Latest News

‘You’re starting to see all the classic early signs’: Legendary investor Ray Dalio says the stock market has further to fall before a recession hits

0

S&P 500

3,693.23

-64.76(-1.72%)

Dow 30

29,590.41

-486.27(-1.62%)

Nasdaq

10,867.93

-198.88(-1.80%)

Russell 2000

1,679.59

-42.72(-2.48%)

Crude Oil

79.43

-4.06(-4.86%)

Gold

1,651.70

-29.40(-1.75%)

Silver

18.83

-0.78(-3.99%)

EUR/USD

0.9693

-0.0145(-1.47%)

10-Yr Bond

3.6970

-0.0110(-0.30%)

GBP/USD

1.0857

-0.0398(-3.54%)

USD/JPY

143.3300

+0.9950(+0.70%)

BTC-USD

19,066.89

+131.12(+0.69%)

CMC Crypto 200

434.61

-9.92(-2.23%)

FTSE 100

7,018.60

-140.92(-1.97%)

Nikkei 225

27,153.83

-159.30(-0.58%)

For much of this year, the Fed has held steadfast to its goal of a “soft landing” for inflation, the idea of vanquishing inflation without a dramatic economic downturn.

But despite several interest rate hikes, inflation is still running hot, and business leaders are saying that it’s not a matter of if a recession will happen, but when.

On Wednesday, after another rate hike, and a promise from Fed chairman Jerome Powell to stay the course until inflation comes down, Bridgewater founder Ray Dalio said that the Federal Reserve will probably keep tightening its monetary policy until high prices come down, no matter the consequences. As a result, a recession is likely within the next year.

“You’re starting to see all the classic early signs,” he said during an interview with MarketWatch editor-in-chief Mark DeCambre during the outlet’s inaugural Best New Ideas in Money festival. Those signs, he said, are contraction in the housing and auto sectors, which are the first to be impacted by the Fed’s higher interest rates.

It’s not the first time Dalio has sounded the alarm on imminent economic trouble. In June, he was already arguing on LinkedIn that a soft landing was out of the Fed’s reach, even as Bridgewater beat the bear market in the first half of this year, delivering a 32% return to investors as other firms struggled.

Dalio’s comments followed the Fed’s decision this week to institute its third consecutive 75-basis-point rate hike this year. Prior to June, the last time the bank had made such a big rate hike was in 1994.

Those hikes have already slowed down economic growth significantly in the U.S., according to Dalio.

“We are right now very close to a 0% growth year,” he said. “I think it’s going to get worse into 2023 and then 2024, which has implications for elections.”

After the Fed’s rate hike on Wednesday, the S&P 500 fell 1.7% to a two-month low. Dalio joined other billionaire investors like Carl Icahn and said that the stock market will sink further this year as the Fed continues its hikes, adding that the bond market will be hit particularly hard.

“Who is going to buy those bonds?” Dalio asked, noting that there’s been a multi-decade “bull market” in bonds marked by elevated prices. “Now you have negative real returns in the bonds…and you got them going down.”

Last month, Federal Reserve Chair Jerome Powell said that the central bank will stop at nothing until inflation is under control, even if it means “some pain to households and businesses.”

This week, he was even more clear about the cost: “We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t.”

That pain, said Dalio, will be very sorely felt over the next few years. “The Fed always has a tradeoff,” he said, between economic strength and inflation. With inflation now the bank’s target, it will chart a course until “economic pain” is deemed more severe than inflation.

At that point, the bank will begin to pare back on its rate hikes. “Now we play the game of, what level will that be?” said Dalio.

This story was originally featured on Fortune.com

Advertisement

TheBlast

‘Yellowstone’ Star Ryan Bingham Changing His Name, Removing Connection To Ex-Wife

‘Yellowstone’ actor and musician, Ryan Bingham, has legally filed to change his name, officially taking out anything to do with his ex-wife. According to new legal documents, obtained by The Blast, Bingham is asking a judge to change his name from Ryan Axster Bingham, back to his birth name, George Ryan Bingham. Let us explain. Obviously, […]

The Takeout

America’s Fastest-Growing Restaurant Chain Is the Most Underrated

There’s no shortage of places to get a perfectly acceptable sandwich. You can always head to your neighborhood convenience store for a chicken salad sandwich, pull together a simple recipe of your own at home, or rely on one of the many chain sub restaurants across the country. If you tend to do the latter, forget the Subways, Jimmy John’s, and even the Quiznos of the world, because a new chain is about to become top dog in the sub sandwich wars, and deservedly so. It’s time for Jersey Mike’s to

Yahoo Movies

Abigail Disney wants Disney diehards to ‘pay attention’ to how theme park workers are paid: ‘Cinderella is sleeping in her car!’

In a candid interview, Walt Disney’s grandniece addresses the company’s economic inequalities, and why the founder would embrace the studio’s push for diversity.

Yahoo Sports

One man’s plea deal may shed light on Brett Favre’s possible ties to a $70 million Mississippi welfare scam

We may soon find out more about NFL Hall of Famer Brett Favre’s potential involvement in a massive welfare scandal in his home state of Mississippi.

TipRanks

‘It’s Time to Buy on the Dip’: Cathie Wood Snaps Up These 2 Stocks Under $10

On Wednesday, the Fed bumped up interest rates again, its third 75-basis point hike since June, and signaled that there could be two more such hikes by the end of this year. The conventional wisdom has the Fed acting properly, and aggressively, in an attempt to counter inflation raging at 40-year high levels. But conventional wisdom isn’t always right – and we can learn a lot by consulting the contrarians. Few top investors are more contrarian than Cathie Wood. The founder and manager of ARK Inv

Benzinga

Why Warren Buffett Doesn’t Buy Real Estate And Most Other Investors Shouldn’t Either

Warren Buffett’s long-term investment strategy has proven to be successful through virtually all market conditions over the past several decades – recession, high inflation and deflation. If there’s one thing that’s made Buffett one of the most successful investors in history, it’s his commitment to his strategy. A countless number of new investment techniques and algorithms have come and gone over the years, but Buffett has maintained his relatively simple strategy of picking solid companies an

Insider Monkey

Australian Billionaire Kerr Neilson is Selling These 15 Stocks

In this article, we discuss the 15 stocks Australian billionaire Kerr Neilson is selling. If you want to skip our analysis of Neilson’s history and investment philosophy, go directly to Australian Billionaire Kerr Neilson is Selling These 15 Stocks. Kerr Neilson is a billionaire investor who co-founded Platinum Asset Management with Andrew Clifford nearly 28 […]

Lennar lowers home prices in most markets as rates rise

Previous article

‘The housing market may have to go through a correction’: Mortgage rates hit 6.29%, Freddie Mac says

Next article

You may also like

Comments

Leave a reply

Your email address will not be published.

More in Latest News