CNBC Interviews Bridgewater’s Ray Dalio

In case you missed it,  be sure to catch a rare television appearance with hedge fund legend,  Ray Dalio, who manages $89 BN,  more than 3x Yemen’s 2010 GDP.     Bridgewater has been trashed recently in several articles Click here for the CNBC interview.

Here are the  money quotes,

Dalio on US Equities:

U.S. EQUITIES FIRST ARE STILL COMPARATIVELY CHEAP. BUT MORE IMPORTANTLY, THE FLOWS ARE BENEFICIAL TO THEM BECAUSE U.S. EQUITIES BENEFIT FROM CURRENCY DEPRECIATIONS. I THINK, AS I SAY IN 2012, THE DEVELOPED COUNTRIES’ CURRENCIES WILL DEVALUE IN RELATIONSHIP TO THE EMERGING COUNTRIES’ CURRENCIES.

Dalio on the Dollar:

I THINK IT’S INEVITABLE THAT THE DOLLAR’S ROLE AS A WORLD CURRENCY DIMINISH FROM THE DOMINANT WORLD CURRENCY TO ONE OF A FEW AND IT WILL HAPPEN OVER A GRADUAL TIME. WE’VE BEEN VERY LUCKY, BECAUSE THE DOLLAR IS THE WORLD’S CURRENCY AND CONSIDERED THE PLACE THAT’S SAFE SO FOREIGN COUNTRIES WILL SAVE THERE AND WE’VE BEEN ABLE TO BORROW AT CHEAPER RATES THAN WE COULD HAVE OTHERWISE. AND SO THAT IS DIMINISHING.

Dalio on the Emerging Market:

THE ONE WORLD IS BOOMING. THE EMERGING MARKET. INFLATION RATES AND STRONG GROWTH RATE AND TIED THROUGH THIS CURRENCY LINK TO THE U.S., EUROPE AND JAPAN. AND AS A RESULT, THEY HAVE TOTALLY INAPPROPRIATE MONETARY POLICIES BECAUSE IF YOU HAVE A CURRENCY THAT’S LINKED, YOU HAVE INTEREST RATES THAT ARE LINKED. AND IT’S CREATED TOTALLY UNECONOMIC BEHAVIOR IN THOSE COUNTRIES. THIS IS GOING TO BE THE BIG NEXT SEISMIC SHIFT, I BELIEVE. I THINK THAT PROBABLY SOMETHING IN 2012 IT WILL BECOME INTOLERABLE TO MAINTAIN THOSE CURRENCY LINKS AND WE’LL PROBABLY HAVE A BIG SHIFT.

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