Billionaire investor Paul Tudor Jones says the US is in for a 2nd Depression if coronavirus lockdowns last a year

Bloomberg TV

• Paul Tudor Jones said the US is headed for a second Depression if coronavirus-induced lockdowns last a year, in a Monday interview with CNBC.
• Stocks have surged amid optimism that the economy will soon reopen — the S&P 500 has gained 30% from March lows. 
• Still, the market’s future performance depends on how the coronavirus pandemic goes, according to Jones. 
• “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,” said Jones.  
• Read more on Business Insider. 

If lockdowns to curb the spread of coronavirus last a year or more, the US economy may be headed for a “second Depression,” billionaire investor Paul Tudor Jones told CNBC in a Monday interview.

“If a year from now we are still in the same situation, it will be called a second Depression,” said Jones, the founder and CEO of Tudor Investment Corp. 

Economic data is already showing extreme pain from the coronavirus-induced shut downs across the US. On Friday, the April jobs report showed that 20.5 million jobs were erased in the month, and that the unemployment rate spiked to 14.7%, the highest since the Great Depression. 

There’s some hope that as states begin to slowly reopen parts of their economies that the situation will improve, as workers can return to their jobs. Still, Jones worries that the US may have a hard time following methods adopted by other countries to track and contain the spread of COVID-19. 

Read more: Fund manager David Samra has handily beaten the market for nearly 2 decades. He shares 4 simple criteria he looks for in each investment — and details 4 ‘obvious’ places investors should be rushing toward today.

“I think America’s biggest strength is individualism, its love of freedom. In the case of the pandemic, it’s also our biggest weakness,” Jones said. “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.”

Jones also said that the market’s bounce back from the swiftest plunge into bear territory ever in March was “easy to forecast.” Since March lows, the S&P 500 index has regained about 30% as investors feel optimistic about the economy reopening soon. 

“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,” Jones said.

Going forward, however, the market’s performance will hinge on optimism coming to fruition. “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,” said Jones.