it's difficult to go against ray dalio. he's giving us a long-term view.any investors are focused on tactical trading and tactical investing. with some stabilization in the market, that could be the case >> is there any indication of what people are selling or not buying >> a big area as you noted is the oil and gas space. >> just absolutely decimated >> hammered. along with the price of oil. now oil is in a bear market. the stocks -- >> they're selling off at almost twice the pace of oil. normally they track with oil the point we were making is that the stocks sold off -- oil is down 30% this year effectively the stocks are down 60%. >> yeah. >> so they're dumping it willy-nilly. >> it's rare to see versions like this we put together a chart, and this gap is one of the widest on records. investors, when they see that, they have not stepped in yet a lot of it is the price ofthe companies betting that the oilcn >> so clients going long and strong gold, not paying attention to china yet and ignoring oil and gas good stuff >> thanks for having me. >>> your to

have a situation in which there's a lot of pressure to cut rates. >> for more of the interview with ray dalio >>> joining me now is patrick palfrey from credit suisse thank you for being with us today. i will pick up on part of what mr. dalio said, believing there's a 40% chance of a u.s. recession before 2020. what do you make of those odds >> when you look at the indicators, i understand why he gets there right now we believe there's some interesting dynamics which are impacting it primarily the fact that the long end is falling because the industrial data is slowing and because there's a global overseas reach for yield someone in germany or japan is coming to the u.s. to get yield on the portfolio that's sort of suppressing the long end of the curve. the curve may not be the best indicato indicator. when we look around the spectrum, ism looks healthy. the consumer looks great it's partly an indicator there's a lot of things to look at >> we talk a lot about the consumer 70% of gdp is tied to consumer spending activity. could the consumer prevent a recession? >> absolutely. when you and i g

this has been a big topic for ray dalio.ks will not have any leverage left if they keep lowering interest rates. in the event of a recession, there is not many more levers they can pull. this is the big issue ray dalio is concerned about. vonnie: and a bright spots? annie: bridgewater's risk parity fund is up about 25%. that has been one bright spot for bridgewater. a greatannie, it is story and always good to follow what ray dalio is doing. annie massa with our story on the ray dalio fund performance. it is time for the stock of the hour. we are looking at best buy. the electronics retailer slumping after reporting second-quarter earnings. emma chandra is in london to take us through the numbers. emma: what they missed on was the key metric of same-store sales. you can see on the chart, they came in positively at 1.6%, but that was below analyst estimates. the company also lowered its sales forecast. wall street analysts and investors would not have liked that. at issue is the company's comments around uncertainty, particul

>> i wouldn't rule it out. >> that was ray dalio talking there. we are joined by jeffrey sachs how would you suggest investors position themselves now in the credit market given the low yields >> the yields have reached extraordinary low levels, and we think the rally has further to go but taking a long-term view we think they'll weaken. our advice is to look at areas of european fixed income that are less extended. specifically we like european high yield, they rallied on average 8% year to date, they are still yielding 3.7%. we think when the ecb starts buying, they'll be possibly buying for themselves, if not they will get investors looking at high yield because they're constrained in buying investment grade and high yield bonds in europe could rally further >> we will talk more about the european market in a short while. i want to bring it back to the u.s. it's been a week of volatility as far as the data is concerned. the messaging. what the fed will do market expectations of what the fed will do. the data we had yesterday was one of continue

hedge fund titan ray dalio sounding a note of caution on the u.s. interview with ynbc he said the economy is taking a turn for the worst and cutting interest rates this late in the economic cycle may not be as effective usa a stimulus e made a call on the odds of a coming recession. >> recessions are always inevitable the only question is when. >> do you see one coming >> yeah, i think that in the next two years, let's say prior to the next election, there's probably a 40% chance of a recession. and i think that you are seeing this around the world. >> on the flip side, last hour we heard from david rubenstein, the co-founder of the carlyle group, and he said, not so fast. >> i don't know when recession is going to occur. we have them on average every seven years. we are now ten years without a recession. that's very long there's no guarantee there will be a recession any time soon the u.s. economy is actually in pretty good shape. we're not an island though, and there's no doubt as economies in european of europe and asia slow down and go into a re

ray dalio's flagship fund is missing out on the rebound that some macro managers are enjoying.lpha fund at bridgewater associates has tumbled 6% through august. others fared even worse. this as the msci world index was up 13% in the same time period. bloomberg the losses were fueled by bearish wagers on global interest rates. joining us is a bloomberg opinion writer. it's not just ray dalio, some really big names have made wrong way that and lost out this year. >> yeah, but bridgewater is one of the absolute biggest. that he orsting alpha fund has taken such a large bet and got it so wrong -- has takenlpha fund such a large bet and got it so wrong. almost a record short out there. so this is fighting against the tide. this is a story about u.s. treasury particularly, but bonds in europe as well, have been fighting against what most think is an illogical move lower. they have looked at this and gone that this can't be right. the market will right itself, and it hasn't, it has kept going. everyone keeps scrambling and having to go with the tide. slow money come in this sense, has

alix: not ray dalio, i guess, is what we learned.hat i also wondered is that as we get closer and more tariffs are unveiled, the pushback from the business community. as late earnings rolled out, we seen best buy warning on trade. we had the mega horn from the u.s. chamber of commerce talking about business confidence faltering, companies taking stock in uncertainty a home and abroad. shouldlieve trump and xi withdraw the tariff schedule and restart negotiations. what's interesting for me is that in the peace, he said businesses agree with you. we want to get something better, but we don't agree with the way you are doing it, and now we are starting to see the real-world effects. david: and by the way, democrats and republic tickets -- and republicans agree on this. but there is a game of chicken being played by the president before elections. he's got to turn this around or he may have trouble with reelection. lisa: i think the key question here is what is the tipping point where he can't walk it back just based on rhetoric. just sa

ray dalio missing out on the rebound some managers are enjoying this year.ater associates has tumbled through august 23. a source tells bloomberg the losses were fueled by bearish wages on global interest rates. this is so interesting. so many conversations i have had is whether it is starting to get painful to actually be underway bonds given that gravitational pull we have been seeing on yields this week alone. matt: that is the amazing thing. that such towering giants of these markets made the wrong call. we were watching it happened. now it has unfolded like a slow-motion car accident. he is not alone. pimco has taken a hit. some of the biggest names in the market have really gotten the interest rate story wrong. let's talk to another big-name. wouter sturkenboom is still with us. don't laugh. you are a valued guest here. you are underway global bonds. -- underweight global bonds. your response? wouter: very important to highlight we are underweight because we are bullish on interest rates. we have a sizable high-yield position which still has duration,

it is a tale of two titans, we heard from ray dalio and david ruben ste rubenste rub rubenstein in theast 24 hours. what do they think >> recession, yes, but the question is when there's probably a 40% chance of recession. >> the u.s. economy is actually in good shape. we're not an island though and there's no doubt as economies in europe and asia slow down and go into recession, we can't completely avoid that. but at the moment i don't see a recession in the imminent future >> okay. so the chart master is going to settle the score. >> carter. >> that's right. you want to go to the plasma and break it down? >> not cover i belong in obviously, but let's be honest. >> of course you do. you're in it. >> one was constructive. one said odds 40% in the next two years and the other said economy is fine, which is not bearish, which means consensus is very much that things are okay there are things that would suggest otherwise. of course, there's the yield curve. everyone is watching it. for the first time in a long time it actually ticked below zero so here is the two, ten-leer curve. i want t

romaine: let's talk to ray dalio and his alpha fund. it's not as alpha as people wanted to be.i: i really wanted to point out kathy burton on our hedge fund team had a story in january on a tiny pension fund in california pulling their entire investment from this fund. that was after a good year. he made the wrong bet on interest rates, but he's romaine: not really romaine: one. why are people voting against interest rates? they think the bond rally has gone too far, but he made a pretty critical bet early on. wasn't everybody making that bet? everyone was making that bet that they were going to rise. leaderk of america thought that he doubted the fed was going to cut a few months ago. romaine: but if you bond fund manager and you can just put your glass on it. joe: the ones who did that made a lot of money. the only way you loses by trying to outsmart it. sonali: a lot of macro funds were up this month. that's why pure alpha hurts a little bit more than it normally would. ubs is elevating more female bankers in order to push a diversity program of its leadership. tell us about

to cut rates this year and talk of global recession continues to be a topic all around the world ray dalioalking to one of our affiliates on cnbc listen to that >> recessions are always inevitable in the next two years, prior to the next election, probably a 40% chance of a recession and i think that you're seeing this around the world. you willsee greater interest rate cuts as you start to see the world economy starting to slow down. and i think you're seeing that being led now by the bonds so we have a situation in which there is a lot of pressure to cut rates. >> the question is, can you cut your way out of it, you know do you have bullard on the tape this morning saying you have to get worried if you have a longer period of an inversion, tom lee, this morning, arguing for a 75 basis point cut in september that's kind of where we are. and whether it is effective or not is anyone's guess. >> and then the corollary to dalio, of course, david rubenstein, co-founder of carlisle, talking about the fact that negative interest rates do not necessarily preclude a recession in various economies

i'll pass. >>> welcome back bridgewater associates founder ray dalio out with new comments on the chinarade war on a video he posted online yesterday. he said investors still have an historic opportunity to buy into china as it opens its markets to foreign investors. he compares to investing in china to investing in the british empire in the industrial revolution >> i believe that china is a competitor of the united states or chinese businesses will be competitors of american businesses and other businesses around the world and that you're going to therefore -- you want to be, if you're diversified, you want to have bets on both horses in the race >> he's had some long debates with us about the role of china the u.s. and what he thinks of as a potential long-term conflict between both countries. to me it's interesting that he wants or is encouraging people to invest in china i believe they have a fund in china. they do some work in china already. >> he has 1$125 billion he's got to diversify. he has to be invested in china the question i would ask him, for the viewers, how do they inves

there's a lot of commentary, steve, today, ray dalio, 40% chance of a recession before the election what do you make of it >> rubinstein says no recession. i'm betwixt and between like everybody else one day the bulls are in charge, the next day the bears are in charge, each runs with their football in respective directions we have global economic weakness, u.s. pretty strong, running 2.1% in the third quarter, that's because of the strength of the u.s. consumer. we have the bond market calling for inversion. the economic data says maybe not so quick on the recession story. we have this interesting split in the u.s. economy with the consumer doing pretty well and manufacturing, you know, pretty darn close to contributing. globally manufacturing has been contracting. i just looked at a dozen different growth rates and every one of them is lower globally than it was the prior quarter, scott. i think there's an argument for cut. i don't think powell has shown himself to be somebody who talks the market down or up either way from where it is i think he likes to get that pure market signal wh

. >> back to china for a moment, we did hear from ray dalio earlier, bridgewater, one of the largest hedge funds, here's what he had to say about -- >> i believe the china is a competitor of the united states or chinese businesses will be competitors of american businesses and other businesses around the world and that you're going to therefore you want to be, if you're diversified, having bets on both horses in the race >> not quite sure what that means. but okay >> well -- >> bet on both horses in the race that brings me to alibaba. bet on them, they have have an enormous issue in hong kong, issuance, not an issue, issuance of stocks. can you still do that in the current environment if you're alibaba? i don't know the answer. i haven't heard from them. >> demand economy. remember those terms command economy. got to do what they want how are the nine state-owned enterprises doing? how about ious, the new york times, pretty good quarter, the failing new york times you look at that, why isn't that in the conversation? why is that abstract ray dalio will stick with that view until the

ray dalio thanks central banks are losing the ability to reverse an economic downturn, they says thebal economy enters what he says is the late stages of a long-term debt cycle. the billionaire founder of bridgewater associates says interest rates get so low that lowering them enough to stimulate roads does not work well. -- to stimulate growth does not work well. hong kong police band protests set for saturday. organizers said the move could anger demonstrators ahead of a plant 13th straight week of pro-democracy marches. he was earlier reported police believed the protests were too risky due to safety concerns. local news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: turning to italy, the country's acting prime minister has already led an unstable coalition of two disparate parties. today he will get a second chance. the president is due to give thee a mandate supported by five-star movement and the democratic party, two long-time rivals who have little in common. let's go to maria, who has been covering thi

maria: let me ask you about the ray dalio posting. urging investors to buy into china. he had this to say in a video online yesterday. >> would you have not wanted to invest with the dutch and the dutch empire, would you have not wanted to invested in the industrial revolution and british empire, would you have not wanted to invested in the united states and the united states empire? i think it's comparable. i believe that china's a competitor of the united states or chinese businesses will be competitors of american businesses and other businesses around the world and that you're going to, therefore, you want to be -- if you're diversified, you want to have bets on both horses in the race. maria: your reaction, ken and how prevalent is china investing from the hedge fund world? >> well, it's huge. i think that definitely you're seeing more and more funds -- they've been that way for quite a long time now, 10 or 15 years, you've seen increases in hedge fund capital allocations to china. china is trying to accelerate some of their chan

>> ideally, absolutely, but i think we are on praecipes if you read ray dalios' book, the painful optionather than having debt crisis, if you go back, some of the things people from the left have coming in, this is not the time of spending tons of money in the environment, spending tons of money on free education and free health care, it's not the time and the cycle because we are loaded down. maria: would you allocate money in the stocks right now? >> no, too high for me. maria: selling to any rallies? >> i'm actually selling into some of the rallies on certain stocks, i'm lowering my equity, at the firm we have very low exposure to equities, utilities, we have been doing great all year because of the defensive plays, personally i'm unloading stocks for the fall. maria: nancy are you on the other side of the trade? >> i am. [laughter] >> we will talk about how you're allocating capital. francis, good to see you, thank you so much for joining us. coming up wild fires ravaging the amazon rain forest with no end in sight, heavy smog heading over several brazilian cities, harry reid going a

one side, ray dalios' piece on paradigm imshifts, maybe the best piece his written okay we got negative this giant decade-long liquidity-driven rally. and so when you really step back, the macro's ldangerous. you are going toe surf that la leg of this big rally. i'm short osteoyawn 100 year bonds at 96 basis points like you think there has been two more warse1 in the last 1 hundred years. the currency became toilet paper at one point.xd you can borrow money less than 1% for a hundred years it makes no sense. we're in a strange paradigm for investing in general it's why lots of guys aree1 buyg gold, lots of guys are skeptical of the equity market so it allows the equity mark to have a rally for the skepticism. but it doesn't mean it's a great safe-rick reward. >> i know everybody out there, all your fans, are they were on the edge of your seat when you said you are basing the -- it's full of money then you said they're buying gold and they're all ready for you to say bitcoin and you didn't let's not. we'll do that i know they're all out there going okay.e all right. you are leading to