After years of subpar returns and wrong-way bets, hedge fund manager Paul Tudor Jones, a trader known for his slam-dunk trades during the 1987 crisis, and again during the financial crisis, is once again having a moment. After telling CNBC back in January that he felt like the markets were about to have a “1999”-type moment, he added that he wouldn’t want to be long until the novel coronavirus outbreak had run its course.
Now, PTJ revealed Thursday before another interview with CNBC that his flagship fund is up 1.5% over the last two months, a sign that he skillfully sidestepped the selloff and is positioning himself for the rebound. But unlike Ackman, who clinched a billion-dollar windfall thanks to his decision to spend nearly $30 million on hedges when we were still at the highs, PTJ’s doesn’t have any major winnings to brag about. Instead, he told CNBC and its audience that his daughter had tested positive for COVID-19 and “worked every single day remotely while she had it.”
So, young analysts and associates, next time you’re thinking about slacking off, remember: PTJ’s daughter didn’t let a global pandemic stop her from turning some comments.
And in keeping with our new reality where we rely on hedge fund portfolio managers and sell-side strategists for our epidemiological projections, PTJ warned that if we “extrapolate from what is getting ready to happen in the US”, he expects the outbreak to peak some time in early April, and in that time, stocks will retest lows.
“Well, I think COVID-19 is — listen, it’s unlike anything we’ve obviously ever seen before. If we kind of think about where we are right now, we’re probably — if you look at the Hubei experience and we extrapolate from that what is getting ready to happen in the United States, to New York in particular, we’re probably — we’re probably going to hit our peak somewhere between April 4th and April 10th. My guess is we can have somewhere between 3 and 400,000 cases in the United States. It’s going to be a — that’s going to be a really challenging period, I think, for us as Americans.”
During this time, the virus is “going to throw its best punch”, and it will be up to American workers to not only persevere and get back to normal, but figure out what this “new normal” is going to look like once we “restart America.”
“We’re going to see the worst of Covid-19, it’s going to throw its best punch over the course of the next few weeks and then we’re going to be on the back side of that,” Jones said. “We’ve got to look through these numbers, look through the tragedy of the next few weeks, think about how we’re going to restart our lives, think about how we’re going to deal with the new normal and think about how we’re going to restart America.”
PTJ also tried to put the Fed’s latest easing in perspective from a “purely monetary standpoint.” At this rate, the Fed by May will have purchased as many assets as it did during the six years after the crisis. If this doesn’t give investors some peace of mind, nothing that the central bankers dream up will.
“So, investors can take heart that we’ve counteracted this existential shock with the greatest fiscal monetary bazooka. It’s not even a bazooka. It’s more like a nuclear bomb.”
As we confront the virus, PTJ said people need to be careful not to “mythologize” it. It’s just a slightly more deadly version of the flu, essentially, he said.
“We’ve got to be careful not to mythologize this particular disease,” he said. “We’ve got to be careful not to mythologize this into the pandemic Godzilla. We can beat this thing.”
Echoing comments from President Trump, PTJ said he’s “much more nervous” about the loss of life caused by a 20% unemployment rate than the death caused by the virus.
“What are the human impacts of that? I’m much more nervous about the loss of life that could come with a 15 or 20% unemployment rate than I am about the loss of life that comes with CV-19. CV-19 may cost us – let’s say CV-19, again – I think we’re going to peak out somewhere in the 3 to 400,000 range. Again, if I used a – an overly pessimistic view of 4% mortality rate because our health care system will be overwhelmed in the next two weeks, we’re talking 16,000 people.”
Watch a clip from the interview below: