Global markets continue climbing in early 2026, yet some of the world’s most influential investors are urging caution. Ray Dalio, founder of Bridgewater Associates, believes financial markets may be overlooking risks building beneath the surface of the global economy.
U.S. stocks remain strong for now. The S&P 500 closed at 6,836.17 on February 13, 2026, rising 0.05% for the day and staying near historic highs. Dalio, however, warns that investors should pay attention to what he calls a possible “capital war” between major economies.
The risk of a financial cold war
Instead of tariffs or military conflict, financial pressure could come through sanctions, asset freezes, and capital controls. Tensions between the United States and China may already be pushing the global financial system in that direction. Money moving freely across borders has long supported economic growth, so what happens if that flow slows down?
Large U.S. government deficits add another layer of concern. Washington continues funding spending gaps by issuing Treasury bonds, which foreign investors have traditionally purchased in large amounts.
Growing geopolitical risk could make those buyers more cautious. Policymakers might then need to raise bond yields to attract investors, increasing borrowing costs across the economy, or print more money to purchase debt, which could weaken the dollar over time.
High stock prices meet AI-driven confidence
Market valuations are also drawing attention. The Shiller CAPE ratio for the S&P 500 is nearing 40, a level reached only during the 1999 dot-com bubble. Much of today’s optimism is tied to the artificial intelligence investment boom, which depends heavily on affordable financing and steady capital flows.
Nevertheless, some analysts still see room for the market to grow. UBS expects the S&P 500 could climb to 7,500 by 2026, showing confidence in continued growth. Companies with strong cash flow and limited reliance on debt may be better positioned if financial conditions tighten, while holding some cash could help investors manage sudden market swings.
