The Associated Press, May 26 (Editor Shi Zhengcheng) When Rui Dalio, founder of Bridgewater Fund and well-known Wall Street "preacher", was interviewed by Nikkei News this week The status and prospects of the US economy and society, and the trend of major currencies such as the US dollar And other topics that global investors pay close attention to update his views.
As for the upcoming US election, Dalio also warned that no matter who can win, Biden and Trump will face challenging domestic conflicts and international geopolitical conflicts at the same time.
The United States is in the classic "fifth stage"
In the face of the immediate problems, Dalio did not forget to review the "six stages of the internal cycle of the country" in the Principles. The "fifth stage" is precisely the stage characterized by huge differences in wealth and values, which promotes a polarised society to fight head to head - that is, the stage that is on the verge of "civil war" but has not yet broken out.
Dalio said that, The United States is in the classic "fifth stage", which is also characterized by excessive debt issuance and the new pattern of the international order caused by natural disasters (drought, flood, pandemic, etc.), major technological changes, geopolitical conflicts and other factors. The United States is on the verge of great turbulence, but it is not really involved in it. How to go next depends on the Americans, especially the leaders of the United States.
The reason why the preceding "civil war" needs quotation marks is that Dalio believes that, The type of civil war that is most likely to occur in the United States is not the kind in which people shoot each other with guns. Instead, the state and local governments refuse to follow the instructions of the federal government. At the same time, the federal government handles this confusion and dysfunction.
For the upcoming U.S. general election, in addition to the challenges that the two candidates will face, Dalio also raised a deeper concern: the Republican Party is now controlled by the far right, and people are also worried that the Democratic Party is more affected by the far left than the moderate left, which means that no matter who wins the election, there may be a huge political conflict in the United States.
US dollar and the prospect of US inflation
Just because inflation is regarded as the result of "relieving debt pressure", Dalio said frankly Not very confident that the Federal Reserve can achieve the so-called 2% inflation target 。
He said, Just as what is happening in Japan, the United States and the euro area - the issuers of the three major reserve currencies in the world are actively pushing for devaluation, together with their debts. such The result of depreciation will be more reflected in more inflation and higher gold price , rather than the sharp depreciation of one currency against other currencies. He also believes that monetization of debt will continue to be the trend in the next few years.
Dalio also pointed out that the U.S. economy is supported by the deterioration of the government's balance sheet and profit and loss statement, so the U.S. government will continue to issue a large number of bonds to deal with the deficit, which is also the reason why it is difficult for the inflation rate to return to the goal of the Federal Reserve or other major central banks.
The attractiveness of Japanese stocks declined
Even in the face of Japanese media, Dalio still said frankly that "Japanese stocks are not as attractive as before".
He said that Japan is still an attractive market based on the price factor, but under the tightening of monetary policy, the attractiveness of Japanese stocks is naturally different from that of the past.
Dalio also expected that the Bank of Japan could only slowly promote a more stringent monetary policy, because the Bank of Japan itself has a very large position in bonds, and raising interest rates too aggressively could lead to huge losses. meanwhile, The Japanese government and the Bank of Japan may push forward the depreciation of huge debts by keeping the policy interest rate at a relatively low position of inflation and nominal growth. This also means that yen bonds will still be a very bad investment, and stocks will be better relatively.
In addition, interest rate hikes in Japan will also make it difficult to sustain the flow of Japanese capital into specific markets, which will also put upward pressure on US bond yields.
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