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Margo Cook will join Mike McGavick as co-Chair of Bridgewater’s Operating Board of Directors. Margo has been part of the Bridgewater community since 2021, currently serving as an Outside Director on our Operating Board, and brings more than 30 years of executive leadership, operating experience, and innovative thinking as an investor.

Long before Angela Ruggiero (’14-’15) joined Bridgewater Associates, it became clear that she thrives on the cutting edge. At nine years old, she was cut from an all-star hockey team for being a girl, even though she was among the best players on the ice. Her father gave her a choice. “You can quit and prove them right, or you can get on the horse and prove them wrong,” she recalls him telling her. “I chose the latter, and it was the best moment of my life.”

As various announcements and actions by the US and China pertaining to tariffs and trade come forth, they of course have direct implications, but to a significant extent each action is intended to achieve some higher-level purpose. In some cases the goal is more clearly evident, and in other cases it sits deeper in the background. In order to more clearly understand what is going on and to anticipate how things might play out, below we have mapped out what we see as each side’s key overarching goals, connected the various actions taken to them, noted their interconnections, and recognized other factors at play.

We are considering what the range of plausible economic outcomes is from here and the implications across that range. Data is starting to come in that confirms our analysis that the level of global GDP has dropped a little over 20%. This is of course catastrophic, and the rate of the downturn is unprecedented. But knowing what has occurred doesn’t do much to reduce the range of outcomes from this unique economic shock and the wide range of fiscal and monetary responses. Deep economic contractions that don’t quickly resolve themselves have second- and third-order linkages. This is the case whether a contraction is originally caused by central bank tightening in response to inflation, the bursting of a credit bubble, a commodity shock, a balance of payments crisis, or a pandemic-driven income shock. Adequate monetary or fiscal easing can mitigate these second-order effects, so understanding deeply how these tools work is a necessary step in visualizing how the economy and markets will unfold.

January 2012

The pandemic and the shutdowns that followed have opened two distinct but related holes—a hole in incomes (the real economy), and a hole in asset markets. If left unfilled, these holes would produce a self-reinforcing collapse and intolerable economic and social outcomes. The longer they persist, the greater the accumulated problems and the higher the likelihood of prolonged economic weakness as households and businesses sell assets and eat through cash balances until more and more entities are bankrupt. Faced with this, the main policy choice is whose balance sheets will bear the losses, which will determine to some extent how the economy rebounds after the health emergency eases. Many policy makers are now attempting to use government balance sheets to fill these two holes through coordinated monetary and fiscal policy (MP3)—filling the gap in markets with the central bank balance sheet through QE, and filling the gap in incomes with the government balance sheet through fiscal stimulus monetized by that QE. The intent is to avoid a collapse in markets and to bridge the gap in incomes so that when the pandemic is over companies are still intact, workers can get back to work, and the economy can quickly get back on its feet. In other words, policy makers hope to reduce the impact of the pandemic to a short-term interruption in activity and avoid long-term economic problems.

Sean is an Investment Associate and 11-year Bridgewater veteran who leads the firm’s currency investment research. As part of the Atlantic Council’s 2020 Millennium Fellowship class he joins a prestigious group of other leaders, including Bridgewater’s Steven Kryger and Karen Karniol-Tambour who were part of previous classes. The fellowship focuses on equipping young leaders to tackle the defining global challenges facing the next generation. Already Sean has been driving impact by tapping into his experience from Bridgewater and sharing insights on how to shift the fellowship into a virtual program which the fellowship’s program director has said has been incredibly helpful and engaging.

By guaranteeing very low interest rates years into the future, the central bank can leverage Yield Curve Control (YCC) policies to finance large government deficits without putting upward pressure on the cost of borrowing. Karen Karniol-Tambour and members of our research team explain how YCC has moved from an abstract concept to a practice that the world’s largest central banks have adopted or are heavily considering.

The rapid policy response to the COVID-19 pandemic has resulted in an unprecedented speed of asset reflation. What took almost two years to achieve during the 2008 financial crash and almost four years during the Great Depression has unfolded in only one month during the current crisis. Co-CIO Greg Jensen and members of our research team explore the unique lengths and the potential limits of policy makers’ efforts to stimulate the economy.

As part of Bridgewater’s Distinguished Speaker Series in which changemakers share their expertise, Shamil Idriss, CEO of the global peacebuilding organization Search for Common Ground, joined Bridgewater staff for a conversation that covered the dynamics of conflict, the state of conflict in the world today, and peacebuilding approaches that anyone can apply to their own lives — including at home and in the workplace. The efforts of Search for Common Ground around the world earned it a nomination for the Nobel Peace Prize in 2018.