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Ray Dalio concerned about America postelection: ‘Both candidates worry me’

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Ray Dalio speaking with CNBC at the Future Investment Initiative in Riyadh, Saudi Arabia, on Oct. 30, 2024.

CNBC

A postelection America worries U.S. billionaire Ray Dalio, who called for reforms numerous times amid a political landscape strife with what he views as irreconcilable differences between both Democratic and Republican parties.

Speaking at the Future Investment Initiative conference in Saudi Arabia on Wednesday, the founder of the investment firm Bridgewater Associates spoke about major geopolitical and election-related concerns, the issue of rising U.S. deficit and how investors can best position their portfolios.

“Both of the candidates worry me,” Dalio told CNBC. “This left, right and fighting each other is a problem as it becomes more of the extremes. I think there needs to be a bringing of Americans together, that middle of that, and making great reforms. … There needs to be a strong leader of the middle, I believe, that makes great reforms. … Neither of the candidates does that for me.”

Dalio noted that Republican presidential candidate Donald Trump is “a lot more capitalist” than Democratic candidate Kamala Harris, and therefore better for domestic capital markets. However, he warned that there will be big deficits in an economy run by either party. Both candidates have major differences, including in tax policies, he added, noting that Trump’s plan to collect greater tariff revenue could lead to a spike in prices depending on how much that revenue is converted into internal productivity.

Consequences of the election are “really more a left-right question, and it’s a shame because we need to bring the country together in a smart way and make great reforms. We need to do that,” Dalio said. “The debt is concerning, the internal conflict is concerning, the external conflict is concerning and certainly the climate and the cost of the climate is concerning.”

PRO: Watch CNBC's full interview with Bridgewater Associates founder Ray Dalio

Dalio said he continues to be concerned about the increase in U.S. Treasury supply. About a third of U.S. Treasurys are held by foreigners, leading to a supply-demand issue that has more upside than downside risk for investors, he said.

“We have a real debt problem. … I think one man’s debts is another man’s assets,” Dalio said. “Treasury market is basis of all capital formation. At some point, when you combine it with the internal conflict issue, if you have a downturn — when the downturn comes — I’m worried about internal political and social conflict.”

When positioning one’s portfolio, the famed investor said gold should be part of a diversified and balanced strategy that reduces overall risk.

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Economics

Marco Rubio, MAGA and the State Department’s new look

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SOMETHING STRANGE happened on April 22nd. A top member of America’s cabinet announced big changes to his department—and it did not represent a MAGA-inspired overhaul. At a time when Donald Trump’s worst instincts are dominating public policy, it is notable that Marco Rubio’s reforms at the State Department resemble what might have come out of a conventional Republican administration.

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Economics

If Trump wants rate cuts, he would likely need to replace the Fed’s full board

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U.S. President Donald Trump speaks to the media during the annual White House Easter Egg Roll, on the South Lawn of the White House in Washington, D.C., U.S., April 21, 2025.

Leah Millis | Reuters

President Donald Trump’s public criticism of Fed Chair Jerome Powell has fueled concern that he will try to fire the central bank chief, but even that historic and legally questionable move may not be enough for Trump to bend monetary policy in his preferred direction.

Even firing Powell won’t necessarily get Trump the rate cuts he wants, according to multiple economists.

“In all likelihood, however, firing Powell would just be the first step in dismantling the Fed’s independence. If Trump is set on lowering interest rates then he will have to fire the other six Fed Board Members too, which would trigger a more severe market backlash, with the dollar falling and rates at the long end of the yield curve rising,” said Paul Ashworth, chief North America economist at Capital Economics, in a recent note.

Powell is chair of both the Fed board of governors and the Federal Open Market Committee, which sets interest rate policy. Ashworth pointed out that, while FOMC members usually choose to make the president-appointed board of governors chair to lead them, they can buck Trump and choose someone else as head of the rate-setting committee. And JPMorgan’s chief U.S. economist, Michael Feroli, said in a note Monday that “most of the power of the leadership stems from the historical deference” rather than the actual mechanics of the job.

Deutsche Bank senior economist Peter Sidorov echoed the idea that individual Fed members might vote against the wishes of a new leader if they feel Trump has overstepped.

“Note that while the Fed Chair has significant influence over the FOMC, monetary policy actions are taken by a majority vote so removing Powell could lead to increased pushback from other members against pressure on the Fed to deliver easier policy,” Sidorov said in a note to clients Tuesday.

This discussion on Wall Street comes after Trump has criticized Powell multiple times in recent days, including calling the Fed chair “a major loser” in a social media post Monday that rocked financial markets. White House economic advisor Kevin Hassett said last week that the president and his team were exploring the possibility of removing the Fed chair.

It is unclear whether Trump even has the authority to remove Powell before his term as board of governors chair ends next year. Powell has previously said he does not believe it is legally allowed for the president to fire him. The Supreme Court is set to hear an appeal about Trump’s firing of board members at other federal organizations in a case that could shed light on what’s next for the Fed.

The speculation about changes at the Fed, along with the ongoing tariff uncertainty, appears to have hurt investor confidence in the United States. U.S. stocks, bonds and the dollar have all fallen in recent weeks.

Wall Street pros worry that changes at the Fed could lead to further sell-offs and fears of higher inflation.

“Any reduction in the independence of the Fed would add upside risks to an inflation outlook that is already subject to upward pressures from tariffs and somewhat elevated inflation expectations,” Feroli said in a note to clients.

“It has been hoped that these adverse consequences would dissuade the president from threatening Fed independence, though so far the president has often followed through on his intentions,” he added.

— CNBC’s Michael Bloom contributed reporting.

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Economics

ECB’s Lagarde says she hopes firing of Fed’s Powell is not on table

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Christine Lagarde, President of the European Central Bank (ECB), comments on the central bank’s latest interest rate decision to journalists.

Photo by Andreas Arnold/picture alliance via Getty Images

European Central Bank President Christine Lagarde on Tuesday said she hoped that the prospect of U.S. President Donald Trump firing Federal Reserve Chair Jerome Powell was not on the table.

Asked by CNBC’s Sara Eisen if that scenario was a current material risk to markets, Lagarde said: “I certainly hope not … I hope that it is not a risk.”

Speaking on the sidelines of the IMF World Bank Spring Meetings, Lagarde told CNBC that she would not comment on the market implications of an event she hoped was “not on the table.”

U.S. President Donald Trump has been ramping up pressure on Fed Chairman Jerome Powell to reduce interest rates, warning the U.S. economy could slow down otherwise.

Powell had in turn last week suggested that Trump’s trade war could weigh on growth and fuel inflation. He did not indicate his expectations for the interest rate path ahead, but noted that “for the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”

Trump appointed Powell during his first presidential mandate, but is now looking into whether the Fed chief can legally be sacked before him term expires.

The ECB and the Fed have been diverging on monetary policy.

The euro area’s central bank has consistently cut rates as inflation closes in on its 2% target and economic growth in the bloc appears lackluster. The Fed has meanwhile been keeping rates steady this year, after enacting three consecutive cuts between September and December last year.

The ECB last week cut interest rates by a further 25 basis points, making its third reduction of 2025 and its seventh trim since it began easing monetary policy last summer. In its monetary policy statement, the central bank warned of a weakened growth outlook linked to the global trade uncertainty stoked by U.S. President Donald Trump’s tariff policy.

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