Finance

Dalio says cutting budget deficit is crucial to stabilize bond market

Published

5 months ago

January 21, 2025

Ray Dalio, Founder & CIO Mentor Bridgewater Associates, speaking on CNBC’s Squawk Box at the WEF Annual Meeting in Davos, Switzerland on Jan. 16th, 2024.

Adam Galici | CNBC

Billionaire investor Ray Dalio thinks reducing the U.S. budget deficit could stabilize the bond market and lower interest rates.

The founder of Bridgewater, one of the world’s largest hedge funds, said the current projected deficit is 7.5% of U.S. gross domestic product. If that ratio goes down to 3%, the supply-demand imbalance in the bond market would be lessened significantly, Dalio said.

“It’s almost a black and white situation,” Dalio said on CNBC’s “Squawk Box” from the World Economic Forum in Davos, Switzerland. “All those bonds have to be sold … there’s a tremendous supply … It’s happened many times before, so we have to stabilize that, and we can do it.”

Rising financing costs along with continued spending growth and declining tax receipts have combined to send deficits spiraling and have pushed the national debt past the $36 trillion mark. In 2024, the government spent more on interest payments than any other outlay other than Social Security, defense and health care.

The widely-followed investor said reducing the deficit can be achieved through higher taxes, lower spending or a combination of the two, so long as politicians work together to solve the problem.

“That’s what I call the 3% solution,” Dalio said. “We have so much debt that the interest costs on the debt is more important than spending and taxes …. our problem isn’t the deficit. Our problem is the politics, the fragmented politics.”

Finance

UK’s FCA teams up with Nvidia to let banks experiment with AI

Published

29 minutes ago

June 9, 2025

Business Finance News

Jakub Porzycki | Nurphoto | Getty Images

LONDON — Britain’s financial services watchdog on Monday announced a new tie-up with U.S. chipmaker Nvidia to let banks safely experiment with artificial intelligence.

The Financial Conduct Authority said it will launch a so-called Supercharged Sandbox that will “give firms access to better data, technical expertise and regulatory support to speed up innovation.”

Starting from October, financial services institutions in the U.K. will be allowed to experiment with AI using Nvidia’s accelerated computing and AI Enterprise Software products, the watchdog said in a press release.

The initiative is designed for firms in the “discovery and experiment phase” with AI, the FCA noted, adding that a separate live testing service exists for firms further along in AI development.

“This collaboration will help those that want to test AI ideas but who lack the capabilities to do so,” Jessica Rusu, the FCA’s chief data, intelligence and information officer, said in a statement. “We’ll help firms harness AI to benefit our markets and consumers, while supporting economic growth.”

The FCA’s new sandbox addresses a key issue for banks, which have faced challenges shipping advanced new AI tools to their customers amid concerns over risks around privacy and fraud.

Large language models from the likes of OpenAI and Google send data back to overseas facilities — and privacy regulators have raised the alarm over how this information is stored and processed. There have meanwhile been several instances of malicious actors using generative AI to scam people.

Nvidia is behind the graphics processing units, or GPUs, used to train and run powerful AI models. The company’s CEO, Jensen Huang, is expected to give a keynote talk at a tech conference in London on Monday morning.

Last year, HSBC’s generative AI lead, Edward Achtner, told a London tech conference he sees “a lot of success theater” in finance when it comes to artificial intelligence — hinting that some financial services firms are touting advances in AI without tangible product innovations to show for it.

He added that, while banks like HSBC have used AI for many years, new generative AI tools like OpenAI’s ChatGPT come with their own unique compliance risks.