Hedge Fund King, Ray Dalio, who manages Bridgewater Associates, gave a rare interview today. Ray Dalio is a fan of QE3, but is sceptical about the fragile economic recovery.
Ray Dalio’s thoughts on the matter can be rubber-stamped on recent unemployment statistics, with a national rate pegged at above 8%, for such a long period. Furthermore, the private sector will benefit from the improved interest rates, which they can capitalize on, and help stimulate growth. This is no doubt, one of the reasons value investors should be so happy about QE3, as featured in one of our articles.
For much of the past decade, Crispin Odey has been waiting for inflation to rear its ugly head. The fund manager has been positioned to take advantage of rising prices in his flagship hedge fund, the Odey European Fund, and has been trying to warn his investors about the risks of inflation through his annual Read More
Ray Dalio said that he was not sure whether the country was beyond the point of being able to successfully manage the situation. Additionally, Dalio did point at some point in the conversation that U.S is perhaps lagging behind in terms of competition in the radar of economic growth prospects, as compared to some major economies like China.
He picked up China’s Target economic floor of 6%, in which, if the Asian nation fails to meet, would imply a recession for the Chinese economy, as compared to U.S Ceiling target of 2%, in which, if the country manages more than that, it would imply an over achievement. He noted that the matter rests on how the people work together to get over it, saying, “I think it’s very dependant on how the people work this through together.”
With regard to QE3, Ray Dalio was very positive on the matter, saying that the private sector definitely needs it, as it will ease interest rates and stimulate growth of the sector. Additionally, Dalio believes that the dollar will succumb to pressure soon, having experienced some continuous gains over major currencies, in the recent past. Dalio said, “there is a short squeeze on the dollar”, implying the inevitable short term weakening of the currency.
Dalio pointed to the fact that, the U.S dollar is in high demand all over the world, the Euro banks will definitely issue them, while the Emerging markets are in dire need of them. However, the moment this scenario takes a reverse perspective, the dollar will succumb to pressure and decline, as demand wanes. Nonetheless, he termed the situation, “an ugly contest”.