♪ >> happy weekend. welcome to the program that analyzes you for the week and your head. legendary hedge fund manager best-selling author is my special guest this weekend. first, these are both in standing by in the foxbusiness news room. wall street and main street. >> federal reserve chairman sending the market sewing this weekend after suggesting the bank should slow it space of hikes. openly critical of a washington

post piece. saying the fed is way off days. it has raised rates three times this year. for the major markets for the week, dow, s&p 500 and the nasdaq all closed in the green. dow, s&p 500 and nasdaq rose in the month of november. general motors driving in a new direction. laying off 14,000 workers. these are the companies biggest restructuring most since i filed for bankruptcy in 2009. the announcement drawing fire from president trump. the world's top leaders are gathering in argentina for the g20 summit. the president will discuss trade markets falling briefly on that peter would also attend the dinner. president trump and the leaders in mexico and canada signing the united states mexico agreement.

japanese media reporting that auto execs remaining in police custody until at least december 10 until authorities continue to investigate charges of financial misconduct. maria, back to you. maria: thank you so much. my guest is a giant in the world of investing. the founder and cochairman of bridgewater associates. with over 40 years has become the largest hedge fund. bridgewater manages $160 billion in mobile assets. also best-selling author. principles for navigating big that crises a look into how policy leaders should prevent the next financial crisis. thank you for joining us. your book is available on amazon it is actually free if you want to download it on principles.com

a subject people do not usually talk a lot about. $21 trillion in debt you are not really hearing worries from the leadership right now. would you agree with that? >> the usual way it happened is in bubbles. everyone is thinking the opposite. the same thing happens over and over again. maria: when i look at this in terms of debt crisis, let's stay on the global story today. what do you think is most important in terms of driving these markets? once again we have worries about growth. worries about trade in terrace. your thoughts on what is more important in terms of direction. >> of course the cycle and tightening up interest rates. where we are in terms of monetary policy.

the prices of assets. back in 2008, 20098, 2009 financial crisis. we had zero interest rates in the debt crisis. much like 1929-32. when you hit zero interest rates, central banks have to print money and buy financial assets. they bought $15 trillion trillion dollars of financial assets. pushed financial assets up. the economy grew. here we are. now we are in the late part of the cycle. you have to put on the brakes. it means they tie in monetary policy. the tightness of monetary policy together with what we had was a big fiscal stimulation in the form of not only the corporate taxes, but other forms. when there is capacity constrained. that had the effect. monetary policy matters.

where we are in the economic cycle matters. geopolitics matters. populism matters. the left and the right. populism has more conflict internally and more conflict externally. what also matters is emergence of china as a competitor on the world scene. changes in nature. those are the things that matter. >> what is your take? actually having an impact on assets. we seen the federal raise interest rates. also, that is a balance sheet that you just mentioned. the fed has to unwind $5 trillion, $4 trillion in this balance sheet. constitute pressure? is that another form of tightening? >> of course it's another form. the it's in the selling of

assets. reverse qe. a negative for assets. the page where they will do that will be important. they have raise the short-term interest rates up to equal the same as long-term interest rates all along the curve. you can get 3% anywhere in the curve. you can put your money and gas and not worry about price movements and get 3%. when you look at the returns of equities, it is not going to be that much more than 3% it has more risk and it. >> you don't think the fed will be able to tighten much more. you don't think the feds will be raising rates consistently next year? >> no. i think that what is in the curve, i think if they continue to raise rates, faster than is built into the curve, that will

affect all asset prices. all asset prices have that one interest rate. then asset is the purchase. the present value of the cash flow. when you buy an asset coming up pay a lump sum. there is a interest rate. it affects all assets. all of those, you raise the interest rate. faster than is built into the existing expectation in the curve that has a negative effect on asset prices. that negative effect also tightens credit. it puts the brakes on the economy. now we have a delicate situation did going into the next presidential election. that is why there is a delicate situation with monetary policy there. as a backdrop to that, we have a delicate political situation

because of the populism. in addition, the federal reserve and other central banks capacity to stimulate is less. the economy goes goes down, political implications, social implications because of the rich and poor, the left and right will be at more challenge. you will have an issue of whether monetary policy will be affect. >> this is not a widely held view. raising rates is much as some people thought next year. it is not a widely held view. >> that is what makes a market. maria: people start recognizing they will have a barrier to continue this rate rising environment, i would imagine that will be a big upside. >> i think you saw a bit of a realization of that by j powell. >> yes. you saw a shift. use all the markets react to that shift. getting very close close to the

neutral rate. that tone has changed relative to what it was not long before that. maria: really fascinating stuff. let's take a short break and come right back. hi, kids! i'm carl and i'm a broker. do you offer $4.95 online equity trades? great question. see, for a full service brokerage like ours, that's tough to do. schwab does it. next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service and low costs, backed by a satisfaction guarantee. if you don't like their answer, ask again at schwab.

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for about 50 years now. every time i encountered a new situation, i began to realize every time i was surprised, it was because of things that never happened in my lifetime before. i realized i needed to study other past periods. i found out the same things happen over and over again. i needed to understand how they worked and also the mechanics of them. these principles were written over the last 30 years. how would a deal with this situation. when the anniversary of the 2008 financial crisis came along, i was asked by a number of people to put that together so they would be a book that individuals could go to to understand that crisis.

also policymakers through the financial crisis who asked me to do that. there's a book book that they understand. it has been great. if we could agree on the template of how these things happen, the mechanics, cause-and-effect relationships, it's like a doctor understanding how the body works. if we do not have that kind of agreement of how the machine works, we will not know how to treat it. that is why put it together for the 2000 financial crisis. i am making it free so it can be a free download so anyone can see it. also the hard copy being sold on amazon. downloadable free copy so anyone could read it. >> give us the cause and effect. i know you said this. reminds you most of the 1930s. look back and give us a

cause-and-effect. jim grant when he was on this program, 135 years to get to the first trillion dollars in debt just a couple years to get all the way up to $21 trillion in debt. what does this mean for people? >> okay. trinity. that means as we learn, we raise raise our living standards. we have cycles around that. we have a short-term debt cycle. the recession. when you provide credit, you provide bonding power. when you provide credit, you also create debt. that means an obligation to pay back more than you earned. as you are going through that providing credit, in the early stages, everyone is

conservative. they do the calculations of what it will take to service that debt. later in the cycle, that causes asset prices to rise. because asset prices rising incomes rise, people get more credit worthiness. they have more collateral. they also gain confidence. as it continues, they become more emboldened and they pay less attention to the paying back. everybody is making money do it. later in the cycle when you are really coming to the constraints, central banks continue to tighten. you cannot continue to grow that way. that tightening of monetary policy, cracks begin to appear and vulnerabilities emerge. that produces the cycle on the downside. >> a worry this time around that the debt that the u.s. sold is getting more and more expensive as interest rates go higher.

someone said it will cost us a billion dollars a day just to service that debt. do worry about that impact over the short term on markets? >> i worry about fed policy. the change in the fed's attitude makes me worry less. as i go into next year and the year after, i worry about that a lot. that is a big thing. with that, i should also say, there are non-debt obligations which are very large that have to be considered, too. pension obligations, unfunded pension and healthcare. building up a lot of ious. maria: let's take a short break. g 20 taking place this weekend. turning our attention to china when we come back

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maria: welcome back. back with ray. i want to get your thoughts on china. the president has a sit down with the president of china. this is an open question, as far as where this goes. your thoughts on our relationship with china right now. >> there is a continuum of issues. there are trade issues and then there are ways of operating issues. i think the way of being issue is a real big issue.

i think as we step, we have to realize that the world is a small place relative to these two countries and they will bump into each other. we are in that world where they will be bumping into each other. we will have different expectations. one of the chinese leaders describe it to me as follows. what you value most is the individual in the united states. property rights pertaining to the individual. if you want to build the highway and their individuals on that property, you might have a challenge of doing that. in china, it is the family. the country consists of two characters. state family. he said, him, as a leader, and other leaders, basically.

himself as fraternally top down. they want their country to be great and they run it top-down. if we were to deal with the video games, it would not be tolerable to their kids to watch certain types of video games and a number of hours. in the united states would say individually that is a parental decision made bottom-up. we have this different way that has worked for them. top-down way versus the bottom-up. freedom within the boundaries. china has changed in terms of freedom pertaining to markets and so on. it is within boundaries. a very limited amount of privacy those types of issues. there would be a different approach. two different approaches. bottom-up, top-down.

your education system. how we take care of your education system. we would say along that freedom, freedom of debate in various ways. new wall street program. at-large with jared baker. right after this program. i hope you will tune in. >> we in the united states need to be very clear. entitled. we are right to reject chinese violation of the rules. rules that don't cover unfair practices.

what our position is, china can't succeed. not allowed to succeed or it is somehow wrong for china to succeed. a position for us politically. >> succeeding without stealing intellectual property. >> different perspectives of how to achieve success. they have a view of how to achieve success. we different view on how to achieve success. that is where the issue lies. you cannot expect them to change their approach. maybe there is a little bit. when we look at the issues, when there is a trade issue in in a way of being issue. maria: it is great to get your insight. thank you for joining us. don't go anywhere. more wall street right after

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i hope you will join us. thank you for joining us this weekend. that will do it for now. stay with foxbusiness. the premier with gerri baker begins now. ♪ >> hello. welcome to the debut of wall street journal at-large. i am the editor at large. doing something a little different from the current fair of television news and talk. not be looking for the quick soundbite of the easy sound line digging deep into the big issues of the day that are shaping our world. technology, markets, government, government, entertainmend