Paul Tudor Jones, founder of Tudor Investment and a legendary hedge fund figure, issued a rare, fully bearish signal on US stocks Tuesday on CNBC's "Squawk Box" program.

He warned: "2027 is going to be very, very difficult for the stock market." The current supply-demand structure of US stocks is "the worst since 2002," similar to the eve of the 1999 dot-com bubble burst, and he announced he will short US stocks all year next year.

At the same time, he is bullish on crude oil, expecting oil prices to rise another $20 to $25. He warned that once oil prices surge, the stock market will "absolutely hate" the situation.

Drawing a parallel to 2002: A wave of IPO supply will crush the bull market

Jones believes current market conditions resemble 1999, roughly a year before the internet bubble burst in 2000.

He stated that one of the core drivers of the past four-year bull market was share buybacks and M&A activity that continuously compressed stock supply. But this logic is now reversing.

Large IPOs from Anthropic and OpenAI are coming soon, and SpaceX's offering has just been completed. In addition, many companies will launch secondary offerings to raise funds for AI buildout. Jones believes these factors combined will create enormous stock supply pressure in 2027. He said:

I'll be short the whole year. There's really no value at all. In '98, '99, and 2000, 2001, 2002, shorting was easiest in those years because there were constant lockup expirations and constant new supply flooding into the market.

Fiscal deficit: The market will eventually force a correction

Jones also listed the US fiscal deficit as another major hidden danger for the stock market.

His judgment is that politicians will not proactively raise taxes or cut spending; only market pressure will force action.

We will never proactively solve the deficit problem until the market forces us to do it. Just like 2008 and TARP. No politician will voluntarily raise taxes or cut spending; they are forced to.

He further stated: "The only question is whether we have now reached that critical point where the market is about to take action. If you force me to give an answer, I'd say 60 to 40 that we are already on that path."

Long crude oil: The Iran conflict remains unresolved, oil prices still have room to rise

On crude oil, Jones holds long positions, citing the difficulty of resolving the US-Iran conflict in the short term.

I'm long crude oil... bullish on crude oil... I think it can rise another 20 to 25 dollars. If anything were going to ease the situation, it would have happened before the midterm elections.

West Texas Intermediate crude oil futures traded around $92.50 per barrel early Tuesday. If oil prices rise another $20 to $25, they would break above the previous closing high of about $113 per barrel in 2026.

Jones noted that earlier this year the stock market showed tolerable resilience to rising oil prices—after the US-Iran war broke out on February 28, the S&P 500's maximum decline was only slightly more than 7%. But he warned that if oil prices climb sharply again, the stock market will "completely and utterly hate it."

On the geopolitical trajectory, Jones believes Trump will seek to push for peace after the midterm elections.

I assume the president has a plan after the election, because the current situation is clearly unsustainable.