Ray Dalio Warns SVB’s Collapse Shows Cracks Widening in Global Finance

Bridgewater Associates founder Ray Dalio warned Silicon Valley Bank’s failure shows cracks widening in global finance, joining other US billionaires raising the alarm on fallout from the lender’s collapse.

“This bank failure is a ‘canary in the coal mine,’” Dalio said in a newsletter Tuesday. It’s an “early-sign dynamic that will have knock-on effects in the venture world and well beyond it.”

Ray Dalio, billionaire and founder of Bridgewater Associates LP, speaks during the Milken Institute Global Conference in Beverly Hills, California, U.S., on Wednesday, May 1, 2019. The conference brings together leaders in business, government, technology, philanthropy, academia, and the media to discuss actionable and collaborative solutions to some of the most important questions of our time. Photographer: Patrick T. Fallon/Bloomberg

Dalio, 73, built one of the world’s biggest hedge funds through focusing on economic trends such as inflation, interest rates and foreign-exchange rates before giving up control of Bridgewater last year.

He said SVB’s collapse underscores how the global economy is entering a new era after central banks hiked interest rates over the past year to curb surging inflation. Dalio now expects problems to start mounting in the fallout from contractions in debt and credit markets.

“It is a very classic event in the very classic bubble-bursting part of the short-term debt cycle,” said Dalio, who has a net worth of $16.2 billion through the Westport, Connecticut-based hedge fund he founded more than four decades ago, according to the Bloomberg Billionaires Index.