UPDATE 1-Bridgewater's Jensen says markets not fully pricing the crisis
(Adds comments by Jensen)
By Carolina Mandl and Svea Herbst-Bayliss
NEW YORK, Sept 12 (Reuters) - Greg Jensen, co-chief investment officer of Bridgewater Associates, said on Monday that prices in financial markets have not been fully priced to a recession and that the hedge fund can create returns to investors by shorting assets.
"I think the biggest mistake right now is the belief we're going to return to essentially prices similar to the pre-COVID," Jensen said at a hedge fund conference in New York.
Jensen said investors are not pricing how constrained policy makers would be to intervene in an inflationary environment. For this reason, he said a recession is likely to last longer and to be large and difficult.
In his bearish outlook for the global economy, he said markets will likely react to a European crisis only when it is "deeply upon us", while the United States is the center of the financial bubble most at risk to what is happening now. Given this scenario, Jensen said the world's biggest hedge fund can create returns to investors by shorting some assets. Bridgewater has been shorting European stocks this year, for instance. (Reporting by Carolina Mandl and Svea Herbst-Bayliss in New York; editing by Jonathan Oatis)
