Bridgewater leaders warn American assets at risk, Dalio strikes Chinese trade

The largest coverage fund in the world has sounded the alarm on a world -class change, warning investors that they are dangerously exposed and must adapt to the new reality.

The three co -chief investors of Bridgewater Associates – Bob Prince, Greg Jensen and Karen Karniol -Tambour – have issued dramatic caution in their last letter to customers and included an extract in a newsletter of the company this week.

The trio said that the transition to a “new macroeconomic and geopolitical paradigm” turns the markets, the reshaping of capital flows and the threat of the status quo.

The world goes from the post-war period of globalization and free trade to “modern mercantilism”, they said. The Trump administration’s efforts to disrupt multinational and security and security agreements as part of its “America First” program accelerated the change, they continued.

The Prince, Jensen and Karniol-Tambour predict that governments would intervene more and more in their economies, using commercial, foreign and industrial policy to support companies and sectors that correspond to their strategic mission to “increase wealth, strength and self-sufficiency”.

Change is an “urgent threat” to investor markets and portfolios, they said. “The current mix of global assets reflects the winners of the past paradigm, which were largely assets such as American actions which benefited from growth in growth, proactive Fed and American outperformance.”

The three investment gurus have warned that many portfolios seem vulnerable to lower growth, reducing the flexibility of central banks, underperformative actions and American assets that drag foreign rivals.

“We expect an slowdown induced by policy, with an increasing probability of recession,” they said, suggesting that the federal reserve cannot reduce interest rates as freely as certain other central banks given the risk of resurgence inflation. They also reported that the stock market is still pricing solid profits for businesses, even if they are “threatened”.

“We see exceptional risks for American assets, which depend on foreign entrances,” they said, nodding in the large amount of money abroad invested in American stocks and obligations.

The bosses of Bridgewater highlighted AI like any other Global Driver Change, but they said it was “too early to say who the winners will be and if they keep their winnings”.

They established a parallel at the early stages of the Dot-Com arrow. Although the first promises of the Internet were finally carried out, American actions underperformed treasurers, gold and emerging market actions during the 15 years after 1998, they said. They added that most of the dominant technological actions of this period also followed the wider market.

“Beautiful rebalancing”

Ray Dalio, a billionaire founder of Bridgewater and official mentor of his three investment leaders, has announced a change in the world order for some time.

In a LinkedIn article on Thursday, Dalio said that he dreamed of American-Chinese trade negotiations leading to a “beautiful rebalancing”.

He diagnosed the problem because the United States being too dependent on cheap manufactured products such as China, which had eroded its manufacturing base and injured a large segment of its population. China, on the other hand, had become too dependent on sales and investment in the United States and other countries.

“It is an unbearable imbalance in one way or another – that is to say in a coordinated and well managed manner or in an accident – must end,” said Dalio.

The United States had to reduce the deficit, stimulate manufacturing, reduce consumption and reduce its debt charge to rectify the imbalance – and hoped that it could work with China to do so.