September 25, 2013

Ray Dalio believes that Japan needs another "big round" of stimulus

Hedge fund legend Ray Dalio stated on Friday 20 of September 2013, that the Japanese economy will need another huge round of stimulus to boost sluggish growth, and some emerging markets are headed for a crisis.

Ray Dalio, chairman and CIO of $150+ billion firm Bridgewater Associates, one of the world's largest hedge funds, was speaking at the Japan Society in midtown Manhattan.

"The effects are going to wear off," Dalio said, about prior stimulus measures. BOJ is "going to have to do another big round of purchases," he shared.

In a 30 minutes conversation, Ray Dalio addressed important issues in economies like China and France. He were an optimist about investing in emerging markets, especially in equities, which dropped like a rock this year. According to him emerging markets will not be an "an attractive place" to invest this year "given flows and pricing."

He said emerging markets face "a major balance of payments problem" that will eventually lead to significant problems. It seems that Kyle Bass and other great hedge fund managers share the same view, as some of them expect either India or some other country to go into a crisis mode.

“We are going to have the emerging market crisis," Ray Dalio said during a Q&A period.

India should "prepare for the worst" since it has been one of the biggest beneficiaries of foreign capital flows that are already bypassing emerging market equities, he said.

As for Europe, Dalio said that France is of particular concern to him since "it has not dealt properly with debt to income ratios rising."

Update: There is information that Ray Dalio and Bridgewater Associates went long treasuries yesterday, and even though we don’t know whether its short-term or medium-term trade, it’s worth taking notice as some other prominent managers like Marc Faber also like treasuries short-term and believe they are due for a rebound.

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.