Paul Tudor Jones is "Very Bullish"

On Monday, famous fund manager Paul Tudor Jones spoke with CNBC and gave his thoughts on the market. Paul (otherwise known in investing circles as "PTJ") is known for his macro calls, including the crash in 1987. He says he is "very bullish on US stocks". Further, Paul thinks that US equities will again outperform their foreign peers, including Emerging Markets. He also says there are many correlated trades that go along with this mindset, including the fact that we won't see lower rates (in fact, Paul thinks they will go back up) and that the dollar should stay pretty healthy.

One of the main reasons he feels this way is the overall sentiment of market participants. He points out that in 2018, investors came into the market with a lot of "euphoria" , overweight large long positions in both US and global stocks. We saw trillions of dollars pour into corporate buybacks. Moving forward to the current day, all that leveraged positioning from the macro community has been wiped out. Paul thinks there is another trillion dollars in buybacks scheduled for 2019 as well, but isn't sure where that will come from because that means investors will have to be willing to sell their stocks.

Personally, I think PTJ is on the right track here, as the selloff in US equities does seem to be finished for the time being. We are back above a major level of support around 2,600 on the S&P 500. Further, the downtrend we experienced in Q4 of last year also seems to have subsided, with equities breaking through the overhead downtrend on January 30th.

In regards to US outperformance, while we did see Emerging Market begin 2019 by outpacing the S&P 500, the later has taken over in the past week:

Speaking to Paul's outlook on the Dollar, we are still in a trading range between 95 and 97.50. If we can break above this range, then the Dollar certainly has room to run much higher:

I completely agree with Paul on multiple points, but his mindset on sentiment may be the biggest factor in the rally we have seen in stocks since Christmas Eve. Investors and traders were very depressed after a roughly 20% downswing in equities going to the end of the year. We entered 2019 with fund managers sitting in large amounts of cash, as most felt there is no way stocks could turn around. But turn around they did, and very quickly. This has caught a large portion of participants off guard, and has left them scrambling to get back into the market. Knowing how hard it has been for managers to create Alpha over the previous few years, they will most likely have to put that cash to work in the near future as an attempt to keep up with the broad indices.