Billionaire investor Paul Tudor Jones warns on stocks as Israel-Hamas war raises geopolitical risks

• Paul Tudor Jones said he would avoid risk assets until the Isreal-Hamas conflict reaches a resolution.
• Mounting geopolitical tension has made it a "challenging time to want to be an equities investor right now."

Hedge fund billionaire Paul Tudor Jones warned against stocks and other risk assets as the Israel-Hamas war adds to a growing list of geopolitical flash points.

In an interview with CNBC Tuesday, he noted Russia's war on Ukraine and the risk a conflict between Taiwan and China, while also sounding alarms on the deteriorating US fiscal health.

"It's a really challenging time to want to be an equity investor and US stocks right now," Jones, founder and chief investment officer of Tudor Investment, said.

He suggested that he would wait for more clarity on the Israel-Hamas war before investing in stocks, and even raised the concern of an potential escalation to a nuclear war.

Reports over the weekend said Iran helped Hamas plan its attacks. But some Western officials have yet not pointed the finger directly at Tehran.

"From a personal standpoint, would I be investing in risk assets now and stocks until I saw what the resolution was with Israel, Iran?" Jones said. "Israel is going to respond in some way, shape or form. The determination of whether Iran was actually responsible is enormous because again, it has the possibility to really escalate into something terrible."

Meanwhile, he warned that the US is probably in its weakest fiscal position since World War II as federal debt explodes.

With total debt recently hitting $33 trillion, Jones noted that debt-service costs alone will soon overtake defense spending.

The looming threat of heavy US debt has some market experts expecting a comeback of the "bond vigilantes" who famously dumped Treasurys in the early 1990s to rein in government spending. And in August, Fitch downgraded the long-term US rating, citing poor governance on fiscal and debt matters.

Early this year, Jones flagged the risk of the US falling into a recession this fall, pointing to booming US debt.

On Tuesday, he pointed to a "vicious circle" as interests costs go up, "where higher interest rates cause higher funding costs, cause higher debt issuance, which cause further bond liquidation, which cause higher rates, which put us in an untenable fiscal position."