Bridgewater’s Jensen Says Stagflation Is ‘Real Risk’ to Assets

(Bloomberg) -- While inflation concerns mount for the U.S. economy, the real danger may be the combination of rising prices and a stagnating economy, said Bridgewater Associates co-Chief Investment Officer Greg Jensen.  

“The problem is stagflation -- that’s the real risk, and so many portfolios are massively exposed,” Jensen said Wednesday at the Bloomberg Invest virtual conference.

Policymakers have limited options to handle that, Jensen said in an interview with Stephanie Flanders of Bloomberg Economics. “The Fed faces certainly the problem of inflation being well above their target and the inability to be as easy as they’d like to be and being pulled along by that -- and certainly the increasing odds that we’re facing bubbles,” he said.

Jensen also said the economy is facing pent-up demand and a scarcity of supply.

Bridgewater is the world’s biggest hedge fund. It manages $105 billion in hedge fund assets. It’s Pure Alpha II hedge fund gained 1.4% this year through August.

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