Ray Dalio says watch for rates hitting this level as Wall Street stocks set to take a 20% plunge – MarketWatch | Jewelry Dukan

After that CPI shock earlier in the week, Wall Street is gearing up for a fresh set of data Thursday, including retail sales, with a deepening yield curve inversion between 2- and 10-year bonds sending increasingly gloomy economic signals. There is good news, however, as a catastrophic rail strike could be averted.

There is no billionaire investor and hedge fund manager Ray Dalio in our call of the day claims that the Fed has no choice but to keep raising interest rates at a high price for stocks.

And he’s making pretty precise guesses. “My guess is that if interest rates go from where they are to about 4.5%, it will have about a 20% negative impact on stock prices,” Dalio said in a LinkedIn post Tuesday.

Some are predicting that the Fed could hike rates by 100 basis points next week, a move not seen since the also inflationary 1980s. The central bank’s short-term interest rate has fluctuated between 2.25% and 2.5%, but Nomura, for example, sees that rate rising to 4.75% by 2023.

But Dalio believes interest rates could even reach the top end of a 4.5% to 6% range. “This will reduce private sector credit growth, which will bring down private sector spending and thus the economy,” he says.

Behind this forecast is the Bridgewater Associates founder’s belief that the market is grossly underestimating where inflation will end up over the next 10 years — at 2.6% over the next 10 years versus 4.5% to 5% over the medium term, excluding from shocks.

Read: Why a single US inflation report roiled global financial markets – and what’s next

What happens when people lose money in the markets – the so-called “wealth effect” – he expects less spending as they and their lenders become more cautious.

“The upshot is that I think it’s likely that the inflation rate will stay well above what the people and the Fed want (while the inflation rate will fall year-on-year), that interest rates will rise, the other that the markets will collapse and the economy will be weaker than expected, without taking into account the worsening trends in internal and external conflicts and their impact.”

The markets

stock futures ES00,
-0.28%

YM00,
-0.07%

NQ00,
-0.49%
have become mixed, with Treasury yields TMUBMUSD10Y,
3,462%

TMUBMUSD02Y,
3.864%
climbing and the dollar DXY,
+0.05%
loosen something.

oil prices CL.1,
-1.51%
leaning south, next to Gold GC00,
-0.84%.
China stocks SHCOMP,
-1.16%

HSI,
+0.44%
slipped after the country’s central bank left interest rates unchanged. European natural gas prices GWM00,
+4.45%
are on the rise again. bitcoin BTCUSD,
+0.98%
is trading at just over $20,000.

The Buzz

Union Pacific UNP shares,
-3.69%,
Norfolk Southern NSC,
-2.16%
and CSX CSX,
-1.05%
gather in the premarket after the White House said it had reached an interim railroad agreement with unions. No deal by Friday would mean strikes and chaos for supply chains, grain markets and even the upcoming holidays. Read more here.

Aside from August retail sales, we get weekly jobless claims, the Philly Fed and Empire State manufacturing indices, and import prices. Industrial production and corporate inventories will follow.

Adobe shares ADBE,
+0.85%
fall following a report that the software company is considering a $20 billion deal to buy graphic design startup Figma.

Vitalik Buterin, one of the co-founders of Ethereum, says that the so-called merger is complete, which means the birth of a greener crypto. Ethereum ETHUSD,
-0.89%
is just a bit high.

A new lawsuit alleges Tesla TSLA,
+3.59%
made false promises about autopilot and full self-driving capabilities. And move over Tesla, Apple AAPL,
+0.96%
is now Wall Street’s biggest short bet.

Ericsson ERIC,
-3.32%

ERIC.A,
-1.78%

ERIC.B,
-3.23%
falls after a double downgrade in Credit Suisse, which cited inflationary headwinds. Analysts highlighted Nokia NOKIA,
-0.36%

NOK,
-0.40%
to beat even though the stock is barely moving.

Cathie Woods Ark Investment Management went on a dip-buying spree after Tuesday’s market plunge, mostly snapping up Roku ROKU,
+0.44%.

Opinion: Pinterest never saw itself as a social network. Until now.

Patagonian billionaire Yvon Chouinard is donating his entire company worth $3 billion to fight the climate.

The best of the web

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Turkey finds an additional $24.4 billion lying around.

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The tickers

These were the most searched tickers on MarketWatch as of 6 a.m. Eastern Time:

ticker

security name

TSLA,
+3.59%

Tesla

GME,
+1.01%

GameStop

AMC,
+1.95%

AMC entertainment

BBBy,
+4.66%

bed bath beyond

CHF,
+311.78%

AMTD Digital

NEVER,
-0.14%

NEVER

AAPL,
+0.96%

Apple

MONKEY,
+0.94%

AMC Entertainment preferred stock

AMZN,
+1.36%

Amazon

NVDA,
-0.02%

NVIDIA

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