Good evening, I'm William D. Cohan.

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Bill

BuzzFeed’s I.P.O., Dalio’s “Moral Lapse,” and the Humbling of Marcelo Claure

Observations on the latest Wall Street gossip and market signals as our twelve-year bull market begins to turn.

Each week, I receive feedback from readers and sources about Wall Street’s biggest characters and concerns. I’ll be engaging with some of those questions here—in addition to a few observations of my own.

Bridgewater founder Ray Dalio got himself in trouble this week when he equated Washington and Beijing while excusing China’s human rights abuses (including the recent disappearance of star tennis player Peng Shuai). Mitt Romney called it a “sad moral lapse,” but wasn’t Dalio just saying publicly what most investors on Wall Street believe privately? 

My sources on Wall Street basically take the view that they shouldn’t worry about things they can’t control. They have zero influence over whether the Chinese Politburo engages in extensive human rights abuses. It’s just not going to happen. But they can focus on whether their firms can be profitable in China—by underwriting stocks and bonds, by trading securities, by advising on M&A deals, by investing as a principal, by managing the wealth of more than 1.4 billion people, etc. And that’s all this boils down to: The hedge funds and big banks believe they can make a lot of money in China, and therefore they will be there. Their perspective is, leave the diplomacy to the diplomats. 

You can argue that these firms should have a stronger sense of moral rectitude and declare they will not do business in a country that treats its own people the way China has been known to treat its people. That’s a slippery slope for sure. I mean, the United States is not exactly a shining example of moral rectitude either. Does that mean Goldman should close up shop in this country? That’s laughable, obviously. And that’s essentially what Dalio is saying, whether you agree with him or not. If China is going to slowly but surely eat our lunch, as Dalio argues in his latest book, then it’s folly not to engage. (Bridgewater C.E.O. David McCormick is now distancing himself from Dalio, telling staff that they’ve always disagreed about China, but that’s not surprising given that McCormick is actively considering a U.S. Senate run.)

As for the criticisms of Dalio by Romney, I find it amusing that suddenly Republicans in Congress are finding the backbone to criticise China’s human rights abuses. Yes, Romney is one of the few sane Republicans in Washington. But where was their concern during the Trump Administration? Where is there concern about voting rights abuses? Where is there concern about the January 6 insurrection? Where is there concern about the millions of their constituents who refuse to get vaccinated because Republican leaders have filled their minds with misinformation? Or that the party continues to pretend that the 2020 election was stolen?

It looks like BuzzFeed is only going to raise only $16 million or so in its SPAC merger after investors withdrew about 94 percent of the money that the blank-check company had targeted. How bad is it? 

There’s no question we’re well past-peak in the two-year SPAC boom and the BuzzFeed merger is yet the latest example of how the smart money is souring on the asset class. But this story is far from over... 

FOUR STORIES WE'RE TALKING ABOUT