“Fear will sweep the world in 18 months”… Hedge fund warning [세지포]

World Information Forum ◆

picture explanationRay Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, gives a lecture at the ‘Global Economy Great Circle’ session held at the Jangchung Arena in Seoul on the 22nd. [박형기 기자]

“It will be a very difficult year with stagflation sweeping the world over the next 18 months and a political crisis by 2024.” Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, made this prediction in a session on the last day of the 23rd World Information Forum, which was held right after the US Federal Open Market Committee (FOMC) raised the interest rate key by 0.75 percentage points. Stagflation is a phenomenon that accompanies a rise in prices and a recession in the economy. The World Information Forum venue on the 22nd was a success, with audiences including young investors flocking to hear the direction of the global economy and market prospects.

Founder Dalio said in a video session of the ‘Great Cycle of the Global Economy’ session at Jangchung Arena in Seoul, “Rising interest rates cause weakness in all other assets, including stocks and bonds.” However, as the need for monetary tightening continues to grow, the position in major currencies around the world will be dynamically intertwined and stagflation will continue for the next 18 months.” The founder of Dalio is called the ‘Warren Buffett of the 21st century, the Steve Jobs of the financial world’ and is a leading hedge fund investor on Wall Street. Bridgewater, founded in 1975, is the world’s largest hedge fund with $126.4 billion (about 178 trillion won) of assets under management at the end of June this year.

Je-seong Yoon, chief investment officer of New York Life Asset Management (CIO), said, “As the US Federal Reserve is expected to raise the key interest rate up to 125bp (1bp = 0.01 percentage point) by the end of the year, The S&P 500 goes down to 3,600. “If there is an economic downturn next year, the index could drop another 10% from here to the 3,200 level,” he predicted. He advised Korean investors not to blindly invest in US technology stocks. “Korean investors’ belief in Apple and Tesla is close to religion,” said CIO Yoon. Global investor Mark Mobius, co-founder of Mobius Capital Partners, also said, “We expect the stock market to drop an additional 10%.”

[이종혁 기자 / 김유신 기자]

“Only half of the stance of global austerity has passed… Political conflict is further exacerbating the economic crisis”

US Fed raises interest rates 4.5-5%
The stock and bond markets are cold.

Russia-Ukraine war, US-China conflict, etc.
Concerns about prolonged political turmoil

The recession worsens until 2024
A promising gold investment around that time

Ray Dalio, founder of Bridgewater Associates, speaks in a video at the 23rd World Information Forum 'Conversation with Ray Dalio' held at Jangchung Arena in Jangchung-dong, Seoul on the 22nd.  founder of Dalio

picture explanationRay Dalio, founder of Bridgewater Associates, speaks in a video at the 23rd World Information Forum ‘Conversation with Ray Dalio’ held at Jangchung Arena in Jangchung-dong, Seoul on the 22nd. Founder Dalio predicted on the same day that “stagflation will continue for the next 18 months, and 2024 will be a very difficult year with political crises.” [박형기 기자]

“A cycle of global tightening is underway. Interest rates are rising and the economy and markets are shrinking. We are halfway through the cycle.”

Legendary hedge fund investor Ray Dalio, founder of Bridgewater Associates, answered a question from a domestic investor on the 22nd. At the 23rd World Information Forum session ‘Conversation with Ray Dalio: The Great Circle of the Global Economy’ held at Jangchung Arena in Seoul on the same day, he said, “Until efforts are made to contain inflation, high interest rates will continues, and the market will shrink as much as possible.” analyzed. The US Federal Reserve continues to raise the key interest rate, but Europe, Japan and China are unable to tighten monetary tightening in a hurry to stimulate the economy, and currencies are getting weaker. In addition, conflicts and political extremism are common in countries around the world, starting with the conflict between the United States and China. “The stock and bond markets are in a bad position,” he observes.

Founder Dalio is a leader who pays attention to every word he says not only in the United States but also in the global financial world. He drew attention by correctly predicting the timing of the 2008 global financial crisis with an error of about a month. Bridgewater, which he founded, is more famous for his macro investing by analyzing major macroeconomic indicators such as global interest rates, bond prices and yields, and foreign exchange rates rather than focusing on specific stocks or assets. The Fed took another major step at the Federal Open Market Committee (FOMC) this morning to raise the benchmark interest rate by 0.75 percentage points. Three huge steps in a row. The Fed’s benchmark interest rate rose to between 3.0% and 3.25%. Founder Dalio predicted that the Fed would raise interest rates a further 4.5% to 5%. He said, “The 10-year expected inflation rate (BEI) is currently below 3%, but is expected to rise to 4.5%. Accordingly, interest rates will also reach 4.5-5% soon. I have no choice but to go cold. water.” The BEI is the difference between the yield on US Treasury Bonds (TIPS) and the yield on regular Treasury bonds.The BEI recently fell below 3%, which the market saw as a sign that the price of US catching up slowly, but Dalio’s founder predicted a higher growth rate.

The Fed’s continued rate hikes are a sign of economic decline. In an interview with US economic media Market Watch on the 21st, he said, “The US is very close to 0% growth right now. The way the Fed successfully fights inflation is to trade recession and inflation to share ‘economic pain’ with businesses and investors. There is only one way,” he said. In other words, the Fed will continue to raise rates until at least 2024 to contain inflation, and the recession will worsen in return. In amid this, countries other than the United States cannot tighten their currencies due to economic stimulus. Founder Dalio said, “The European euro, Japanese yen, and Chinese yuan are all experiencing difficulties in the national economy and increasing the supply money. At the same time, the need for austerity in these countries is growing. “It will get worse over the next 18 months.”

Founder Dalio referred to the global political turmoil as a risk factor that could worsen the economy. The Russia-Ukraine war has been protracted due to Russia’s partial migration order, and the economic war between the United States and China is intensifying. Amidst this, the United States, where political polarization is severe, is ahead of the mid-term elections in November and the 2024 presidential election.

The founder of Dalio, anticipating weakness in all asset markets, including stocks and bonds, emphasizes the need for a “balance of investment assets” now. He predicted that “sentiment towards gold will rise significantly around 2024.”

[이종혁 기자]
[ⓒ 매일경제 & mk.co.kr, 무단전재 및 재배포 금지]

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