With the Federal Reserve continuing to pursue aggressive tightening, Ray Dalio, the billionaire founder of Bridgewater Associates, calculated that interest rates will have to rise to at least 4.5%, forcing stocks down by 20%.
In order to get to the 4.5% interest rate estimate, Dalio looked at inflation and real yields."The process starts with inflation. Then it goes to interest rates, then to other markets, and then to the economy," he explained. Considering this and real yields, Dalio sees long and short rates between4.5% and 6%."The higher end of this range would be intolerably bad for debtors, markets, and the economy, I'm guesstimating that the Fed will be easier than that ," he said.
I think he actually said the upper band of 4.5 - 6% would cause the market to fall ~20%