially suppressed and liquidity remains abundant, inflation is bound to return—he expects inflation to be reignited within the next 18 months. There are approximately $370 trillion in global financial assets, while the market sizes of gold, silver, and Bitcoin are relatively small, "just a little flow of funds is enough to push up price levels."

He further pointed out that under populism and political pressure, central banks generally choose to "continue to inject liquidity," leading to systemic devaluation of global currencies. The "bond vigilantes," originally used to check government finances, have been suppressed, replaced by the rise of gold and cryptocurrencies. "The devaluation trade has turned into gold and Bitcoin trading," Jones said.

Taking Japan as an example, the new Prime Minister still calls for the Bank of Japan to "gradually exit easing," unwilling to raise interest rates even in the face of obvious inflation issues, showing that countries are avoiding the costs of tightening. Jones warned that this trend will ultimately lead to severe turmoil in the sovereign debt market—both Japan and the U.S. may experience a "crisis of confidence" similar to that of the U.K. during Liz Truss's government in 2022.

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