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Are You Expecting Inflation or Deflation? Here Are Two Views

Originally published by Bloomberg on February 5, 2018 Read the original article.

You’ve probably heard of John Tudor Jones II. In case you haven’t, he’s a legendary hedge fund manager who founded Tudor Investment Corporation in 1980.

Jones received a lot of press coverage for being positioned on the right side of the market during the 1987 stock market crash.

Here in early 2018, the billionaire is still professionally active, and just expressed strong views about the prospects of inflation (Bloomberg, Feb. 5, 2018):

Paul Tudor Jones said inflation is about to appear “with a vengeance” and may force the new Federal Reserve chair to accelerate interest-rate hikes.

The hedge fund manager said policy has focused on a “low inflation problem” and years of rates near zero amid economic expansion will have “painful” consequences. Policy makers should have been more aggressive in tightening policy and “rejecting the fiscal impropriety associated with this most recent tax cut,” he said.

“We are replaying an age-old storyline of financial bubbles that has been played many times before,” Jones, founder of Tudor Investment Corp., wrote in a Feb. 2 letter to clients seen by Bloomberg. “This market’s current temperament feels so much like either Japan in 1989 or the U.S. in 1999. And the events that have transpired so far this January make me feel more convinced than ever of this repeating history.”

But, after the stock market’s trend shifts from upwards to downwards, EWI’s analysts expect deflation, not inflation.

Read this excerpt from the November 2017 Elliott Wave Theorist:

When social mood begins to trend negatively, available credit will contract and debt will implode as deflation takes hold. The Fed will be prompted to act, perhaps in dramatic ways; but its actions will not change the trend. The bear market will ultimately lead to an outright decline in the prices of producer and consumer goods.

Now is the time to read our FREE REPORT, “What You Need to Know NOW About Protecting Yourself from Deflation.”

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