Billionaire hedge fund manager Paul Tudor Jones has warned that the U.S. economy is likely headed for a recession, but he says the market could rally depending on how Russia's war in Ukraine plays out.
"We have a dictator who's losing and typically that doesn't end well," Jones said Monday on CNBC's "Squawk Box."
"Typically, that's going to end with a violent death and the question is who is he going to take with that?"
What To Know: Jones has suggested the war in Ukraine will end with the death of Russian President Vladimir Putin. He told CNBC that what Putin chooses to do before the war comes to a close could have significant consequences on broader markets.
Jones said, "Is it gonna be the regional focus between Russia and Ukraine or does it expand beyond that?"
Near the end of September, Putin warned that he isn't bluffing when it comes to using nuclear weapons to defend Russia.
"When the territorial integrity of our country is threatened, to protect Russia and our people, we will certainly use all the means at our disposal," Putin said before accusing the West of engaging in "nuclear blackmail."
Why It Matters: The potential for nuclear war is an ongoing threat to the markets, Jones said.
"The two outcomes have such two dramatically different impacts on the markets. If all of a sudden he was gone tomorrow ... you'd have this massive rally in risk and yet if — what I think is probably more probable — he escalates the kinetic side of his response, then you have just the opposite, the Armageddon scenario," Jones said.
He told CNBC that he doesn't think anyone can predict the outcome, but he suggested that he has some sort of a hedge in place.
"If you've got something that's going to be exposed to, again, an escalation in the kinetic response, whether it's chemical weapons or a tactical nuke or whatever, we make everyone cover their tails because, again, the outcomes are so binary and they have such massively different consequences for so many different asset classes," Jones said.
SPY Price Action: The SPDR S&P 500 (NYSE:SPY) was down 0.32% at $361.63 Monday afternoon, according to Benzinga Pro.
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