Hedge fund titan Dalio fears Trump policies will hurt world economy
By William Watts
Ray Dalio, the founder of the world’s largest hedge fund, is warning clients that he’s grown increasingly worried that the Trump administration’s policies could damage global growth, news reports said Wednesday.
That marks a shift from November, when the billionaire investor who runs Bridgewater Associates wrote that his “very preliminary” assessment was that the developments on the economic front following Donald Trump’s presidential election victory were “broadly positive.”
In a Tuesday note to clients, Dalio and his co-chief investment officer, Bob Prince, cautioned that the downside effects of Trump’s policies could outweigh the benefits, according to news reports.
“We are now in a period of time when how this balance tilts will be more important to the economy, markets and our well-beings than normally dominant divers such as central bank policies,” they said, according to Reuters.
While there is potential for the administration to “improve fiscal policies and make beneficial structural reforms, there is also a significant risk that his populist policies could hurt the world economy (and worse),” they wrote.
The S&P 500 SPX, -0.12% remains up around 6.5% since Trump’s Nov. 8 election victory. Stocks extended a rally after the election, fueled by expectations Trump’s pledges to cut taxes, slash regulations and increase infrastructure spending would boost growth and aid company profits. Stocks set back modestly at the end of last week and early this week in a move partly attributed to concerns over Trump’s trade and immigration policies.
Bridgewater earned almost $5 billion for clients in 2016, the most in absolute terms of the top 20 funds ranked by hedge-fund investor LCH Investments NV in an annual report released Wednesday and obtained by MarketWatch.
Bridgewater manages around $150 billion in client assets. The hedge fund didn’t respond to an email request for comment.