Ex-CIO of world’s largest hedge fund manager Bridgewater Associates Ray Dalio today in an interview with CNBC shared his take on current economic situation in US. The ace hedge fund manager also talked about his strategy to manage assets in 2023.
Yesterday, US FED increased the interest rates by 25 BPS. The crypto and US Stock markets have reacted positively to the news so far as top coins like Bitcoin and Ethereum are trading 3.5% and 6.8% higher in last 24hrs at the time of reporting.
Cash More Attractive To Bonds And Stocks
Ray Dalio who coined the famous phrase “Cash Is Trash” said that it’s no more true and that cash is the new king. He said that with high interest rates large as well as small businesses are facing a cash flow crunch.
As more and more businesses are unable to raise cheap debt or already have expensive debt on their balance sheets, cash has become highly attractive.
Ray also revealed that we are in a classic cycle driven by stimulations and high debt. In his opinion, this cycle is different from other previous cycles. This is due to large scale debt accumulations and FED controlling large part of supply demand on their balance sheet.
What’s Next?
Clearly, Ray suggests that cash is definitely attractive at the moment and the businesses with cash reserves can take advantage of the downturn. But he also emphasizes the large impact of global economics, high interest rates and debt in this cycle. So, it is not that easy to predict for businesses when is the right time to switch gears.
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