1 00:00:00,080 --> 00:00:03,040 Speaker 1: Not reflective of how the leaders are handling the economy 2 00:00:03,200 --> 00:00:06,000 Speaker 1: based on what you've seen. Do you feel better about 3 00:00:06,080 --> 00:00:09,000 Speaker 1: their ability to handle their death situation now than you did, 4 00:00:09,000 --> 00:00:14,920 Speaker 1: say six months ago? Um? Probably about the same. The 5 00:00:14,920 --> 00:00:18,759 Speaker 1: balance of payments issue is going to be a challenge. 6 00:00:18,840 --> 00:00:20,400 Speaker 1: Let me, if you want to get into the balance 7 00:00:20,400 --> 00:00:22,160 Speaker 1: of payments, will to explain it just a little bit. 8 00:00:22,200 --> 00:00:23,880 Speaker 1: But the balance of payments has to do the currency. 9 00:00:23,880 --> 00:00:27,080 Speaker 1: A lot of money leaving the country for and they 10 00:00:27,120 --> 00:00:30,560 Speaker 1: are draining the reserves very quickly. That's right, because money 11 00:00:30,600 --> 00:00:33,880 Speaker 1: is leaving the country, and also these cycles happen every place. 12 00:00:34,760 --> 00:00:36,800 Speaker 1: But what happens is when the money is leaving in 13 00:00:36,880 --> 00:00:39,440 Speaker 1: the country and less money wants to go into the country, 14 00:00:39,479 --> 00:00:42,919 Speaker 1: creates a balance of payments issue. UM. In terms of 15 00:00:42,960 --> 00:00:44,879 Speaker 1: that money leaving the country, they have a lot of 16 00:00:44,920 --> 00:00:47,599 Speaker 1: control over that nature of that money because a lot 17 00:00:47,640 --> 00:00:51,159 Speaker 1: of those are state owned enterprises and other things. For example, 18 00:00:51,200 --> 00:00:53,960 Speaker 1: they've just opened the bond market to foreign investment. We 19 00:00:54,160 --> 00:00:58,160 Speaker 1: estimate that probably in UM maybe eighteen months or two years, 20 00:00:58,160 --> 00:01:01,040 Speaker 1: that'll be worth about probably in the vicinity of maybe 21 00:01:01,120 --> 00:01:04,280 Speaker 1: two billion dollars of influence. Influence, in other words, you 22 00:01:04,280 --> 00:01:07,160 Speaker 1: can have by opening the bond market and having foreign 23 00:01:07,160 --> 00:01:10,280 Speaker 1: investors invest in the market, it will also attract money in. 24 00:01:10,880 --> 00:01:14,840 Speaker 1: Many of their companies are state owned companies and multinational companies, 25 00:01:15,000 --> 00:01:19,240 Speaker 1: and they have greater controls over the then we might 26 00:01:19,319 --> 00:01:22,080 Speaker 1: think for ourselves and so on. So while there's a 27 00:01:22,080 --> 00:01:25,400 Speaker 1: balance of payments challenge, there's there are also ways to 28 00:01:25,959 --> 00:01:28,679 Speaker 1: deal with that. I'm not saying it's not a challenging situation. 29 00:01:28,920 --> 00:01:32,720 Speaker 1: It is a challenging situation, but on the tools to management, 30 00:01:32,760 --> 00:01:36,160 Speaker 1: and I would say the capabilities of managing it are 31 00:01:36,640 --> 00:01:39,320 Speaker 1: are excellent. I will say that, Um, you know, I 32 00:01:40,080 --> 00:01:44,000 Speaker 1: get to know different economic leaders around the world in 33 00:01:44,280 --> 00:01:47,480 Speaker 1: different ways, and I would say that their capabilities are 34 00:01:47,880 --> 00:01:51,640 Speaker 1: equal to the best that exists anyway in terms of 35 00:01:52,280 --> 00:01:54,120 Speaker 1: the things that need to be done, which in monetary, 36 00:01:54,120 --> 00:01:57,680 Speaker 1: fiscal policy, restructuring, debts, I mean all of those types 37 00:01:57,680 --> 00:01:59,960 Speaker 1: of things. And there is an advantage there. Look, there 38 00:02:00,040 --> 00:02:03,640 Speaker 1: a lot of disadvantages to a system like that, but 39 00:02:03,720 --> 00:02:06,360 Speaker 1: one of the greater advantages is that there's also greater 40 00:02:06,440 --> 00:02:09,799 Speaker 1: controls over things. Do you think to fix this balance 41 00:02:09,840 --> 00:02:14,400 Speaker 1: of payments issue you've described, they'll have to devalue their currency. 42 00:02:14,800 --> 00:02:20,160 Speaker 1: I you know, Um, I don't know. UM. I guess 43 00:02:20,200 --> 00:02:23,320 Speaker 1: the thing that I would say is, um, there's a 44 00:02:23,360 --> 00:02:28,600 Speaker 1: balance of payments pressure. I. Uh, it's one of those 45 00:02:28,639 --> 00:02:31,600 Speaker 1: things where that it's too close to call the two. 46 00:02:31,800 --> 00:02:35,280 Speaker 1: The tools that are there are are really great in 47 00:02:35,320 --> 00:02:38,359 Speaker 1: many ways, and then it's just one of those too 48 00:02:38,400 --> 00:02:41,240 Speaker 1: close to call situations. When we go back to what 49 00:02:41,320 --> 00:02:45,120 Speaker 1: you were describing the failures of UH monetary policy one 50 00:02:45,160 --> 00:02:48,560 Speaker 1: interest rate, it's the failures of monetary policy to quantitative easing, 51 00:02:48,880 --> 00:02:53,600 Speaker 1: the possibility of monetary policy free where somehow governments get 52 00:02:53,639 --> 00:03:02,200 Speaker 1: cash directly into the hands of consumers. Um does that Auger? 53 00:03:03,880 --> 00:03:06,640 Speaker 1: What does that augur well or poorly? For you know, 54 00:03:06,680 --> 00:03:10,880 Speaker 1: if you're thinking as an investor, well, um, Well, if 55 00:03:10,919 --> 00:03:12,959 Speaker 1: you're thinking, there's the economy and who's the investor, I 56 00:03:13,040 --> 00:03:14,880 Speaker 1: was gonna ask the answer the economy part of the 57 00:03:14,960 --> 00:03:18,760 Speaker 1: first but invested from the perspective of the investor. Um. 58 00:03:18,800 --> 00:03:23,960 Speaker 1: From the perspective of the investor, I would use UM, 59 00:03:24,160 --> 00:03:27,600 Speaker 1: Japan is being more of UM what is most more 60 00:03:27,720 --> 00:03:32,160 Speaker 1: likely unless there is a debt restructuring to deal with 61 00:03:32,200 --> 00:03:37,200 Speaker 1: these things, meaning, um, we we have a we've raised 62 00:03:37,200 --> 00:03:39,840 Speaker 1: the limits as the debt relative to our incomes as 63 00:03:39,880 --> 00:03:42,520 Speaker 1: a as a group. So there's a private sector, that's 64 00:03:42,560 --> 00:03:44,520 Speaker 1: a public sector. But let's take us as a country. 65 00:03:44,680 --> 00:03:48,000 Speaker 1: Then take us as a world, so include Europe, take China, 66 00:03:48,320 --> 00:03:51,600 Speaker 1: take the whole world. The world has a limitation right 67 00:03:51,640 --> 00:03:53,960 Speaker 1: now in terms of you can't raise much debt, so 68 00:03:54,040 --> 00:03:57,280 Speaker 1: we can't we can't borrow our ways to higher spending 69 00:03:57,800 --> 00:04:00,840 Speaker 1: with the zero interest rates being down there, that's where 70 00:04:00,880 --> 00:04:03,200 Speaker 1: we are. And then in terms of returns, we're going 71 00:04:03,200 --> 00:04:05,840 Speaker 1: to have a low return environment, and that low return 72 00:04:05,960 --> 00:04:08,880 Speaker 1: environment is the main issue. That's that that becomes the 73 00:04:08,880 --> 00:04:10,920 Speaker 1: main issue when you liken it to Japan. Ray and 74 00:04:10,960 --> 00:04:13,480 Speaker 1: I just want to remind everybody who's watching again Bloomberg 75 00:04:13,480 --> 00:04:17,679 Speaker 1: television viewers and Bloomberg radio listeners worldwide. Does that mean 76 00:04:18,040 --> 00:04:21,279 Speaker 1: that the United States and Europe the developed the world 77 00:04:21,320 --> 00:04:23,400 Speaker 1: broadly speaking? Of course Japan is part of that. But 78 00:04:24,600 --> 00:04:27,240 Speaker 1: is that the trajectory is that the road that we're 79 00:04:27,240 --> 00:04:31,159 Speaker 1: headed down. We're looking loosely speaking, I believe that that's 80 00:04:31,320 --> 00:04:35,120 Speaker 1: the most likely scenaria meaning slow growth, very slow growth, 81 00:04:35,640 --> 00:04:42,159 Speaker 1: deflation ups and downs. Okay um, the increased difficulty in 82 00:04:42,279 --> 00:04:47,160 Speaker 1: stimulating monetary policy that was manifest in deflation the movement 83 00:04:47,279 --> 00:04:53,120 Speaker 1: toward increasingly other alternatives ways of having monetary policy that 84 00:04:53,200 --> 00:04:59,200 Speaker 1: will produce stimulation, more currency volatility. But in other words, 85 00:04:59,560 --> 00:05:02,200 Speaker 1: I'm not a expecting something like two thousand and eight, 86 00:05:02,240 --> 00:05:04,680 Speaker 1: because two thousand eight was a debt crisis. There were 87 00:05:04,720 --> 00:05:08,039 Speaker 1: a lot of debts coming to and they couldn't be paid, 88 00:05:08,120 --> 00:05:10,760 Speaker 1: and that was what two thousand eight was. This is 89 00:05:10,800 --> 00:05:13,680 Speaker 1: not like a crisis situation that way, It's not one 90 00:05:13,720 --> 00:05:15,400 Speaker 1: of them, you know, I don't think we're going to 91 00:05:15,560 --> 00:05:19,320 Speaker 1: probably see the big bang crisis type of thing. I 92 00:05:19,360 --> 00:05:21,440 Speaker 1: think that what we're going to see is this kind 93 00:05:21,480 --> 00:05:25,839 Speaker 1: of situation in which there's the dynamic of a relative stagnation, 94 00:05:26,040 --> 00:05:32,360 Speaker 1: low returns and also the uh you know, not much 95 00:05:32,400 --> 00:05:35,640 Speaker 1: picking up and low returns and sagment and volatile markets 96 00:05:35,839 --> 00:05:38,920 Speaker 1: choppy or markets probably over a period of time. So 97 00:05:38,960 --> 00:05:43,560 Speaker 1: because like what we've seen this year, because as you 98 00:05:43,720 --> 00:05:45,640 Speaker 1: as you have the zero interest rates and then you 99 00:05:45,640 --> 00:05:48,240 Speaker 1: have the market sell off, then the market sell off 100 00:05:48,240 --> 00:05:51,560 Speaker 1: brings back risk premiums and there's a lot of liquidity, 101 00:05:51,640 --> 00:05:54,320 Speaker 1: and so from an investor point of view, okay, then 102 00:05:54,360 --> 00:05:56,960 Speaker 1: you might move out from something like cash or a 103 00:05:57,000 --> 00:06:00,320 Speaker 1: bond or something to uh an asset like equity, and 104 00:06:00,320 --> 00:06:02,279 Speaker 1: you might move out, and so you have this movement 105 00:06:02,360 --> 00:06:06,159 Speaker 1: up and down as those risk previous change. Us have 106 00:06:06,240 --> 00:06:10,720 Speaker 1: to decide that that those risk assets have repriced enough 107 00:06:11,200 --> 00:06:15,160 Speaker 1: to create an attractive enough spread between that's that's right. 108 00:06:15,320 --> 00:06:18,919 Speaker 1: Are we there yet? Um? Well, you know, as I 109 00:06:19,640 --> 00:06:22,120 Speaker 1: no one knows exactly what that range is. I think 110 00:06:22,160 --> 00:06:25,159 Speaker 1: that becomes the nature of it. And then we have 111 00:06:25,360 --> 00:06:30,520 Speaker 1: to see what that whether there's that negative feedback loop. Okay, 112 00:06:30,560 --> 00:06:34,159 Speaker 1: because that part of the negative feedback loop is another word. 113 00:06:34,240 --> 00:06:37,640 Speaker 1: Stocks go down, and that then means the wealth effect 114 00:06:37,720 --> 00:06:40,839 Speaker 1: is lessen and as the dollar goes up and the 115 00:06:40,880 --> 00:06:44,919 Speaker 1: wealth effect is and that makes us less competitive. Both 116 00:06:44,960 --> 00:06:47,360 Speaker 1: the rise and the value of the dollar and the 117 00:06:47,440 --> 00:06:50,640 Speaker 1: decline in the value of stocks is essentially a tightening 118 00:06:50,640 --> 00:06:53,760 Speaker 1: of monetary policy. And there's a type globally, there's a 119 00:06:53,800 --> 00:06:59,040 Speaker 1: tightening of world economic activity. And those negatives, how exactly 120 00:06:59,080 --> 00:07:02,359 Speaker 1: they pass through to the economy is the asymmetric risks 121 00:07:02,400 --> 00:07:05,360 Speaker 1: that I'm referring to. I see, Ray, while you're sitting here, 122 00:07:06,360 --> 00:07:08,240 Speaker 1: I want to touch on something that I know is 123 00:07:08,240 --> 00:07:10,240 Speaker 1: important to you because it's attracted a little bit of 124 00:07:10,240 --> 00:07:14,120 Speaker 1: attention lately. Shall we say, which is Bridgewater's culture and 125 00:07:14,160 --> 00:07:16,640 Speaker 1: the attention that it's attracted is due to this notion 126 00:07:16,680 --> 00:07:18,640 Speaker 1: that there's some kind of a dispute, if you will, 127 00:07:18,720 --> 00:07:21,360 Speaker 1: between you and your co c. I oh, Greg Jensen, 128 00:07:21,640 --> 00:07:23,640 Speaker 1: give me a sense of what's going on behind the scenes. 129 00:07:24,280 --> 00:07:26,440 Speaker 1: I mean, I don't know, and the but the culture 130 00:07:26,520 --> 00:07:34,440 Speaker 1: is people are asking questions, okay. Um. The way that 131 00:07:34,520 --> 00:07:40,840 Speaker 1: we succeed is by having thoughtful disagreement when I um, 132 00:07:40,880 --> 00:07:43,920 Speaker 1: I'm so scared about being wrong and the key to 133 00:07:44,000 --> 00:07:47,320 Speaker 1: my success in our success is to try to find 134 00:07:47,360 --> 00:07:50,560 Speaker 1: people who disagree with us, who are smart and try 135 00:07:50,560 --> 00:07:53,560 Speaker 1: to understand their point of view so that we can 136 00:07:53,600 --> 00:07:57,720 Speaker 1: have disagreement. In order for us to have independent thinkers, 137 00:07:58,200 --> 00:07:59,880 Speaker 1: there's going to have to be disagreement.