“Capitalism basically is not working for the majority of people,” often says Ray Dalio, an American billionaire with a personal wealth of $18.7 billion and the founder of the Bridgewater Associates hedge fund with $160 billion of assets under management (AUM).
Having the ear of the most powerful when speaking about economic cycles and macroeconomic trends, Dalio estimates at 25 percent the chance of entering into recession by 2020 and distinguishes four main factors which are the effectiveness of central banks, US presidential election 2020, the Chinese economy and the wealth gap.
Above all, considering interest rates which are already historically low, the Federal Reserve(Fed) lacks room to cut rates with a view to reviving the economy in case of a recession and therefore Dalio disagrees with President Donald Trump underlining that “you don’t want to apply accommodation at a time when you don’t need it.”
As a result, over-using a tool would render it inoperative and the question is posed with greater acuity in Europe where general economic conditions are not as good as they are in the United States and where rates are more and more often negative.
With a return down by 6% at his leading Pure Alpha hedge fund while the S&P 500 index gained 18.71% year-to-date (YTD), Ray Dalio doesn’t worry about the consequences of Brexit and sees 75% chance that the longest phase of U.S. economic expansion started in 2009 continues.
Recently, Ray Dalio discussed the impact of China’s growth on the world economy (see video below) :