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Oct. 26, 2019, 3:21 p.m. EDT

Why the bull market won’t end with a typical crash, says hedge fund billionaire Ray Dalio

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By Callum Keown

Web Summit via Getty Images
Hedge fund billionaire Ray Dalio said the world’s economy echoes the 1930s

The U.S. and China may be nearing a tentative, partial trade agreement but the IMF’s new leader has warned the trade truce won’t be enough to boost global growth.

Another ongoing dispute may also be nearing a resolution, with the U.K. and EU agreeing a Brexit deal, though British MPs still have to approve it.

But the U.S. has confirmed tariffs on $7.5 billion worth of European goods will take effect on Friday, proving that geopolitical tensions are here to stay.

Hedge fund billionaire Ray Dalio, in our call of the day , says the global economy is in a “great sag” and the world has parallels to the 1930s.

“This is the best we are going to get, this moment. The cycle is not going to continue forever,” he said at the International Monetary Fund’s annual meetings in Washington.

The founder of the world’s largest hedge fund, Bridgewater Associates, said he didn’t see a market or economic crash on the horizon but a “great sag.”

He added that there was little central banks could do in terms of monetary policy to stop the downturn as they had less room to maneuver.

“Europe is at the limitation of that, Japan is (too) and the U.S. doesn’t have much to go on for that.”

He pointed out that the world’s widening wealth gap and a rising power — China — challenging an incumbent power, the U.S., had similarities to the 1930s.

Dalio said more policy coordination was needed but feared that could prove tricky in a world characterized by rising geopolitical tensions and polarization.

The market

After the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.54%   edged up 24 points on Thursday, Dow futures /zigman2/quotes/210407078/delayed YM00 +0.01%   are slightly down, along with Nasdaq futures /zigman2/quotes/210219788/delayed NQ00 +0.33%   and S&P 500 futures /zigman2/quotes/209948968/delayed ES00 +0.08%  .

Europe stocks /zigman2/quotes/210599654/delayed XX:SXXP +0.91%   are down, while Asian markets /zigman2/quotes/211618636/realtime XX:ADOW +0.41%   fell on news China’s GDP growth slipped to its slowest pace since the first quarter of 1992.

The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.1197%   has nudged higher against the dollar after the U.K. and EU agreed a Brexit deal.

The buzz

China’s economy grew by 6% in the third quarter, its slowest growth since the beginning of 1992. Growth cooled in all sectors despite some recovery in industrial production and retail sales at the end of the quarter.

US : Dow Jones Global
+454.97 +1.54%
Volume: 436.45M
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$ 30,001.00
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Volume: 17,982
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US : U.S.: CME
$ 12,116.25
+40.25 +0.33%
Volume: 34,841
Nov. 24, 2020 11:52p
US : U.S.: CME
$ 3,635.50
+2.80 +0.08%
Volume: 80,398
Nov. 24, 2020 11:52p
+3.55 +0.91%
Volume: 0.00
Nov. 24, 2020 11:03p
XX : Dow Jones Indices
+15.03 +0.41%
Volume: 0.00
Nov. 25, 2020 1:02a
US : Tullett Prebon
-0.0016 -0.1197%
Volume: 0.0000
Nov. 25, 2020 1:02a
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