Dalio, the founder of Bridgewater Fund, issued another "warning": the United States is going to have problems!

Golden Ten New Media

2024-05-16 14:17Published in Guangdong

In his research, Dalio found that the likelihood of a "civil war" in the United States is increasing, with a probability of between 35 and 40 percent......

Billionaire Dalio, founder of hedge fund giant Bridgewater Fund, has warned that rising debt levels in the U.S. government could affect U.S. Treasuries, arguing that U.S. investors should shift some of their money to foreign markets.

In an interview, Dalio described his broad concerns about the United States, including the U.S. debt burden, the risk of what he called "civil war," and the possibility of the country getting involved in another international conflict, which he warned could deter foreign investors from buying U.S. bonds. "I'm concerned about U.S. Treasuries because debt levels are high and high interest rates are exacerbating debt levels."

"I'm also concerned about weak demand for U.S. Treasuries, especially from international buyers who are concerned about the state of the U.S. debt and possible sanctions," Dalio said. He added that if the United States imposes sanctions on more countries, then this could reduce the international demand for U.S. Treasuries.

Dalio's warning comes as some commentators are increasingly concerned about the build-up of US debt. The Congressional Budget Office (CBO) predicts that by the end of the decade, the U.S. debt-to-GDP ratio will surpass the 106% high of World War II and will continue to rise. The head of the watchdog warned that if the federal deficit is ignored, there could be a Truss-style market shock.

Fed Chair Jerome Powell also said in an interview earlier this year that "the United States is on an unsustainable fiscal path."

At the same time, Treasury yields have risen this year, jumping earlier in the 10-year yield to 4.35% from 3.88% as investors sharply reduced their expectations for rate cuts, but fell after Wednesday's CPI data.

Some investors believe that such concerns are exaggerated. They argue that the large number of new Treasury bonds issued this year has largely been well absorbed by private investors, and that the larger Treasury auctions have had little impact on yields so far.

Due to the U.S. debt and the potential impact of further conflicts, Dalio believes investors should seek to move some of their money abroad. He said risks to the U.S. are rising and diversification is necessary. "Countries that have revenues over expenditures, have good balance sheets, have internal order, and remain neutral in geopolitical conflicts......," he said Looks attractive. ”

He pointed to India, Singapore, Indonesia, Malaysia, Vietnam and some Gulf countries as potentially attractive investment destinations. He added that gold is also a good diversification tool.

Dalio, 74, stepped down as chairman of Bridgewater in 2021. Bridgewater, the world's largest hedge fund with $112.5 billion in assets under management, remains an advisor to Bridgewater's three co-chief investment officers and a member of the board of directors, while his research is backed by a team at Bridgewater and shared with investors.

Dalio believes that one of the risks of his research is the growing likelihood of a "civil war" in the United States – which he believes is between 35 and 40 percent. "We are now on the verge of collapse, but we don't yet know if we will enter more turbulent times".

However, the "civil war" imagined by Dalio is not necessarily a war, although such a scenario is possible. On the contrary, he sees it as an acceleration of political polarization in the United States in recent decades. This civil war will be "people moving to different states that are more in line with their wishes, and they do not listen to the decisions of federal authorities with opposite political beliefs".

He also believes that this year's U.S. presidential election, the most important of his life, will determine whether the risks he sees, including the impact of climate change and the wider use of artificial intelligence, will spiral out of control. Dalio said he refused to support any presidential candidate, but revealed he had recently attended Taylor's concert. He joked:

"I saw how she brought people of different nationalities together. I'm joking to some extent, but if she's running for president and willing to listen to good advisors, I'll consider backing her. ”

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