The inventory market faces a “cash-filled river” for spending, and the new government administration will “redirect” the river as there are no signs of fiscal or financial adjustment in the short term, Prince told CNBC Wednesday.
Bridgewater Associates’ co-chief investment officer said pandemic spending drives markets and this is unlikely to drastically replace now that elections are over. He said that 3 types of monetary resources are the source of expenses: money, credits and income.
“There’s a lot of cash there, there’s a lot of credit, basically from the government,” Prince said. These government loans have more than replaced other people’s lost source of income, while savings rates have increased. “
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“There is a huge amount of cash due to the inertia of past policies, and there are no signs of adjustment on the horizon,” Prince said. He also said that the United States will not see a fiscal or financial adjustment in the short term and that it will be more stimulus.
All of this creates liquidity that you probably wouldn’t replace with a Biden presidency.
“The effect of a replacement policy is a diversion of this river, however, it is a wonderful river that overflows on the banks. “
“You have wealth reserves, whether stocks or gold that benefit from the liquidity effect and you have other types of assets that suffer contraction and source of income and so until the virus’s effect on spending disappears, it will be a problem, persistent pressure. “Prince said.