On Tuesday, April 15th, we kicked off a brand new Bloomberg Invest Talks series with a virtual fireside chat between Ray Dalio, Founder, Co-Chairman and Co-Chief Investment Officer of Bridgewater Associates, and Erik Schatzker, Bloomberg Editor-at-Large.
In case you missed it, below are some key insights from our conversation, but you can also view the entire event here.
How big will the COVID-19 economic fallout be?
- The hole to incomes in the US will be approximately $5 trillion dollars.
- The world economy will fall by approximately $20 trillion dollars.
“You’d be pretty crazy to hold bonds”
- During this period of low to negative rates, investors would be “crazy” to hold government bonds.
- The Coronavirus pandemic will result in the value of money going down while other asset classes will be big beneficiaries – including gold, some stocks and corporate bonds that have strong balance sheets.
- We will see the world order change based on these beneficiaries.
Post-pandemic wealth and societal shift
- There will be a significant shift in wealth distribution that follows the Coronavirus pandemic. Who ultimately gets what in this new economy will be crucial to the future world order, which will not resemble the one we are used to.
- You can only impose a certain amount of suffering on people before there is revolution and loss of productivity. As with the 2008 financial crisis and the Great Depression, governments are taking responsibility for doing whatever it takes to save their economies. However, they still have to prioritize which areas they allocate credit to and who is saved.
- We will know in the next 1-2 years if civil society will get through this pandemic harmoniously and what the implications will be for taxation.
The future of work
- Having studied pandemics we know that they come in waves. Returning to normal working conditions will rely on human inventiveness, virus testing processes and changes to protocols.
- Bridgewater Associates will be very conservative about returning to a pre-COVID-19 working environment having been early adopters of remote working.