Tudor Jones: US stocks should 'terrify' Yellen

New York: Billionaire investor Paul Tudor Jones has a message for Janet Yellen and investors: Be very afraid. The legendary macro trader says that years of low interest rates have bloated stock valuations to a level not seen since 2000, right before the Nasdaq tumbled 75% over two-plus years. That measure ­ the value of the stock market relative to the size of the economy ­ should be “terrifying“ to a central banker, Jones said earlier this month at a closed-door Goldman Sachs Asset Management conference, according to people who heard him.

Jones is voicing what many hedge fund and other money managers are privately warning investors: Stocks are trading at unsustainab le levels. A few traders are more explicit, predicting a sizable market tumble by the end of the year.

Last week, Guggenheim Partner's Scott Minerd said he expected a “significant correction“ this summer or early fall.

Philip Yang, a macro manager who has run Willowbridge Associates since 1988, sees a stock plunge of between 20 and 40%, according to people familiar with his thinking.Even Larry Fink, whose BlackRock oversees $5.4 trillion mostly betting on rising markets, acknowledged that stocks could fall between 5 and 10% if corporate earnings disappoint. Their views aren't widespread.They've seen the carnage suffered by a few money managers who have been waving caution flags for awhile now, as the eight-year equity rally marched on.