Paul Tudor Jones – yes, that Paul Tudor Jones, the UVA Athletics benefactor – said on CNBC today that market conditions are feeling to him a lot like what we saw ahead of the burst of the dot-com bubble in 1999.
Which, no, this is not good – and not just for investors.
Bubbles bursting lead to recessions, layoffs, frustrations.
The worst thing we had to worry about in 1999 was Y2K.
Computers going haywire in 1999, versus civil war in 2025.
Advantage: 1999.
“I think all the ingredients are in place for some kind of a blow-off. History rhymes a lot, so I would think some version of it is going to happen again. If anything, now is so much more potentially explosive than 1999,” said Jones, during a hit on CNBC’s “Squawk Box.”
The reason PTJ sees the coming blowoff being more explosive than 1999 – the federal government in 1999 was actually operating at a slight budget surplus; the government in 2025 is running a deficit in the range of $1.9 trillion, with the Big Beautiful Bill signed into law by Donald Trump in July pushing annual deficits into the $2.5 trillion going forward.
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A government running a surplus can start running deficits to inject money into the economy to take the sting off a market crash.
A government running a deficit equivalent to 6 percent of overall government spending has little leeway to do anything.
Jones was talking to the CNBC audience today to offer investment strategies so that his listeners could maybe make some money in the runup to this blowoff that he sees as inevitable.
The reason our guy has so much money to give to UVA Athletics is because he famously predicted the 1987 stock market crash, and made money on both sides, in addition to taking advantage of his forecasts of the dot-com crash, the 2007-2008 recession and the pandemic.
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I’m not so much focused on his investment advice as I am what I see as the bigger story here – that a guy who is good at seeing the future of the U.S. economy is seeing hard times ahead.
We’ve had economists telling us since the first year of the Biden administration that we’ve been due for a market correction, and resulting recession, and with history as our guide, the longer we’re able to resist the inevitable in that respect, the more painful it is when it finally hits.
A painful recession is bad enough with responsible people in charge; we have a government that is putting troops in Democrat-led cities to try to egg on a civil war.
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It doesn’t take much to see that anything resembling economic calamity could seed a situation that easily gets out of control.
You don’t have to tax the memory banks too much to remember how things went down in 2020 during the worst of the pandemic, when people who were frustrated at being stuck at home hit the streets in huge numbers to protest the police murder of George Floyd.
An economic downturn exacerbated by Trump’s dumb tariffs, which are already hitting those of us in the 99 percent where it hurts, could play the role of fuse.
Troops with itchy trigger fingers in the streets in big cities, then, are the powderkeg.
I’d put some mental energy into hoping PTJ is wrong about the blow-off that he sees coming, but I’ve enjoyed way too many fun nights in the building that he built for UVA Basketball to think that he’s wrong about much.