Ray Dalio Foresees an Economic Apocalypse As Market Sinks
To New Lows – (Weekly Market Report)
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Contents [hide
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* 0.1 Inflation Reality & Fed Hikes
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* 0.2 Ray Dalio Foresees an Economic Apocalypse
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* 0.3 Key Events, Market Movers & Calendar
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* 1 RATES
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* 2 COMMODITIES
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* 2.1 OIL
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* 2.2 GOLD & PRECIOUS METALS
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* 3 CRYPTOCURRENCY
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US equities sank on Friday as investors digested new earnings data
that painted an increasingly bleak image of the economy’s status.
Last week Goldman Sachs announced job cuts, while General Electric
acknowledged persistent supply chain concerns.
These troubling indicators from large US corporations and the Fed’s
tightening monetary policy have heightened recessionary worries.
The Dow Jones Industrial Average plummeted by more than 3,000 points,
or 9.34 percent, in the previous month.
The S&P 500 is on track for its worst yearly loss since the Great
Recession of 2008.
Bears are running wild….
INFLATION REALITY & FED HIKES
Many investors believed that US inflation had begun to fall, and the
numbers for August demonstrated that it had not.
The gap between market enthusiasm and macroeconomic reality triggered
an earthquake on Tuesday, with the S&P 500 dropping more than 4% and
the Nasdaq dropping more than 5%.
The declining annualized rate of inflation, as measured by the
Consumer Price Index, has been the narrative for the previous few
months (CPI). The normal caution applies: CPI is a short-term
assessment tool that does not reflect the real inflation rate.
Personally, I look at Truflation, which tracks actual costs in real
time to give me a better idea of inflation.
The CPI annualized inflation rate declined from 9.1 percent in June to
8.3 percent in August, which is just part of the story. I’m most
concerned with monthly inflation, which jumped 0.1 percent in August.
It may not appear to be much, but consider the context: Most prices
are still growing, but DROPPING OIL AND GAS COSTS ARE THE SOLE REASON
WE SAW A 0.1 PERCENT MONTH-OVER-MONTH INCREASE.
My point is that inflation is far from over, and the Fed still has a
long way to go. Since last year, the conventional wisdom has held that
the Fed must undermine demand.
Inflation will not fall considerably unless we witness a prolonged
reversal in PROPERTY PRICES AND HIGHER UNEMPLOYMENT.
Brack yourself; the stock market is setting up for a VERY RED
OCTOBER.
RAY DALIO FORESEES AN ECONOMIC APOCALYPSE
Ray Dalio, the founder of the Bridgewater Associates investment firm,
mentioned last week in a LinkedIn post
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that the upcoming Federal Reserve interest rate rises would cause the
stock market to fall by 20%.
“The process begins with inflation.” Then it moves on to interest
rates, other markets, and the economy.”
“With inflation well above what people and central banks want (e.g.
today’s CPI report showed a monthly change in the core CPI of 0.6
percent, which equates to an annualized rate of 7.4 percent) and the
unemployment rate low (3.7 percent), it’s obvious that inflation is
the targeted problem, so it’s obvious that the central banks should
tighten monetary policy.”
Dalio predicted that the central bank would raise interest rates by
another customary 75 basis points. That interest rate would conclude
at 4.5 percent.
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