Billionaire hedge fund manager Paul Tudor Jones said he believes there’s a huge demand for U.S. stocks this year, coming primarily from two sources that could power the market through the most challenging economic environment in 40 years. “You’ve probably got something just under a trillion dollars of excess demand in U.S. stocks,” Jones said Tuesday on CNBC’s “Squawk Box.” “Where is the selling going to come to offset that demands coming from buybacks, from the corporate line items, from some combination of buybacks and M & A? That’s a significant amount. Ceteris paribus, everything being the same, the stock market would be up 7% or 8% this year.” The S & P 500 just suffered its worst year since 2008 with a near 20% loss and snapped a three-year win streak. The Federal Reserve has raised its benchmark interest rate to the highest level in 15 years and has signaled more hikes could come to bring soaring inflation under control. The founder and chief investment officer of Tudor Investment said he believes the Fed will stop short of breaking the economy. In a more negative scenario, Jones envisioned that the Fed could raise rates to a point where it creates enough of an economic contraction to cause retail investors to offload some of the record-level stocks they bought in 2020 and 2021. “It’ll require something negative to happen to create the stock market to go down meaningfully,” Jones said. “Inflation would have to be too high, or [Fed Chairman Jerome Powell] will have to overtighten to create something, some major economic contraction to make the market go down. Absent that, the stock market is going to stay strong.” Jones said he’s not making a specific call and he doesn’t have a crystal ball in terms of market outlook because a lot of it depends on how inflation plays out.