Macros are bad. It's definitely not the time to invest in a modern weapons making business. Trump will bring peace on earth and any demand for defence systems that can be integrated across a wide range of military assets will evaporate, for sure.

Ray Dalio bets Trump steeling America for China war

Matthew CranstonUnited States correspondent

Nov 21, 2024 – 7.45am

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Washington| Billionaire hedge fund manager Ray Dalio has warned that Donald Trump will steel America for an economic, geopolitical and possibly military war with China during his presidency by making major changes to security, industrial and other domestic policies.

Trump and his team of loyalists are planning massive interventions in the US economy to prepare for this war even if it comes at the expense at America’s “free-market, profit-making system”.

Ray Dalio, billionaire and founder of Bridgewater Associates, says Donald Trump is planning massive interventions in the US economy. Bloomberg

Mr Dalio, founder and mentor chief investment officer of Bridgewater Associates, said working with US companies to make sure America produced all key technologies needed for the war was more important than “profit taking alone, because profit taking won’t achieve those goals”.

Investors should “pay attention” to policy shifts in areas that resulted in national security for energy and critical minerals, and that also supported the development of artificial intelligence.

“We should expect more government influence on private markets to achieve the government’s objectives. This is needed to achieve the grand plan to reshape the economy and prepare for war,” Mr Dalio said in a lengthypost on LinkedIn.

“The realisation that the United States is in an economic war and a geopolitical war, and could find itself in a military war, with China as well as with others like Russia, Iran, and North Korea, will have big effects on domestic security and domestic policies,” he said.

Mr Dalio, who runs the largest foreign hedge fund in China, with about $US5.5 billion ($8.5 billion) in assets under management, said the Trump administration would also undertake a “giant renovation” of government, like corporate raider Gordon Gekko engaging in a hostile takeover of an inefficient company.

Beyond profits

Since winning the November 5 election, Trump has moved swiftly to nominatetop members of his new cabinetto carry out his America-first mandate that includes protecting US manufacturing.

The president-elect pledged on the campaign, for example, to slap 10 to 20 per cent tariffs on all imports and 60 per cent on Chinese goods. The move could affect China’s already struggling economy, with knock-on effects for Australia and other major exporters to China.

Trump has alsoappointed billionaire Elon Muskand venture capitalist Vivek Ramaswamy to lead a “department of government efficiency”, putting the two entrepreneurs in charge of a promised effort to slash rules, bureaucracy and spending throughout government.

Mr Dalio said the Trump administration would prioritise teaming up with “national-champion companies” that could help achieve national security.

“Profit-making won’t achieve those goals. The high economic costs of being the dominant world power – i.e., of having the most important technologies, a strong military, and being able to provide soft power – will be greater than the profit-making approach can provide.”

Though Trump was willing to see some profit-making forgone to advance national imperatives, cutting costs and regulation would serve as a counterbalance for the private sector. Mr Dalio likened the president-elect to Gekko, the fictitious character in the 1987 filmWall Street,who ruthlessly cut costs in companies he took over.

“Trump and those he is choosing will reform government and the country like a corporate raider engaging in a hostile takeover of an inefficient company, making huge reforms to it by changing the people, slashing costs, and infusing it with new technologies.

“As long as the Trump-Musk partnership lasts, they will be the main designers and implementers of this new domestic order.

“These policies may well be great for Wall Street and some tech and most businesses that are plagued by regulations and worried about increased taxes. I am already seeing big changes in these people’s plans to do much more under the Trump administration than they could have done under a Democratic government.”

Last year, Mr Dalio warned that America and China were already on the “brink of war”, and the situation would only deteriorate in the run-up to the election. He said Japan will be America’s most important ally, while others such as the UK and Australia, were “not great powers”.