Bridgewater’s Dalio Says the “Risk is Asymmetrical on the Downside”

Ray Dalio of Bridgewater Associates explained the long-term debt cycle affecting the market. “The problems at the end of the long-term debt cycle,” he said, “is that it is very hard for the Federal Reserve or central banks to ease monetary policy.” He observed that the effect of quantitative easing is, ultimately, to lower the spread (or return) because it drives asset prices up and lowers the yield so, “for example, you have about a 2% bond yield.” He continued: “That means that monetary policy makes it more difficult to have credit growth or . . .monetary growth.” Further, Dalio […]

Bridgewater’s Dalio: 2015 May Be Like 1937 for the Market

  A recent Wall Street Journal piece notes that hedge-fund manager Ray Dalio and others have discussed potentially significant parallels between 1937 and 2015.  Dalio, in a March letter earlier this year, identified the following comparable timeline: Debt limits reached at “the bubble top” in 1929 and in 2007; Interest rates fall to zero in 1931 and 2008; Money printing begins a “beautiful deleveraging” in 1933 and 2009; Stocks and “risky assets” rally in 1933-36 and 2009-14, during which the economy improves through cyclical recovery; and The central bank tightens, producing a “self-reinforcing downturn” in 1937 and, maybe, 2015. Others […]

Bridgewater's Dalio Worries about Fed's Effectiveness in Next Downturn

Ray Dalio, the founder of one of the world’s largest hedge funds, believes that monetary policy going forward will be less effective than in the past. He says that the Federal Reserve is overly focused on the short-term debt cycle and he predicts lower assets class returns going forward — somewhere in the 3-4% range over the next 10 years. “What scares me, or what worries me, is what the next downturn in the economy looks like, with asset prices where they are and a lesser ability of central banks to ease monetary policy,” he says. Watch the full Bloomberg […]

Bridgewater’s Dalio Worries about Fed’s Effectiveness in Next Downturn

Ray Dalio, the founder of one of the world’s largest hedge funds, believes that monetary policy going forward will be less effective than in the past. He says that the Federal Reserve is overly focused on the short-term debt cycle and he predicts lower assets class returns going forward — somewhere in the 3-4% range over the next 10 years. “What scares me, or what worries me, is what the next downturn in the economy looks like, with asset prices where they are and a lesser ability of central banks to ease monetary policy,” he says. Watch the full Bloomberg […]

Dalio Sees Significant QE Before Significant Rate Hike

Hedge fund guru Ray Dalio says he expects the Federal Reserve to make a significant quantitative easing move before it makes a significant interest rate hike. “To be clear, we are not saying that we don’t believe that there will be a tightening before there is an easing,” Dalio writes in a recent post on his LinkedIn page (h/t MarketWatch). “We are saying that we believe that there will be a big easing before a big tightening. We don’t consider a 25-50 basis point tightening to be a big tightening. Rather, it would be tied with the smallest tightening ever.” […]