Ray Galio, the head of the world's largest hedge fund says U.S. in a ‘Pre-Bubble Phase’ with a 70% Chance of Recession.
“I think we are in a pre-bubble stage that could go into a bubble stage,” the hedge-fund manager said during a Harvard Kennedy School’s Institute of Politics on Wednesday.
Dalio’s recession comments echo remarks he has made over in a LinkedIn post, where he wrote that “the risks of a recession in the next 18-24 months are rising.”
"Stupid to Hold Cash"
Despite his recession call, Dalio is the same person who told the crowd at Davos, ‘If You’re Holding Cash, You’re Going to Feel Pretty Stupid’.
Dalio is also a believer in the sideline cash theory and that we may see a "Minor Correction".
In a LinkedIn article following the VIX-related plunge, Dalio said We’ve Just Had a Taste of What the Tightening Will Be Like.
The headline sounds bearish, but the message sure isn't, as the key paragraph explains.
"Still, these big declines are just minor corrections in the scope of things, there is a lot of cash on the side to buy on the break, and what comes next will be most important."
Inundated With Cash
In the CNBC interview, Dalio also spoke of sideline cash.
"There is a lot of cash on the sidelines. I don't mean just investor cash. I think banks have a lot of cash. Corporations have a lot of cash. So we are going to be inundated with cash."
Sideline Cash Rebuttal
- St. Louis Fed Promotes the Mathematically Impossible
- Sideline Cash Nonsense From Bloomberg and Merrill Lynch
- $50 Trillion Sideline Cash Conundrum?
Question of the Day
Previously, I asked the question: Do hedge fund managers really believe this sideline cash nonsense, or are they purposely feeding their clients BS?
Here are the final results.
The major networks fawn all over Dalio hoping for quotes, and not a one them takes him to task for spouting pure nonsense or even his "stupid to hold cash" call.
Mike "Mish" Shedlock