Ray Dalio: Trump’s Populism May Overpower Pro-Business Policies

Ray Dalio, who runs the world’s largest hedge fund, said he’s becoming more concerned that the damaging effects of President Donald Trump’s populist policies may overwhelm the benefits of his pro-business agenda.
“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 drivers such as central bank policies,” Dalio and co-Chief Investment Officer Bob Prince said in the firm’s “Daily Observations” note to clients on Tuesday.
Money managers at hedge fund Carlson Capital take an even more negative view of Trump’s nationalist agenda. His policies may have dire consequences for the U.S. and global economy and his attempts to tax imports and subsidize exports could touch off a depression, according to their quarterly letter to clients.
“If the border adjustment mechanism is implemented as proposed we think it will cause a global depression and a major equity market decline,” Richard Maraviglia and Matt Barkoff said in the letter. “It is still unclear whether it will happen but at the very least we expect that U.S. trade policy will put downward pressure on global growth.”
Billionaire George Soros, who had backed Democrat Hillary Clinton in last year’s election, said in January that the stock market rally since Trump’s win, spurred by his promises to slash regulations and boost spending, will come to a halt. He called Trump a “con man” and a would-be dictator.
Bridgewater’s Dalio and Prince said the current investment environment is marked by “exceptional uncertainty” and recommended avoiding concentrated bets, and holding easy-to-sell assets.
“While there is a lot of potential to improve fiscal policies and make beneficial structural reforms (to enhance the business friendly environment, reduce regulatory inefficiencies, etc.), there is also significant risk that his populist policies could hurt the world economy (and worse)”.
“Nationalism, protectionism and militarism increase global tensions and the risks of conflict. For these reasons, while we remain open-minded, we are increasingly concerned about the emerging policies of the Trump administration,” they said.

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