Via Ray Dalio, (from LinkedIn),
Unfortunately the war with China is spreading. This week it spread to a currency war that will affect all currencies. It could spread to a capital war and/or an embargo war (shutting off needed items). In a worst case, it could go beyond that. We need to watch it closely. If there’s no big war, I’m bullish on China and if there’s a big war, I’m bearish on both the U.S. and China.
More broadly I’d like to repeat that I believe that there are three big forces to watch: 1) the end of the short- and long-term debt cycles when there is an economic downturn and monetary policy cannot ease because interest rates can’t be cut and central bank financial asset buying (QE) is no longer effective, 2) internal conflicts between the haves and have nots that become extreme, and 3) external conflicts between a rising power (China) that challenges an existing world power (the U.S.). The late 1930s was the last time we saw the confluences of these forces.
The interview, via Bridgewater
With China continuously in the news, it brings to the forefront one of the central issues of our time, a rising power challenging an existing power. Our founder, co-CIO and co-chairman, Ray Dalio — who has been visiting and studying China for 30+ years — recently sat down with senior portfolio strategist Jim Haskel to explore the ever evolving US-China dynamic and what it means for investors now and in the future.
