After seeing a 'significant risk' of a recession only a month ago, Ray Dalio has now lowered his odds of downturn.
After seeing a"significant risk" of a recession only a month ago, the manager of the world's largest hedge fund has lowered his odds of an economic downturn, now that the Federal Reserve has pivoted to a more accommodating posture.
On Jan. 22, Dalio told CNBC from the World Economic Forum in Davos, Switzerland that he saw a"significant risk" of a recession before 2020."Where we are in the later [economic] cycle and the inability of central banks to ease as much, that's the cauldron that will define 2019 and 2020," the co-CIO and co-chairman of Bridgewater said then.
"While the Fed probably doesn't have enough firepower to offset a deep recession, the big sag that we expect is probably manageable," said Dalio, whose hedge fund manages about $160 billion."More specifically, the Fed now has 250bps of easing , plus the ability to turn QE back on, which we estimate is roughly equivalent to the 4% to 5% of easing typically required to get out of recessions.
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