Bloomberg Open Interest Interview

Summary

On June 11, 2025, Paul Tudor Jones joined Bloomberg's Open Interest for a wide-ranging 25-minute interview. It opens with Tudor's annual trading contest — 40 participants, $400,000 raised, three quarters of it for Robin Hood — won by Bill Ackman on a Fannie Mae long, with a Tudor alum second and Stan Druckenmiller third: "he's going to always be placing."

The core of the interview is the debt-trap playbook. At 100%-plus debt to GDP, a fiscally constrained government's cheapest exit is to run the lowest possible real rates — the 1950s template, and Japan's today — which is why he expects an "uber-dovish" next Fed chair, dramatically lower front-end rates, a steeper curve, and a lower dollar. He works the counterfactual arithmetic of actually balancing the budget — a "big beastly bill" of roughly 49% top rates, a 1% wealth tax, 40% capital gains, and six-percent blanket spending cuts — to show why it will not happen until the bond market demands it, and names the era's mood "kayfabe": everyone knows six-percent deficits are unsustainable and nobody acts. The portfolio conclusion is the debasement complex: vol-adjusted bitcoin, gold, and stocks. On AI he is both adopter — Tudor tested two commercial models that "democratize quanting" — and alarmed witness: the Twilight Zone "To Serve Man" analogy, the Amodei displacement forecast, and a warning that the bill's moratorium on AI regulation removes the last guardrail.

Full Text

Machine transcript (YouTube auto-captions), punctuation lightly normalized; wording as transcribed. Recognition errors possible — see sources.yaml for provenance.

Well, uh, we did it right. It actually starts right before our investor conference that we hold every fall. Uh, this year we had 40 participants. We raised about $400,000 that, uh, went, uh, three quarters of which went to Robin Hood. It was fantastic. Uh, the winner was uh, Bill Aman of Persing Square.

He was long Fanny May. Uh, and see number two was a guy named Mark Galant who actually used to work for me. And three was Stan Duck Miller. No surprise. He's going to always be placing. Uh they came in.

I think if you took the top three or four and you had made their bets, you would have made seven times your money in six months. So, uh it's a great competition. Uh I really hope this year we can expand it. So, it'll be a a much bigger group. It's $10,000. It's a six-month competition, one long, one short.

And uh yeah, it's a lot of fun. Actually, shout out also to Anna Nicole who got up there on the board with those. She was our only female entrant. I hope we get a lot more uh ladies that'll participate this time. So, they have another chance coming up this fall. And I thought since we have you here, you could help us.

Uh give us a tip. What's the What's the one long you would hit um for the next contest? I would say probably the yield curve. It just depends on where it I think it'll be higher at that point in time. Mine would be very esoteric. So, let me think.

Uh, well, it would definitely I would definitely be betting on uh substantially lower front-end rates. We'll have a we'll have a new Fed chair within 6 months at that point in time. And I think Trump's going to pick someone who's going to be uh uber doubbish. Well, let's talk a little bit more about the yield curve. Matt and I were actually emailing at like 4 in the morning about the yield curve because it's broken a lot of hearts that steepener bet and the way you lay it out. Short end rates coming down.

You have concerns about the deficit potentially boosting the long end. It seems like a no-brainer, but it feels like it just hasn't worked. So, what's different this time? Well, I it's it's working. It's just, you know, it's VA adjusted. It's just a slowm moving train.

But I I think in the long run it has to work. We are fiscally constrained uh and we're going to have budget deficits of 6% plus as far as the I can see. So one of the major offsets if I was the president would be to lower my interest rate cost by appointing a Fed chair who was as dovish as could possibly be. Um that's kind of the playbook when you're 100% debt to GDP and you're fiscally constrained. You can see it happening in Japan right now. He's weighed as reluctant to raise rates more than beyond 50 basis points even though they have inflation.

Pick a number somewhere between two and 3%. I think they fudge the numbers down all the time. You got wage growth at 3 and a.5% there. So that's you know historically the way that you get out of a debt trap is you run the lowest real rates possible. Do you lower your interest burdens? And I'm sure that's what we'll see beginning when the next Fed Fed chair comes.

Well, we definitely want to talk about uh who the next Fed chair might be and who you would like to see. But let's talk first a little bit more about the deficit because it feels like you take a look at the bond market over the past few weeks, the past few months. You can see those fears being expressed, but concerns about a higher deficit feels like one of those evergreen issues out there. So give us first your feel how you're feeling about uh the deficit pro projections that we've been getting and also how you might invest around that. Well the big beautiful bill is is really interesting. It's it's first of all it's a genius in branding.

The name of it it's a genius in branding. But I think what you got to do is you kind of got to you have to go to first principles. What would the actual budget look like if we were trying to balance the budget? If we were actually trying to balance the budget, what's what is the uh the counterfactual to the big beautiful bill? So, if you actually had to balance a budget, it probably would be the big beastly bill. Uh and and at some point down the road, who knows when that's going to be.

Maybe it's next year, maybe it's the next administration, maybe it's uh 10 years down the road. At some point, probably the bond markets are going to uh call BS governments around the world playing chicken with them. Right? So to give you an idea, if we were to balance the budget today, let's assume first thing I would do if I was president, I was trying I'd appoint the most dovish central banker I could to lower interest costs. So let's assume that I could make a pack with my uh with my chairman of the Fed that I'm going to go through an austerity package. I'm going to I'm going to b b b b b b b b b b b it, but I need you to really drop rates to let's say 2 and a.5%.

So if you drop rates to 2 and a.5% and you get a 50 basis point reduction or let's say even a 100 basis point reduction in 10ear rates that saves you 175 billion. The starting gap is 900 billion. So that saves you 175. Now I'm down to 725 billion that I've got to find through tax hikes and spending cuts. So let's assume that we're going to do this fairly. We're going to do 50% tax hikes in the rich because they've benefited the most in the last 30 40 years.

50% spending cuts. What does that look like? On the spending cut size aside, I would just do just to make it simple. Let's just call it a blanket 6% reduction in everything. Social Security, Medicaid, defense spending, uh you name it. I'm just going to cut everything 6% across the board.

That's what it would take to get you 360 billion. Half of that tough to do with Congress, right? You got to work. I'm just saying there'll be a point where the markets are going to demand it. I don't know when it'll be. Maybe it'll be in my lifetime.

Who knows when it'll be. By the way, how do you invest around that? Because you famously made a lot of money shorting the N and Japanese assets into the last decade, which was another situation where you saw a country just boost its fiscal debt and deficits. I I will get to that, but let me just finish the tax hike side. Yeah. So, to get 300 63 billion in tax hikes, you're going to have to raise the top income rate to 49.

You're going to have to have a 1% wealth tax annually and you're going to have to raise the capital gains rate to 40. Huh? So, if we're just going to if all we're going to do is stabilize debt to GDP, that's the big beastly bill that somewhere down the road. And again, who knows where when it's going to be. Remember, you have Italy, France, and Japan who on the current projections will be in worse fiscal shape than we are. And they seem to be doing okay.

And that's why we keep that's why we keep the we keep going with the uh the kayf the in wrestling the suspended reality where we like to watch the show, but we know it's not real. So, we know that these 6% budget deficits are not sustainable in the long run, but it's okay because it's okay now. It's okay in the short run. And it feels good and it's not hard. It's actually really easy. Remember in the first Trump administration, he normalized 4% budget deficits.

That's what we had precoid. And now in this administration, he's normalizing 6% budget deficits. So, and I'm not judging. I'm just calling balls and strikes. That's that's where we are. So with that in mind, knowing that we have a whole pricing structure that's created on something that's not sustainable, it's really really hard to invest for the long run because the day that it'll probably be the bond market first or maybe it's the dollar, who knows?

the day that we're called to carpet on that and the day that you actually went through that exercise that I just described, then you know that multiples on stocks will not be where they are right now, right? But are you short the dollar? I mean, you mentioned you you're into yield curves. I would say that the easiest long-term trades are, you know, the yield curve is going to steepen probably to historic wides. You know, we're going to cut short-term rates dramatically in the next year. And you know, the dollar will probably be uh lower because of that.

A lot lower because of that. How much lower? Uh we're off 10% from our high right now. 8%. I would say that that that's I think that's a year from today. That's probably a realistic assumption.

I want to go to one point that you made in that blueprint that you laid out. Uh, and that comes to appointing the most dovish Fed chair possible. Jerome Pal's turn ends in May 2026. We've heard from the president recently that he's going to announce some contenders sometime soon. Bloomberg News has reported in the past 24 hours that Scott Besson has emerged as a pick. Kevin Worsh is under consideration.

I mean, if you had your pick, who do you think is best suited for the chair? Those are two great names. Those are two fabulous names. Um, again, if I was president, I if I just think about President Trump, he's just a he's a growth guy, right? He's a he's a loyalty and growth guy. I You're going to be my pick if you're loyal to me.

You're going to be my pick if you're a growth guy. And I' I'd pick a growth guy and probably Scott would be more uh in line with that than Kevin would. Um they will have had a really close working relationship at that point. I also think again the the playbook's pretty clear uh historically and right now we're we are fiscally constrained. We're in a debt trap. you're gonna have to run negative real rates to get out of it.

That's what we did in the 50s. We had, if you'll remember, we had a variety of prices fixed by the Treasury while we had five and 6% inflation for a period of time. We're going to have negative real rates. And that's that's why you have to think about what is facing our policy makers in this debt trap as you construct your portfolio. So what would an ideal portfolio be in something like that? Well, what has worked so far?

What has worked so far has been some combination of stocks which won't do great, which would do terribly if we ever actually had if if they called us out and the bond market actually gave us an accident that then spilled over. But it would be some combination of probably gold adjusted Bitcoin, gold, stocks. That's probably your best uh portfolio to fight inflation. V adjusted because the V of Bitcoin is obviously five times that of gold. So, you're going to you're going to do it in in different weights. You said at one point you would allocate one or two% of your portfolio to Bitcoin.

Is it still? Yeah. I mean, I think it just particularly now that the that the road map is clear, then I I mean, the the the again, if I'm a policy maker, I'm going to run really low real rates. I'm going to have inflation running hot uh and I'm going to tax the American consumer um to get out of my debt trap. And that's exactly what Japan, who's the most fiscally constrained in the world doing. And it works until uh until the population throws you out because you let inflation get too hot.

So maybe you're in a world with three three and a half% inflation and 2 and a.5% overnight rate and you're kind of trying to run hot and grow your way out of it. Well, let's talk a little bit more about equities. You know, you mentioned in that scenario that you laid out, equities obviously would do terrible, but where we stand right now, I mean, we're back to 6,000ish on the S&P 500. Uh we're slightly positive for the year. It feels like uh after the big performance that we saw in May, though, that people are not sure where to go from here. So, assuming we can continue along this path where inflation is under control, it seems like the labor market is under control and trade negotiations continue to progress.

I mean, what's your base case on equities right now? a year ago, I never thought the bond market would tolerate the big beautiful bill. I just didn't think it would. I thought, wow. Um, I thought there'd be a revolt. I thought bond vigilantis actually had some some stuff, but they've come back out, but they clearly they clearly haven't surfaced.

and uh and well, we haven't seen inflation and we and well, there's a couple of things going on. One, we know 12 months from now rates are going to drop precipitously with a new Fed chair. If you I mean, was it last week when Donald Trump saw after was it I forget uh was it ADP? I drop rates 100 basis points. So, we know we know where his head is. We know who he's going to point.

Well, and just now, uh, the vice president, JD Vance, said, um, this is monetary malpractice in a tweet reply to our Joe Weisenthal. So, they really want the Fed to cut rates. So, so, so that also is a tailwind for the bond market, right? Because, you know, short rates right now aren't going to be there a year from today. So, that's a tailwind. And again, I think the biggest threat to the stock market has been the B has been um our fiscal prophecy, something like the big beautiful bill.

Uh because that was always going to be a threat to the safety and security of the bond market, whether investors would tolerate what's going on. And right now it seems like uh both globally and domestically that the world's okay with kayf kicking the can down the road. We're going to suspend reality. It's okay. Mhm. So, and in that scenario again, if I'm uh if I have to make a decision on stocks and I think that rates are going to be 3% in 12 months, yeah, I'm probably long.

By the way, you keep mentioning KFA and we're all kind of watching this knowing it's fake but don't really care right now. Is that because we're not invested? Because Brad Gersonner has this idea and Ted Cruz was on Bloomberg talking about it yesterday. Um I think it's invest America where you give every child born $1,000 and then allow parents or relatives to invest $5,000 a year. Then by the time they're 18 and the stock market continues to appreciate, they have a serious nut. But they're also they've got skin in the game.

Yeah. I think it's See, here I'm here. I I'm I'm I'm the uh I'm the budget I'm the budget um hawk and you don't mind spending billion and and the and the and the cranky guy. But that's the best $4 billion that would ever spend in history because the idea of making kids stakeholders from an early age in capitalism is so important. Oh my gosh. And then allowing employers or relatives or whatever to build that account so that at an early age they understand the idea of free markets of of uh self individual um excitement about uh understanding how productivity actually works how we build things through our own sheer initiative.

I think it's just spectacular idea. It's the best 4 billion this government could ever spend. Mhm. So, there's a good way to add to the deficit and there's a bad way. That would be the best four billion. I'm very conscious of the clock.

Uh, we only have about eight minutes left with you. So, let's talk a little bit about AI. You've expressed concerns about AI uh in the past. In May, I believe you said that I mean it could be uh pretty disastrous if you think about if you really put your thinking cap on. But I'm curious from the investment perspective when you wear your investor hat, how do you view it then? I mean, you there's plenty of things to get concerned about, but we were having a great conversation with Cliff Aes of AQR last week.

He's had a real change of heart when it comes to AI. He's embraced it. Are you embracing it? Well, for sure I'm embracing it. Uh, we tested two models last week internally. We have a variety of quant teams at Tutor.

We tested two models, commercially available models. Um, where AI has gone in the last four months, in the last four months is so incredible. These models will do democratize quanting for the markets like I can just think I've been a I've been a an investment in quanting uh for the last 30 years. uh internally, externally, variety of ways. And what these new models do is uh what you know there's a huge barrier to entry if you think about quanting which is I need to have dozens if you look at the big ones they're really whether it's two sigma or jump or wh they have hundreds thousands of employees that's their edge that's cliff's edge right with these new models wow they lose the edge it's it's incredible with these new models do. And and the reason that I bring that up, of course, you have to embrace it in our business, there's larger issues regarding AI that I think if you don't mind, I I can't tell you because I don't really trade individual stocks that much.

We I'm I'm actually using the models uh from a quant standpoint. So, I can't tell you which companies to buy. It's pretty clear um that uh this is obviously the most disruptive technology in the history of mankind. If I can just give you the here's the way I think of AI. You're you're too young for this, but there was a Great Twilight Zone. Okay, great Twilight Zone episode where aliens came down to Earth and they had this uh and they hand this book.

It says to serve man. And everyone goes, "Hooray, they're going to they're going to save humanity. It's a humanitarian God." And it turns out to be a cookbook. I was ready to push back, but you called me. I haven't seen that episode. So anyway, uh we just had our Robin Hood AI poverty summit on Monday, which I was at.

Oh my lord, the things that AI are going to do for education there. There is no excuse for a lowincome kid not to have the greatest education if his uh if his parents or caregiver is taking care of them. My gosh, they're going to have an individual tutor to walk them through everything. So, it's it's really The downside of AI is that uh we've been served, right? We when I say we've been served, you had in February Elon Musk, you can think what you think of him with regard to his moral compass, but he's the Thomas Jefferson of our Thomas Edison of our time said AI has the 20% possibility of wiping out humanity. There's the safety side that should set off alarm bells throughout the world, particularly in this country, particularly with this administration.

And then just last week you had Dario at Amodai. Am I pronouncing that correctly? I Anthropic is good enough. So anyway, he said that in 1 to five years we could have 10 to 20% employment because of the displacement of white collar jobs by AI. So now we have 10 to 20% unemployment in this country in 1 to five years. So now you have this massive stability issue.

You got a safety issue and a stability issue and within the big beautiful bill is a moratorum a on AI regulation. So no guardrails. Oh my gosh. that is um when you've just been certain and no one see the interesting is no one in the AI community pushes back on this right because they anyone that understands it and sees how it's progressing these models are increasing 1 to 500% in their efficiency every four months understands these are real possibilities Paul Paul how do we get to guard rails because in the case of the debt bomb right as Gary Schilling would call it you've got bond vigil vigilantes to push back. In the case of the AI bomb, which we fear, uh there's no government that's going to regulate this because they'll lose out to another government. Right?

So, I've come to this realization in the last two years that actually I think libertarianism is as much of a threat to our society as socialism. It's it's the other it's the other end of it, right? and and you've really got this libertarian bent that's taken hold of this administration. So many of the biggest backers, but oh my gosh, our country is built on uh I mean we're built on a system of laws and regulations about private property rights, laws against assault, robbery, etc. So what we have to figure out in a thoughtful way which is why you have to sit down and begin a discussion how do we have AI for good? How do we uh the AI for bad both on a safety standpoint and security standpoint?

One thing that we really need to do is again what is the government's responsibility? What are companies responsibility? We're gonna have this productivity boom, right? Capitalism is so spectacular at maximizing productivity, but it's actually really bad really bad in its in the tales in the tales. I'll say it's really bad about distributing income in a society in a socially beneficial fashion. The best example can be if we look at say since 19 the mid 80s if you look and see how the productivity gains in the United States have been distributed it's about 15% to the bottom 90 and 85% to the top 10.

And so what happens when you do that? Well, you get the incredible divisiveness that we have right now. We have a crisis of trust in this country. We no one knows who to trust. Hell, we had a faction of the Republican party storm the capital in 2020 because they lost an election. So, we're at a really socially fragile time because of wealth disparity.

And now we have AI that unless we think about think about how we distribute those productivity gains in a way. So is it Dario mentioned we're going to have a a token on every time a model's used. Bill Gates said we're going to suggested I think six or seven years ago maybe we tax robotics. There has to be a we need to sit down and thoughtfully think through how we distribute the coming productivity gains so that people are happy and not

Key Themes

The interview is the fastest horse framework stated as portfolio construction: if the debt trap is resolved through negative real rates and financial repression, the rational hold is the hedge complex — vol-adjusted bitcoin, gold, equities — rather than cash or duration. The 1950s template and the Japan parallel are the analog model applied to sovereign debt instead of equities, extending the debasement thesis of the Great Monetary Inflation letter into the fiscal-dominance era. The AI passages widen his stakeholder capitalism advocacy to a new front: how the productivity gains get distributed — "about 15% to the bottom 90 and 85% to the top 10" since the mid-80s — is, in his framing, the social question of the coming decade.

Context & Significance

Recorded weeks before the "big beautiful bill" became law, the interview captures the market's fiscal debate at its sharpest: PTJ conceding he had wrongly expected a bond-vigilante revolt ("I thought bond vigilantes actually had some stuff") while laying out the most concrete public arithmetic he has offered on what stabilization would require. The Fed-chair handicapping — Bessent versus Warsh, "pick a growth guy" — documents the framing months before the decision, and the "kayfabe" line became his shorthand for the whole era. Read with the October 2025 Squawk Box interview, it is the first half of his 2025 arc: position for the dovish pivot in June, ride the blow-off with happy feet in October.