Legendary investor: Warsh "absolutely not" will cut interest rates.

Billionaire hedge fund manager Paul Tudor Jones made a significant statement in a CNBC interview on Thursday, suggesting that incoming Federal Reserve Chairman Walsh will not only refrain from cutting interest rates but may even consider raising them. He also remains optimistic about the AI-driven bull market in US stocks, believing the current market is in its mid-stage and still has 1-2 years of upward potential, but will ultimately face the risk of a sharp correction. Regarding Walsh's policy stance as incoming Fed chairman, Jones stated unequivocally: "Will he cut rates? Absolutely not." Walsh has previously publicly expressed a preference for rate cuts, and the Fed's benchmark interest rate remains unchanged at 3.5%-3.75% since December of last year. However, its willingness to ease monetary policy will face significant resistance from the Federal Open Market Committee (FOMC)—the most recent meeting saw the most dissenting votes in nearly 34 years, with most regional Fed presidents opposing the statement that suggested further easing after three rate cuts by the end of 2025. Jones believes there are even reasons to raise rates in the current environment: "I would consider raising rates, of course, depending on the data, but I would definitely consider it. And I think he will be constrained before the midterm elections." The current policy context is complex: the labor market is stabilizing, but the Iran war and Trump's tariff policies have caused inflation to remain above the Fed's 2% target. According to the CME Group's FedWatch tool, futures traders expect the Fed to keep rates unchanged this year, with the probabilities of rate cuts and rate hikes being roughly equal and both low.Based on historical technological waves, the AI bull market still has 1-2 years of upward momentumRegarding the stock market, Jones is firmly optimistic about the AI-driven bull market, revealing that he has recently increased his holdings of related stocks. He compares the current development of AI to two major technological revolutions in history: "I think the emergence of Claude's big model in January this year is equivalent to the founding of Microsoft in 1981; while the current stage of AI popularization is similar to the period of Windows 95 release in 1995 and the acceleration of internet commercialization."Jones pointed out that both of those technological revolutions ushered in a "productivity miracle" that lasted for 4 to 5 and a half years, driving a long-term upward trend in the stock market."The current AI bull market is about 50% to 60% complete, and if we had to pick a timeframe, it could last another 1-2 years." In recent years, driven by expectations of AI transformation, US stocks have continued to reach new highs, with large-cap tech stocks related to AI infrastructure leading the gains. Chip, cloud computing, and generative AI companies have become the focus of investment, and the S&P 500 index has repeatedly hit record highs. Analogous to the eve of the 1999 dot-com bubble, US stocks may face a sharp correction risk in the future. Despite being optimistic about the short-term market, Jones compares the current market to the eve of the 1999 dot-com bubble—there is still about a year before it peaked in early 2000. He warned, "Imagine the stock market rising another 40%, the ratio of total US stock market capitalization to GDP could reach 300% to 350%, at which point a suffocatingly large correction is inevitable." As a macro trader, Jones stated that he employs a basket allocation strategy, emphasizing, "I always like to look for historical precedents; this is a very special time." Furthermore, he warned of the long-term risks of AI: "Governments will eventually need to intervene and regulate; if left unchecked, artificial intelligence could pose a danger to humanity." Jones rose to fame for successfully predicting and profiting from the 1987 "Black Monday" stock market crash, and is also the co-founder of the non-profit organization Just Capital, which rates US listed companies based on social and environmental indicators.