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By CCN.com: Ray Dalio, Bridgewater's $ 160 billion hedge fund investment manager, joins fellow currency mints and economic experts to warn of a recession on the horizon, threatening to erase the US stock market. Others still do not agree.
Dalio Does Davos warns investors in the US stock market about the "significant" risk of recession
Addressing CNBC in Davos, Dalio said there was a "significant" recession risk for America in 2020. However, not just for the United States, an economic slowdown will be global :
It's not just the United States; it's Europe, it's China and Japan.
Dalio emphasized the need for perspective. Investors have so far ignored the economic signals of the recession, but they will react on a longer "time horizon" because its impact is felt on the stock market.
Where we are in the last [economic] the inability of central banks to appease as much is the cauldron that will define 2019 and 2020.
Despite rising US Federal Reserve interest rates over the last two years, interest rates remain relatively low, leaving little room for additional quantitative easing in the event of a generalized recession.
Investors could react more deeply to the preparation of the US presidential election of 2020 and to the potential impact of a change of government on tax rates and capital gains.
Ray Dalio says 70% tax discussion will play a bigger role https://t.co/Mh7eIbdBie pic.twitter.com/rLvASlJiy8
– Bloomberg Economics (@ economy) January 22, 2019
Dalio also has greater social and political concerns. Speaking in Davos this week, he said the "next downturn in the economy" worried him, that is, the manager of the world's largest hedge fund .
What scares me in the longer run is that we have limits to monetary policy – which is our most valuable tool – while having greater political and social antagonism.
Bloomberg economists have recently indicated that the chances of a recession in the coming year are doubled to 25% from the previous year's level. David Rosenberg, chief economist and strategist of Gluskin Sheff, said in early January that stock market fluctuations were a sign of an impending recession.
Steve Schwarzman, CEO of Blackstone, does not agree
Even with new economic data coming from China and growing fears in Europe, Blackstone CEO Steve Schwarzman disagrees.
He says:
I do not know where it comes from in the last two months of the year. Consumer confidence is a little down, which, in my opinion, comes from a malfunction, but they still spend a lot of money.
The US economy may be slowing down, but that does not mean it's headed for a recession, Blackstone CEO Steve Schwarzman said. # WEF19. https://t.co/PcDK4eG3XS pic.twitter.com/3rKHAjfDLu
– CNBC (@CNBC) January 22, 2019
Schwarzman estimates that US economic growth of 4.2% in 2018 is "unsustainable", but growth in 2019 is expected to remain close to 2.5%. This is despite reports that the lingering sequels of the government shutdown could already bring American growth back to zero. The CEO of Blackstone said he "sees no recession".
I see the United States roll a little here but at a lower growth rate.
Schwarzman is a Republican donor and advisor to US President Donald Trump. Trump also deviates fears of recession. A recent survey by the Conference Board found that US leaders worry less about the recession than other global business leaders. Do they blindly follow Trump's economic rhetoric?
Krishna Memani, CIO of OppenheimerFunds, said earlier this month that a recession was unlikely in the next five years. JP Morgan Chief Executive Jamie Dimon said the US is slowing down, not a recession, and everyone should "take a deep breath."
Ray Dalio Image from Reuters /Brian Snyder
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