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Ray Dalio, Founder & CIO Mentor Bridgewater Associates, speaking on CNBC’s Squawk Box at the WEF Annual Meeting in Davos, Switzerland on Jan. 16th, 2024.
Adam Galici | CNBC

Billionaire investor Ray Dalio thinks reducing the U.S. budget deficit could stabilize the bond market and lower interest rates.
The founder of Bridgewater, one of the world’s largest hedge funds, said the current projected deficit is 7.5% of U.S. gross domestic product. If that ratio goes down to 3%, the supply-demand imbalance in the bond market would be lessened significantly, Dalio said.

“It’s almost a black and white situation,” Dalio said on CNBC’s “Squawk Box” from the World Economic Forum in Davos, Switzerland. “All those bonds have to be sold … there’s a tremendous supply … It’s happened many times before, so we have to stabilize that, and we can do it.”
Rising financing costs along with continued spending growth and declining tax receipts have combined to send deficits spiraling and have pushed the national debt past the $36 trillion mark. In 2024, the government spent more on interest payments than any other outlay other than Social Security, defense and health care.
The widely-followed investor said reducing the deficit can be achieved through higher taxes, lower spending or a combination of the two, so long as politicians work together to solve the problem.
“That’s what I call the 3% solution,” Dalio said. “We have so much debt that the interest costs on the debt is more important than spending and taxes …. our problem isn’t the deficit. Our problem is the politics, the fragmented politics.” More

“Official Trump,” a token representing the new U.S. leader, plunged as much as 26% in 24 hours.
A meme token released Sunday by first lady Melania Trump also crashed.
Trump’s inauguration Monday lacked any concrete policy announcements regarding crypto.

A cartoon image of US President-elect Donald Trump with cryptocurrency tokens, depicted in front of the White House to mark his inauguration, displayed at a Coinhero store in Hong Kong, China, on Monday, Jan. 20, 2025. 
Paul Yeung | Bloomberg | Getty Images

Bitcoin and other cryptocurrencies sank on Tuesday, as bullish investor sentiment surrounding cryptocurrencies cooled after President Donald Trump’s inauguration.
“Official Trump,” a token launched last week that represents the new U.S. leader, plunged as much as 26% in 24 hours, according to CoinGecko data. Meanwhile, a meme token released Sunday by first lady Melania Trump, roughly halved in price in a day.

Bitcoin dipped as much as 5% Tuesday morning before paring losses slightly. The world’s largest digital coin was last down 2%, trading at $104,375. XRP, a smaller token, fell 4%. Ether was flat.
Crypto investors have hailed Trump’s arrival to the White House as a positive moment for the industry. The president has promised to introduce policies supportive of cryptocurrencies, including an accommodating regulatory framework and a federal bitcoin hoard.

While Trump is viewed as set to benefit crypto, his inauguration Monday lacked any concrete policy announcements regarding the sector. That appeared to be the primary factor taking the wind out of the crypto market’s sails on Tuesday.
Kenneth Lamont, a principal at Morningstar, warned investors not to jump into crypto trading without being properly informed about the risks involved.
“If Donald Trump delivers on his election promises, we could see cryptocurrency markets continue to surge. However, investors would do well to resist the siren call of fear of missing out, and sit on their hands,” Lamont said in emailed comments Tuesday.

Cryptocurrencies are known to be volatile. Bitcoin, the world’s largest digital coin, has previously risen or fallen by thousands of dollars in a single day. Alternative coins, or “altcoins,” like ether and XRP, have proven even more more prone to fluctuations.
“Fear of missing out is not an investment strategy. For many investors, the lure of easy wealth is strong,” Lamont said, adding that retail investors “tend to be poor at market timing, buying and selling at the worst moments.” More

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Chinese Vice Premier Ding Xuexiang warned there are “no winners” in a trade war.
“Protectionism leads no where. [A trade war has no winners,” Ding said Tuesday, according to an official English translation.
Returning U.S. President Donald Trump indicated tariffs could be a way to pressure China into forcing Beijing-based ByteDance to sell TikTok, whose future availability in the U.S. is now in question.

Chinese Vice Premier Ding Xuexiang speaks during COP29 on Nov. 12, 2024.
Sopa Images | Lightrocket | Getty Images

BEIJING — Chinese Vice Premier Ding Xuexiang warned there are “no winners” in a trade war, as the world’s second-largest economy faces the possibility of tariffs under the freshly-inaugurated administration of Donald Trump.
“Protectionism leads no where. [A] trade war has no winners,” Ding said Tuesday, according to an official English translation. He was speaking at the World Economic Forum in Davos, Switzerland.

The vice premier began his address largely by referencing Chinese President Xi Jinping’s speech at Davos in 2017, which took place just days before Trump headed to the White House to begin his first term.
At the time, Xi had said that “pursuing protectionism is just like locking one’s self in a dark room. Wind and rain might be kept outside but so are light and air.”
After his second inauguration on Monday, Trump said the U.S. could levy tariffs on Mexico and Canada as soon as February. As for China, the returning U.S. president indicated tariffs could be a way to pressure the country into forcing Beijing-based ByteDance to sell TikTok, whose future availability in the U.S. is now in question.
“If we wanted to make a deal with TikTok, and it was a good deal, and China wouldn’t approve it, then I think ultimately they’d approve it, because we’d put tariffs on China,” Trump said. “I’m not saying I would, but you certainly could do that.”
Trump said he and Xi discussed TikTok and trade during a call on Friday. The Chinese readout of the exchange did not mention the social media app. Neither leader attended Davos this year.

Ding, who said he was attending Davos for the second time, is one of China’s four vice premiers. China economy has struggled with lackluster consumption and a real estate slump. Despite this, the country’s GDP officially grew by 5% last year after a flurry of stimulus announcements starting in late September.
In his speech on Tuesday, Ding attributed China’s economic challenges to the external environment and to “temporary pains brought [about] by our own economic restructuring.” He referenced that the country is trying to move away from real estate as a pillar of growth and toward new drivers such as high-end technology.
China’s technological achievements are the result of “open cooperation,” Ding added in a subsequent discussion with World Economic Forum founder Klaus Schwab. The Chinese official emphasized that Beijing is developing artificial intelligence for the “intelligent transformation” of its economy, and has institutions capable of controlling the emerging technology.
Under the administration of former President Joe Biden, the U.S. had said it was in competition with China and imposed sweeping restrictions that prevent Chinese companies from buying high-end semiconductors used for training artificial intelligence systems.”
“On the global governance of AI, this is a tough issue,” Ding said. “If we allow this reckless competition among countries to continue then we will see a grey rhino, what to do about it?”
He called for global coordination on AI governance through the United Nations, similar to nuclear or biological risks.
Ding broadly warned of “unimaginable consequences” if the world were to split into different systems, including a worst-case-scenario of a “relapse into confrontation.”
“That would be a situation [in which] no country can stay unafflicted,” Ding said.
— CNBC’s Jeff Cox contributed to this report. More

Donald Trump started his new presidential term with an unexpected show of restraint. Just a couple of months ago, Mr Trump had warned that he would announce hefty new levies on his first day back in the White House. Instead, he opted for a softer opening. He was set to issue a presidential memorandum, calling for an “America first” trade policy and a review of commercial relationships with China, Canada and Mexico. His measured start prompted relief in government offices and on trading floors around the world. Foreign currencies and stocks rallied. More

SO BEGINS Donald Trump’s tariff roller-coaster, sure to be a stomach-churning ride for the global economy. He started his first day in office with an unexpected show of restraint: rather than slapping hefty new tariffs on other countries, he instead issued a presidential memorandum calling for a review of unfair trade practices. It seemed to be a measured start for Mr Trump—at least on the protectionist front, if not his wider programme—prompting relief in government offices and on trading floors around the world. Foreign currencies and stocks rallied. More

Billionaire investor Stanley Druckenmiller believes Donald Trump’s re-election renewed a jolt of speculative enthusiasm in the markets and surging optimism within businesses.
“I’ve been doing this for 49 years, and we’re probably going from the most anti-business administration to the opposite,” Druckenmiller said on CNBC Monday. “We do a lot of talking to CEOs and companies on the ground. And I’d say CEOs are somewhere between relieved and giddy. So we’re a believer in animal spirits.”

While the notable investor, who now runs Duquesne Family Office, is bullish on the economy in the near-term, he remains somewhat cautious on the stock market because of elevated bond yields. He revealed that he is holding onto his short against Treasurys, effectively betting that bond prices will fall and yields will rise.
“In terms of the markets, I would say it’s complicated,” Druckenmiller said. “You’re going to have this push of a strong economy versus bond yields rising in response to that strong economy, and that kind of makes me not have a strong opinion one way or the other.”
The S&P 500 surged nearly 6% in November on Trump’s victory, bringing the benchmark’s 2024 gains to 23.3%. Trump’s promised tax cuts and deregulation have boosted risk assets dramatically, especially bank and energy stocks, as well as bitcoin, which just hit another record high Monday.
Druckenmiller, 71, said he would focus on individual stocks, not worrying about the broader market. The investor noted he’s bullish on companies where artificial intelligence is going to lower their costs and drive productivity. He didn’t reveal which AI stocks he’s betting on after selling out of Nvidia and Microsoft.
‘Risks are overblown’
As for concerns that Trump’s punitive tariffs would spoil the market rally and spike inflation, Druckenmiller believes that the revenue generated by duties could lessen the pressing fiscal problem in the country.

“We have a fiscal problem, we need revenues,” Druckenmiller said. “To me, tariffs are simply a consumption tax that foreigners pay for some of it. Now the risk is retaliation, but as long as we stay in the 10% range, …I think the risks are overblown relative to the rewards, the rewards on high.”

Trump’s trade memorandum to be issued Monday would not impose tariffs yet. His camp has been reportedly discussing a schedule of graduated tariffs increasing by about 2% to 5% a month on trading partners.
Druckenmiller once managed George Soros’ Quantum Fund and shot to fame after helping make a $10 billion bet against the British pound in 1992. He later oversaw $12 billion as president of Duquesne Capital Management before closing his firm in 2010.  More

U.S. President-elect Donald Trump speaks during a rally the day before he is scheduled to be inaugurated for a second term, in Washington, U.S., January 19, 2025. 
Brian Snyder | Reuters

President-elect Donald Trump is poised to sign a flurry of executive orders as soon as he’s sworn in, but imposing tariffs on U.S. trading partners won’t be one of the actions Monday.
Trump is set to issue a broad trade memorandum Monday that directs federal agencies to study and assess unfair trade practices and currency policies with other nations, especially China, Canada and Mexico. However, the memo stopped short at slapping any new duties on the countries.

The Wall Street Journal first reported on Trump’s move to hold off on imposing tariffs on his first day in the White House.
The president-elect’s plan on trade could be evolving from what he touted on the campaign trail. His camp has been discussing a schedule of graduated tariffs increasing by about 2% to 5% a month on trading partners, Bloomberg News reported last week.
Trump once made universal tariffs a core tenet of his economic campaign pitch, floating a 20% levy on all imports from all countries with a specifically harsh 60% rate for Chinese goods.
Many economists feared that such protectionist trade policy could make production of goods more expensive and raise consumer prices, just as the world recovers from pandemic-era inflation spikes.
— CNBC’s Megan Cassella contributed reporting. More

Chinese companies won’t likely step up investments in the U.S. under the incoming Trump administration, analysts said.
“That’s probably the last thing on Trump’s mind, is trying to incentivize [Chinese companies] to invest here,” said Rafiq Dossani, an economist at U.S.-based think tank RAND.
Chinese investment deals in the U.S. have slowed drastically since Trump’s first term, according to the latest American Enterprise Institute data.

Cho Tak Wong, the chairman of auto glass giant Fuyao Glass, bought the vacant General Motors manufacturing plant in Moraine, Ohio in 2014.
The Washington Post | The Washington Post | Getty Images

Chinese investments in the U.S. have dramatically declined since Donald Trump’s first term. This trend is unlikely to reverse as Trump returns to the White House, analysts said.
Trump has threatened additional tariffs on Chinese goods soon after his inauguration on Monday, building on an increasingly tough U.S. stance on Beijing.

“That’s probably the last thing on Trump’s mind, is trying to incentivize [Chinese companies] to invest here,” said Rafiq Dossani, an economist at U.S.-based think tank RAND.
“There’s an ideological mismatch. All the rhetoric is, keep China out of the U.S., let their products come in, which are low-end,” he said in an interview earlier this month. But other than that, “don’t, don’t let them come in.”
In the last several weeks, Emirati property giant Damac has pledged $20 billion to build data centers in the U.S., while SoftBank CEO Masayoshi Son announced a $100 billion investment for artificial intelligence development in the U.S. over Trump’s four-year term.

Chinese investment deals in the U.S. have slowed drastically, according to the latest American Enterprise Institute data. Just $860 million flowed into the U.S. in the first six months of 2024, following $1.66 billion in 2023. That’s down sharply from $46.86 billion in 2017, when Trump began his first term.
At the peak, Chinese companies had made high-profile U.S. acquisitions, such as buying the Waldorf Astoria hotel in New York. But regulators on both sides have stemmed the flow.

“Chinese investment in the U.S. has slowed down dramatically since Beijing tightened control over capital outflows in 2017, followed by a series of regulatory policies in the U.S. aimed at excluding investments in certain sectors,” Danielle Goh, senior research analyst at Rhodium Group, said in an email.
In the “foreseeable future,” she doesn’t expect Chinese investments in the U.S. will recover the peak levels seen during the 2016 to 2017 period. Goh pointed out that instead of acquisitions, Chinese companies have turned more to small joint ventures with U.S. companies or greenfield investments, in which business are built from scratch.
For example, Chinese battery manufacturing company EVE Energy is the technology partner with a 10% stake in a joint venture with U.S. engine company Cummins’ Accelera division, Daimler Truck and PACCAR. The companies announced in June 2024 they were kicking off plans for a battery factory in Mississippi that would begin production in 2027 and create more than 2,000 jobs.
Since the Covid-19 pandemic, the U.S.-China Chamber of Commerce has mostly helped Chinese e-commerce companies set up local offices, rather than establish manufacturing businesses, the nonprofit’s president Siva Yam told CNBC.
“Most of those investment nowadays tend to be a little bit smaller, so they are not on the radar, easier to approve,” he said, referring to regulators in both the U.S. and China. But he remained uncertain about whether Chinese companies could use investments to offset the impact of tariffs.
Individual U.S. states have grown increasingly wary of Chinese investment. Last spring, Politico reported that more than 20 states were passing new restrictions on land purchases by Chinese citizens and companies, or updating existing rules.
Chinese hackers in December targeted a government office that reviews foreign investment in the United States, CNN reported, citing U.S. officials. This was part of a wider breach of the Treasury Department, which declined a CNBC request for comment.

Deal-making strategy?

Trump has indicated tariffs may be used to coerce Chinese investment in the U.S.
In his speech accepting the Republican nomination, he said, “I will bring auto jobs back to our country, through the proper use of taxes, tariffs, and incentives, and will not allow massive auto manufacturing plants to be built in Mexico, China, or other countries.”
“The way they will sell their product in America is to BUILD it in America, and ONLY in America. This will create massive jobs and wealth for our country,” he said, according to an NBC News transcript.
Chinese battery giant CATL reportedly said in November it would build a U.S. plant if Trump allowed it. The company did not immediately respond to a request for comment.
Advocacy group Center for American Progress pointed out in December that during his first term, Trump cancelled restrictions on Chinese telecommunications company ZTE — just days after the Chinese government and Chinese banks invested $1 billion in a Trump Organization-affiliated theme park in Indonesia.
The Trump transition team did not immediately respond to a request for comment on the ZTE deal or the opportunities for Chinese companies to invest in the U.S.
Even if Trump welcomed more Chinese investment, or coerced it through tariffs, large investments are long-term processes that won’t happen overnight, pointed out Derek Scissors, senior fellow at the American Enterprise Institute.
Then there’s the unpredictability of the president-elect’s policies.
“Trump saying the U.S. is open to Chinese companies in 2025 is no guarantee [even] for 2029,” he said. More