Dalio is right to short Europe, strategist says: 'The pain will go on for quite a while'

cnbc.com:

Billionaire investor Ray Dalio is right to have bet against European stocks, and global markets still have a rough road ahead, according to Beat Wittmann, partner at Zurich-based Porta Advisors.

Dalio's Bridgewater Associates has at least $6.7 billion in short positions against European stocks, according to data group Breakout Point, which aggregated the firm's public disclosures. It is unknown whether Bridgewater's shorts are outright bets against the stocks, or part of a hedge.

The Connecticut-based fund's 22 short targets in Europe include a $1 billion bet against Dutch semiconductor equipment supplier ASML Holding, $705 million against France's TotalEnergies and $646 million against French drugmaker Sanofi, according to the Breakout Point data. Other big names also shorted by the firm include Santander, Bayer, AXA, ING Groep and Allianz.

«I think he's on the right side of the story, and it's quite interesting to see what strategies have performed best this year,» Porta's Wittmann told CNBC on Friday.

«It's basically the trend-following quantitative strategies, which performed very strongly – no surprise – and interestingly the short-long strategies have been pretty disastrous, and of course, needless to say that long-only has been the worst, so I think right now he is on the right side of this investment strategy.»

The pan-European Stoxx 600 index is down more than 16% year-to-date, although it hasn't quite suffered the same degree of pain as Wall Street so far.

However, Europe's proximity to the conflict in Ukraine and associated energy crisis, along with the global macroeconomic challenges of high inflation and supply chain issues, has led many analysts to downgrade their outlooks on the continent.

«The fact that