Bridgewater is said to manage about U.S.$130 billion. That is a huge responsibility, and it seems evident to me that Mr. Dalio strongly believes that to be the case. Accordingly, in what I see as very turbulent and uncertain economic times it is not terribly surprising to me that:
- Mr. Dalio in his remarks speaks in quite general terms – the exception being that he expressed a specific (positive) view with respect to physical gold ownership; and,
- as a result, it is necessary to ‘read between Mr. Dalio’s lines’ and reach your own conclusion with respect to what he likely thinks are ‘most probable outcomes.
I consider the latter exercise to be one ‘well worth doing’, and recommend it to you.
Topical Reference:
Ray Dalio talks about delivering and a lot of other things, from
Also Sprach Analyst, Ray Dalio, September 13, 2012 – video watching and listening time 30 minutes plus a further 37 minutes of questions and answers.
North America >> United States: How negative might U.S. QE3 announced September 13 really be?
In a must-read and think-about article Liam Halligan, Chief Economist at Prosperity Capital Management, expresses his views on the U.S. quantitative easing measures introduced on Friday by Fed Chair Bernanke saying that in his view:
- they will do more harm than good;
- will do more harm than good to the U.S. credit rating;
- harm American consumers as it will fuel future inflation;
- potentially spark a trade war; and,
- result in increased reluctance on the part of China and others to keep buying U.S. treasuries.
If he is right or even partially right, the financial markets last Friday (September 14) likely over-reacted on the positive side. If you participate in those markets I suggest you read this well constructed article – and conclude what parts of it you agree and disagree with.
You might want to consider whether it is significant that it has been reported that Egan-Jones Ratings Co. on Friday downgraded its U.S. sovereign rating to AA- from AA+. From its website,
Egan-Jones Ratings describes itself as an independent Nationally Recognized Statistical Rating Organization (NRSRO) not paid by corporations issuing bonds. It seems to me the question that arises from this is: What adjustments Fitch, Moody’s and Standard & Poor’s will make, if any, to the U.S. credit rating going forward.
Topical Reference:
US cannot continue the endless sugar rush, from
The Telegraph, Liam Halligan, September 15, 2012 – reading time 5 minutes, thinking time longer. Also see
Egan-Jones downgrades U.S. rating on QE3 move, from
Marketwatch, Wallace Witkowski, September 14, 2012 – reading time 1 minute.
Brief Commentaries prompted by world headlines (collective reading time 2 minutes)
Eurozone >> Banking: Agreement on ECB direct bank assistance unlikely by year-end
Germany’s Finance Minister is reported as having cautioned on Saturday that agreement on new ECB powers that have been ‘pledged’ might not be reached before the end of 2012.
The article discusses the widened proposed banking supervision and funding abilities of Eurozone (17 countries) and wider European Union (a total of 27 countries including the 17 Eurozone countries), and is worth reading in the contexts of both those proposals and the likely complications of getting agreement quickly on those things.
Difficulty with getting quick agreement, while understandable, is not helpful in circumstances where time may be running out on some Eurozone countries. This may become even more evident as new information comes from Spain over the next weeks.
Topical Reference:
Germany says further steps needed before banks tap ESM, from
Reuters, John O’Donnell and Annika Breldhardt, September 15, 2012 – reading time 4 minutes.
Eurozone >> France >> Germany: Recent German/French poll on euro
Reuters said yesterday that a recent poll suggests about two-thirds of Germans, but only one-third of the French people polled, think that their respective countries would be better off without the euro.
If that poll has been reported properly, and is statistically valid, that is interesting – and arguably in the end does not bode well for the euro continuing as it is without change, or at all.
Topical Reference:
German faith in euro and EU lags behind French: poll, from
Reuters, September 17, 2012 – reading time 2 minutes.
Brief Country Risk Commentaries prompted by world headlines (collective reading time 2 minutes)
Oceania >> Australia: Mining executives less optimistic about investing in Australia
75% of mining and finance leaders surveyed recently by the Baker & McKenzie law firm are reported as saying they are less optimistic about investing in Australia than other important mining countries due to complexity, uncertainty and costs resulting from increasing regulatory and environmental obligations.
You might want to read the referenced article, consider why Australia is being singled out with respect to ‘country risk’ in the context of new regulation and increasing environmental concerns, and consider what this ultimately may mean to supply/demand issues around important required metals going forward.
If GDP growth is important to world well-being and stability, key commodity supply at reasonable prices will have to be important to that growth. Thinking simply from 20,000 feet, one might reasonably expect a reduced supply of important commodities over time to result in escalated prices for those commodities – and escalated prices at the consumer level in all countries.
For a more detailed commentary on the same survey see the referenced ‘Mineweb’ article. That article discusses (1) political stability, (2) resource nationalism, (3) infrastructure and workforce, (4) Australia, (5) Canada, and (6) South Africa.
Topical Reference:
Mining Industry Less Optimistic About Investing in Australia – Report, from
Fox Business, from Dow Jones Newswires, September 16, 2012 – reading time 3 minutes. Also see
Mining investment to grow ever more complex, costly, industry leaders fear, from
Mineweb, Dorothy Kosich, September 17, 2012 – reading time 4 minutes
Important Snippets From Today’s Commentaries
Snippet #1: You can visit Bridgewater Associates (
http://www.bwater.com/), and read or print (at no cost) a four page PDF titled ‘Risk Parity is about Balance’. To access that paper, click on ‘Site Map’ (bottom of home page), then click on Risk Parity & Portfolio Construction White Papers. You will taken to a webpage that asks for your name, e-mail address and agreement with Bridgewater’s disclaimer. You will then be taken to a webpage where you can access the PDF.
Snippet #2: At September 18, 2012, difficulty with getting quick agreement, while understandable, is not helpful in circumstances where time may be running out on some Eurozone countries. This may become even more evident as new information comes from Spain over the next weeks.
Snippet #3: If GDP growth is important to world well-being and stability, key commodity supply at reasonable prices will have to be important to that growth. Thinking simply from 20,000 feet, one might reasonably expect a reduced supply of important commodities over time to result in escalated prices for those commodities – and escalated prices at the consumer level in all countries.
