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By Opalesque: Bridgewater Associates' co-CIOs argue in their latest newsletter that we are experiencing a once-in-a-generation economic and market shift. Now is very much a time to wake up and smell the coffee.
They identify three interrelated forces reshaping the global landscape:
1. A New Geopolitical and Macroeconomic Paradigm
The decades-long era of globalization, rising trade, and capital liberalization is ending, replaced by "modern mercantilism." The Trump administration has accelerated this shift with its "America First" approach, dismantling global interdependencies established since the post-war era. Under this new paradigm, states prioritize national wealth, strength, and self-sufficiency through active economic orchestration, including trade policies, transactional foreign policies, and strategic industrial investments in areas like AI/ML and semiconductor manufacturing.
2. Urgent Threats to Markets and Investment Portfolios
Current global asset allocations reflect winners from the previous paradigm, particularly US equities that benefited from growth, proactive Federal Reserve policies, and US outperformance. These portfolios are now vulnerable to:
• Economic growth weakness
• Central banks' limited ability to ease into problems
• Equity underperformance
• US underperformance relative to global markets
The aut......................To view our full article Click here
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