Bridgewater Co-CIO: It Will Be Worse Than Everyone Expects

Wednesday, January 23, 2019
By Paul Martin

by Tyler Durden
Wed, 01/23/2019

One day after Bridgewater founder and billionaire Ray Dalio told a Davos panel that the “one thing that scares him the most” is that during the next downturn in global growth, which will hit both markets and the economy, central banks will have virtually no ammo to spark another rebound, Dalio’s top lieutenant, Greg Jensen, who is co-chief investment officer of the world’s biggest hedge fund (excluding various central banks, of course) said “he sees a more negative outlook for growth than the markets and policy makers.”

“While people have certainly diminished their growth expectations and you’re hearing all about that at Davos, we don’t think they’ve done it enough,” he told Bloomberg TV during an interview from the World Economic Forum, effectively warning that the coming drop will be worse than (virtually) everyone expects. Echoing concerns first voiced by Morgan Stanley’s Mike Wilson, Jensen said that “earnings expectations particularly in the U.S. are too high, and generally the Fed and other policy makers are still expecting stronger growth than we see.”

As a result of what may soon be an earnings recession, Jensen said that he expects to see lower interests rates, particularly on the short-end of the Treasury curve, or in other words, he expects the Fed to make monetary easing great again; he also warned that regions that have priced in high growth expectations will be hurt the most, and no region has priced in more “growth” than the US, with the decoupling between US stocks and the rest of the world now absolutely historic.

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