Ray Dalio, founder of the world’s biggest hedge fund, warned Tuesday on CNBC that there’s a “significant risk” of a possible recession in the U.S. in 2020.
“It’s going to be globally a slow up. It’s not just the United States; it’s Europe; and it’s China and Japan,” the billionaire investment titan said on “Squawk Box” in an interview from the World Economic Forum in Davos, Switzerland.
“Where we are in the later [economic] cycle and the inability of central banks to ease as much, that’s the cauldron that will define 2019 and 2020, ” said Dalio, co-CIO and co-chairman of Bridgewater Associates.
Bond yields are signalling the Federal Reserve should not increase interest rates anymore, Dalio said. “If it rises faster than that, I think we’re going to have another problem.”
The Fed, after its fourth hike of 2018 in December, had signaled two more rate increases in 2019. However, Fed Chairman Jerome Powell earlier this month said central bankers will be “patient” given continued muted inflation.
The Federal Open Market Committee meets again next week. No move is expected from the current benchmark fed funds short-term rate range of 2.25 to 2.50 percent.
“I think there is the possibility that you extend the equilibrium in a certain way where you have an easier monetary policy … and you grow in a fairly slower way and that you don’t have a classic recession for a while,” Dalio acknowledged.
Dalio said earlier Tuesday during a Davos panel discussion that “the next downturn in the economy worries me the most.” He also said he’s concerned about “greater political and social antagonism” around the globe.
Founded by Dalio in 1975, Bridgewater currently manages around $160 billion on behalf of about 350 clients worldwide, including public and corporate pension funds, university endowments, as well as charitable foundations.
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Source: cnbc.com | Original Link