Clenow Futures Intelligence Report

Clenow 

Futures Intelligence Report

October 22, 2014

Fed caution about rate hike right move: Ray Dalio

Bridgewater Associates founder Ray Dalio explains why he agrees with Fed chair Janet Yellen’s decision to wait until the U.S. sees more inflation before raising interest rates.

Ray Dalio head of the world's biggest hedge fund, told CNBC on Wednesday the FED should wait for signs of inflation before it raises interest rates.

Fed Chair Janet Yellen's cautious bearing to winding down easy monetary policy has been the correct approach, the Bridgewater Associates founder on "Squawk Box." Dalio's firm manages $163 billion overall, including nonhedge fund money.

"If I were running monetary policy, I'd wait to see for the whites of the eyes of inflation," he said, because the Fed should not be ahead of market expectations on increasing rates. The first hike is expected in the summer, though some market watchers think it may be earlier.

Looking at the markets, Dalio said, "the prospective return of asset classes, it's very narrow." He predicted expected returns of equities of "only about 4 percent."

Dalio did express optimism about the prospects for the U.S. in the near-term. "I see no real reason for a problem in the United States now other than too tight ... monetary policy. And I don't think you'll get to too tight of monetary policy."

Besides the Fed, Wall Street will be watching the European Central Bank's Thursday meeting, when the ECB is expected to detail its asset-backed purchase program—just as the U.S. central bank gets ready to end its bond-buying this month.

What happens this month or even in the next year are not big worries for Dalio. "My real concern is when the next downturn comes, which probably won't be for another couple of years ... 18 months," he said.

Source: CNBC

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

January 31, 2014

Ray Dalio -- founder of world's largest hedge fund -- talks his work-life philosophy

Bridgewater Associates founder Ray Dalio sits down the "CBS This Morning" co-host Charlie Rose to discuss his understanding of the way the economy works, as well as his philosophies and how he puts them to work in his company and his life.

 

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.

January 28, 2014

Ray Dalio's Advice for investing In the current market cycle

After presenting on a panel at the World Economic Forum in Davos, Ray Dalio joined the team at CNBC this morning. In his interview, he shared where things stand in the global economy right now, and how investors can act.

Ray Dalio is the head of Bridgewater Associates, the world's largest hedge fund with more than $150 billion AUM.

He's known for his deep understanding of market cycles. In 2013, Dalio released a very interesting video how the world's economic and money machine works. It's a machine in which the use of either credit or money and the generation of debt creates different market cycles — recessions, depressions, boom years etc.

So here's today's engineering lesson — some of which he talked about on his panel — it's about the United States, Southern Europe, China and you (the investor).

Ray Dalio said that the US right now is in the middle of a post-recession short term debt cycle where assets will return about 4%. He calls this, "the boring years," and compared it to the economy in 2004 or 2006. We won't boom, we won't bust.

Southern Europe, on the other hand, is still struggling out of a nasty debt bubble — with debt rising faster than income — but unlike the United States, the region couldn't print money to inflate itself out of trouble. No one would fund Southern Europe's debt.

But still, that debt must be rolled over. To do that, Southern Europe's economy will remain depressed for quite a while — a very different position in the cycle from the U.S.

Then there's China, which Dalio said is going through a much-needed tightening of monetary policy. The country's break-neck growth speed is slowing. China’s Q4 GDP number came in at 7.7%. That's a slowdown from the same quarter the year before when the number came in at 7.8%. Economists expect full year growth to come in at its lowest number since 1990 at 7.4%.

China's President, X Jinping, expected this slowing. In fact, instead of slowing, it's more of an attempt at normalization.

The problem is that getting things to normal will be bumpy, if it's achievable at all. As China tries to find balance in its economy the tightening can get too tight — as in, there isn't enough money floating around the economy to keep money flowing freely. Consumers can't do it with their purchasing power alone.

That's when the government steps in and injects money into the system again. It's a tough place to be in because the government doesn't want the economy to freeze, and Dalio believes it's a bubble.

We've already seen that happen this week. On Tuesday the Chinese government injected some cash into the banking system ahead of the Lunar New Year. It's a time of year when businesses pay a lot of Chinese migrant workers their yearly wages, people buy presents for each etc. The entire country needs cash.

While doing this, the government also announced that smaller loans would be written off bank balance sheets. That's not tightening, but it is the country trying to find a balance between keeping money flowing through its economy and not drowning in cheap money as it tries to mature.

And "balance" leads us to what Dalio talked about next — how to build a solid portfolio in our interconnected world. How do you invest in this environment?

China's tightening, the U.S. is growing slowly, Southern Europe's depressed — we're in a world where people want to buy financial assets. It's a hunt for returns. There's a lot of demand for cash.

At the same time, Dalio pointed out, longer term debt and liabilities are eating money.

"If I could say one thing to your investors, it's try to achieve balance," he said.

As an investor you need to diversify your portfolio and understand that in the type of world we're living in, your returns are going to look like this: 1% on cash, 3% on bonds, 4% on equities.

It's a low yield world, and you should plan accordingly.

Read more: http://www.businessinsider.com/ray-dalio-davos-cnbc-2014-1#ixzz2rbAVJudW

Ray Dalio is an American businessman and founder of Bridgewater Associates. Bridgewater Associates has since attracted many clients including pension funds and is currently (as of January 2012) the largest hedge fund in the world with nearly $120 billion under management.