Bridgewater Investment Chief Warns “Big Shakeout” in Markets is Coming

Date | 13-02-2018 - 03:35 PM Article Type | Stock Markets Region | World
© Reuters. Bridgewater investment chief warns “big shakeout” in markets is coming - Bob Prince, co-chief investment officer at the world’s largest hedge fund warned Monday that a “big shakeout” in global markets is coming as investors adjust to a faster pace of interest rate increases.

In an interview published in the Financial Times, Prince, co-chief investment officer at Bridgewater warned that markets are entering a new era of volatility and said last week’s market turbulence was set to continue.

“There had been a lot of complacency built up in markets over a long time, so we don’t think this shakeout will be over in a matter of days,” he said. “We’ll probably have a much bigger shakeout coming.”

A rout in financial markets last week saw $4tn wiped off the value of global shares and the U.S. market entered into a correction after falling more than 10% from January’s record highs.

Wall Street staged a late rally on Friday but U.S. markets still recorded their worst week in two years as fears of faster inflation and thus more aggressive interest rate increases sparked a wave of selling.

“Last year equity markets had a free run. But this year we are going from central banks contemplating tightening policy to actually doing it,” Prince said. “We will have more volatility as we are entering a new macroeconomic environment.”

Prince also said that he expects global growth to remain on track despite the shift in central bank policy and heightened volatility in markets.

“The real economy will outperform financial economy this year, the opposite of what we've seen in recent years,” he said.

Author: Heng V. Mony
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