“Tightenings become progressively more concerning because as you move along they’re more and more difficult to get perfect. As we’re progressing, we’re entering a period of greater risk in the nature of the market.”
“…looking at average statistics could lead the Federal Reserve to judge the economy for the average man to be healthier than it really is and to misgauge the most important things that are going on with the economy, labor markets, inflation, capital formation, and productivity, rather than if the Fed were to use more granular statistics. That could lead the Fed to run an inappropriate monetary policy.”
“Bridgewater is a secretive and eccentric firm and I let my suspicions of that get in the way of our ordinarily comprehensive due diligence.”
“They are not investing. Yet here he is, laying it all out to the world again – necessarily doing less of his day job than he would otherwise do.”
Again, this isn’t about whether you like Gary Cohn or whether you think he’s a good choice for the Fed. This is about uncertainty in markets and the extent to which Donald Trump’s ineptitude is setting the stage for all manner of volatility down the road.
“…politics will probably play a greater role in affecting markets than we have experienced any time before in our lifetimes but in a manner that is broadly similar to 1937.”
To be fair, “beauty is in the eye of the beholder,” so in that regard, if Ray wants to call a given “deleveraging” “beautiful” well then that’s his prerogative.
“Central bankers have clearly and understandably told us that henceforth those flows from their punch bowls will be tapered rather than increased.”
“Given the extent of it now, over the next year populism will certainly play a greater role in shaping economic policies. In fact, we believe that populism’s role in shaping economic conditions will probably be more powerful than classic monetary and fiscal policies (as well as a big influence on fiscal policies).”
Anyway, it’s not populism that should “scare” Dalio, it’s the possibility that stock/bond return correlations flip positive and stay there during some kind of nightmarish VaR shock that sees 10s at 3.5%+.