Jakarta, CNBC Indonesia – The attention of global market players this week is focused on the announcement of the monetary policy meeting of the United States (US) central bank or The Fed. You know, the issue tapering or a reduction in the value of the asset purchase program (quantitative easing/QE) will be answered on Thursday morning Indonesian time.
The market is currently still confused, whether the Fed will do tapering in the near future because inflation has shot up in the US, or is still maintaining its attitude which considers tapering to be too early.
Tapering can cause turmoil in global financial markets called taper tantrum. Therefore, market participants will be cautious ahead of the Fed’s announcement.
One of the top investors, Paul Tudor Jones, gave his views on what to do in response to the Fed’s announcement. Jones is one of the investors included in the book Market Wizard or “Market Wizard” by Jack Schwager.
The Fed has previously stated that high inflation is only temporary, to the “market wizard” it doesn’t make sense.
“Inflation that is said to be temporary is not what I see it. I’m worried that inflation is said to be temporary” supply is low and demand high,” said Jones as reported by Kitco Monday, (14/6/2021).
According to the founder of Tudor Investment, if the Fed once again ignores high inflation in the US, it will buy up commodities, cryptocurrencies and gold.
“If the Fed says ‘we are on the right track, all is well’, then I will go all in for inflation-supported assets. I will probably buy commodities, cryptocurrencies and gold,” added Jones.
However, Jones also warned of impending taper tantrum if the Fed no longer says high inflation is temporary.
“If they say ‘we have the data, we have achieved our goal, or we are on a very fast track to reach the full employment target, then you will face taper tantrum. You will see a sell-off in fixed income assets, as well as the stock market which will experience a correction,” said Jones.
Jones also confirmed his positive view of bitcoin. Before Elon Musk made the bitcoin price skyrocket and see this year, Paul Tudor Jones is one of the investors who made bitcoin prices soar last year.
At CNBC International’s “Squak Box” in May 2020, Jones said bitcoin was “very good speculation,” and that there were about 2% of bitcoins in his investment portfolio.
“More than 1% of my assets right now are bitcoin, maybe close to 2%, and that looks like the right number for now,” Jones said. The price of bitcoin at that time was still below US $ 10,000/BTC finally continued to climb.
Meanwhile, for now, if the Fed ignores high inflation, the number of bitcoins it owns will be increased to 5%.
“One thing I know for sure, I want 5% (of total assets) in gold, 5% bitcoin, 5% cash and 5% commodities. While the remaining 80% I don’t know yet where to invest until I know exactly what the Fed is going to do,” said the wizard.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)
– .
