‘Second Depression’ if we’re still in lockdown in a year

Stocks could retest lows as coronavirus peaks

Billionaire hedge fund investor Paul Tudor Jones said Monday the economy would be in a “Second Depression” if the coronavirus pandemic doesn’t get contained in a year.

“Just depends on whether unfortunately this goes to a year with this kind of a lockdown,” Jones said on CNBC’s Squawk Box on Monday. The Great Depression from 1929 to 1939 was the worst economic downturn in the U.S. history.

The coronavirus has infected more than 1.3 million people in the U.S. as of Monday, including at least 79,528 deaths, according to data from Johns Hopkins University. New York state has been the epicenter of the pandemic, with more than 330,000 cases and over 20,000 deaths.

Jones, the founder and chief executive officer at Tudor Investment Corp, said the U.S. may have trouble following contact tracing and other methods used by other nations to contain the virus quickly because of how Americans feel about individual freedoms,

“Americans are too different. I don’t think we would be able to come together and do that,” Jones said. “I think America’s biggest strength is individualism, its love of freedom. In the case of the pandemic, it’s also our biggest weakness. If you look at the Asian countries that are succeeding and beating this, they are doing it because they place a much greater emphasis on society values than they do on individual rights.”

After tumbling into the fastest bear market on record in March, U.S. stocks have bounced back swiftly from its low. The S&P 500 has come back more than 30% from its virus low and is just 13.6% from its record high as investors bet on an eventual reopening of the economy.

“I think this part of the bounce was easy to forecast, I think what happens from here again depends a lot on Covid stuff. There’ll be a shift in focus from liquidity issues somewhere down the line to solvency issues. If we don’t find a vaccine or a cure, if we don’t find a much better way of testing at scale … then I think the market’s going to have a much more difficult time,” Jones said.

The billionaire investor is hosting a virtual charity event Monday evening raising for the Robin Hood Relief Fund which helps New Yorkers by supporting the nonprofit organizations on the front lines. The event will be broadcast on CNBC at 7 p.m. ET. 

With tears in his eyes, Jones said he wants to be able to tell his grandchildren, “when they ask me what did I do during the Second Depression, I would look them in the eye and I want to tell them I did more than I thought I could do.”

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