I have worshipped at the altar of the legendary Paul Tudor Jones for the past 25 years, since he was a client of mine at Morgan Stanley. A once savvy, boy cotton trader from the South, I rate him as the best natural talent in the industry. We all knew he would do well, but the $17 billion he has amassed in a stable of macro hedge funds boggles the mind. Paul’s Greenwich, CT based Tudor Investment Corp. has had one of the bigger sticks in the market for a long time now. I perused his most recent letter to investors to get his current world view, which to my relief, I find remarkably similar to my own. “The Great Liquidity Race” is the dominant theme of the markets today, with hot money pouring into gold, emerging markets, and commodity stocks. Taiwan is a particular favorite, greatly benefiting from closer relations with the mainland. Incredibly aggressive monetary and fiscal policy could drive US GDP growth as high as 3.5% in Q4 2009 and 5.5% in Q1 2010. Then the recovery runs out of gas and we fall off a cliff. If stock markets discount economic activity six months in advance, doesn’t that mean they should be topping out about….now? We are about to relive the stagflation of the 1970’s. Central banks will begin a global tightening by next summer, knocking Treasuries off their perch, and giving some insight into timing for the legions of investors in the TBT, the leveraged bet that long interest rates are going to rise. There are few investments now with attractive risk/reward ratios. Bravo! Dollar weakness may accelerate as we approach year end, and that could prompt another run up in equities. While Paul’s growth forecasts for Q4 09 and Q1 10 are a tad high, and project a more vertical “V,” before a collapse, I happen to know that Paul does his spadework. But it would not be the first time that Paul was right and I was wrong about a trade. It’s amazing how articulate you can be when you are backed by 345 in-house research traders, research analysts, and support staff. At least if I’m wrong, I’ll have distinguished company.