Seth Klarman Warns Trump’s “Erratic, Overconfidence” Could End Dollar Hegemony

“Can we say when it will end? No. Can we say that it will end? Yes,” noted Baupost’s Seth Klarman in the past, warning “And when it ends and the trend reverses, here is what we can say for sure. Few will be ready. Few will be prepared.’
It appears that moment is nigh, as NYT Dealbook reports the 59-year-old value investing legend – who manages $30 billion – is following in the footsteps of Bridgewater’s Ray Dalio (who recently flip-flopped on Trumphoria), and Bill Gross, reinforcing a countervailing view to the euphoria that has buoyed the stock market since Mr. Trump took office, describing ‘perilously high valuations.’
‘Exuberant investors have focused on the potential benefits of stimulative tax cuts, while mostly ignoring the risks from America-first protectionism and the erection of new trade barriers,’ he wrote.
‘President Trump may be able to temporarily hold off the sweep of automation and globalization by cajoling companies to keep jobs at home, but bolstering inefficient and uncompetitive enterprises is likely to only temporarily stave off market forces,’ he continued. ‘While they might be popular, the reason the U. S. long ago abandoned protectionist trade policies is because they not only don’t work, they actually leave society worse off.’

This post was published at Zero Hedge on Feb 7, 2017.