"Has the bull market in government bonds finally ended... A change in the wind is being felt as governments listen to the central banks’ recent call for fiscal, rather than monetary policy, to do the heavy policy lifting from hereon in. Is the long bull market in bonds now over."
Remember Ray Dalio's warning from early 2016 that if assets remain correlated and things continue to move in the “wrong” direction, "there’ll be a depression"? Well, this is where we are now courtesy of the latest observations of Citi's Matt King...
In what may be the latest indication that Merkel's immigration policy blowback is being heard by the government, Germany's Handelsblatt reports that Merkel's government plans to prohibit foreign E.U. citizens from receiving welfare benefits for five years if they haven’t worked in Germany before.
With bond-stock correlations reaching record highs (and broad risk parity fund performance deteriorating rapidly), Ray Dalio’s $150 billion Bridgewater Associates managed modest gains across its main strategies last month - even as macro funds have suffered amid policy and political uncertainty. However, the manager of the world's largest hedge fund warns “Investment returns will be very low going forward,” in his latest investor remarks, suggesting that betting on gold could prove preferable.
"In the recent environment of low volatility, and with high valuations across assets, we are inclined to keep cash reserves to take advantage of more attractive entry points in case of shocks. Potential ‘growth shocks’ continue to loom until year-end as political risks remain elevated, given the upcoming US presidential elections and Italian referendum, and the UK government’s plan to trigger Article 50 by March 2017."
"... it would only take a 100 basis point rise in Treasury bond yields to trigger the worst price decline in bonds since the 1981 bond market crash. And since those interest rates are embedded in the pricing of all investment assets, that would send them all much lower."
Confirming his previous op-ed, the founder of the world's largest hedge fund warned that the current environment is analogous to the 1935 to 1945 period in America as we "reach the limits" of [central banks] "ability to stimulate" the economy " and raise global asset prices."
Employee files sexual harrassment complaint where Bridgewater is described as a “cauldron of fear and intimidation" where employees are exposed to constant video surveillance and encounters with patrolling security guards that "silence" employees who do not fit the Bridgewater mold. In light of these new developments, we're left wondering which particular "values" Comey carried with him to the FBI and exactly how far he "spread" them within the organization.
Having stunned even the most liberal of liberal media outlets with his seemingly unexplainable decision not to bring charges against Hillary Clinton (thus nullifying six criminal laws), FBI Director Jim Comey faces an oversight bloodbath today in front of the House Oversight Committee. However, what few may not know about the "deeply philosophical, religion major" is that he spent three short years (just enough for Dalio to realize 'value') being "probed" at the world's largest hedge fund - Bridgewater, peddling "radical transparency."