Ray Dalio says to watch out for rates reaching this level, as Wall Street stocks will take a 20% hit.

After the CPI shock earlier in the week, Wall Street is gearing up for a new set of data, including retail sales, Thursday, with an ever-deeper yield curve reversal between 2 and 10 bonds. years that emit increasingly gloomy economic signals. However, there is good news, as a disastrous train strike could be avoided.

There is no billionaire investor and hedge fund manager Ray Dalio than in ours call of the day says the Fed has no choice but to keep raising interest rates, at a high price for the shares.

And he’s putting out some pretty accurate conjectures. “I estimate that a rate hike from where they are to around 4.5% will have a negative impact of around 20% on stock prices,” Dalio said in a LinkedIn post on Tuesday.

Some predict that the Fed could raise interest rates by 100 basis points next week, a move not seen since the 1980s as inflationary. The central bank’s short-term rate fluctuates between 2.25% and 2.5%, but Nomura, for example, sees that the rate has reached 4.75% by 2023.

But Dalio thinks interest rates could even reach the higher end of a 4.5% to 6% range. “This will reduce private sector credit growth, which will reduce private sector spending and therefore the economy along with it,” he says.

Behind this prediction is the belief of the founder of Bridgewater Associates that the market is grossly underestimating where inflation will end: at 2.6% over the next 10 years versus what he sees as 4.5% to 5% at medium term, except for shocks.

Laws: Why a single US inflation report has shocked global financial markets and what comes next

As for what happens when people start losing money in the markets – the so-called “wealth effect” – they expect less expense as they and their lenders become more cautious.

“The result is that it seems likely to me that the inflation rate will stay significantly above what the people and the Fed want it to be (while the year-on-year inflation rate will go down), that interest rates will go up, what else. the markets will go down and that the economy will be weaker than expected, regardless of the worsening trends of internal and external conflicts and their effects. “

Markets

ES00 Stock Futures

YM00

NQ00
became mixed, with Treasury BX yields: TMUBMUSD10Y

BX: TMUBMUSD02Y
climbing and the DXY dollar
loosening a little.

CL oil prices
they are tilting south, along with GC00 gold.
Chinese stocks CN: SHCOMP

HK: HSI
it slipped after the country’s central bank left rates unchanged. European natural gas prices GWM00
I’m on the rise again. Bitcoin BTCUSD
is trading at just over $ 20,000.

The buzz

Union Pacific UNP shares,
Norfolk Southern NSC
and CSX CSX
they are mobilizing in the pre-market after the White House said it had reached an interim rail deal with the unions. No deals by Friday would spell strikes and chaos for supply chains, grain markets, and even the upcoming holidays. Read more here.

In addition to August retail sales, we will receive weekly jobless claims, Philly Fed and Empire State manufacturing indices, and import prices. Industrial production and business inventories will follow.

Adobe shares ADBE
are tumbling after 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 the so-called merger has taken place, which means the birth of a more environmentally friendly cryptocurrency. Ethereum ETHUSD
it’s just a little bit right now.

A new lawsuit claims Tesla TSLA
made false promises about Autopilot and Full Self Driving functions. And move on to Tesla, Apple AAPL
is now Wall Street’s largest short bet.

Ericsson ERIC

SE: ERIC

SE: ERIC
it is down after a double downgrade by Credit Suisse, which cited inflationary headwinds. Analysts have revoked Nokia FI: NOKIA

NOK
outperform, although the stock barely moves.

Cathie Wood’s Ark Investment Management Began Making Decline Purchases After Tuesday’s Market Crash, Raising Mostly Roku ROKU.

Opinion: Pinterest has never considered itself a social network. Until now.

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

The best of the web

No US shale bailout for Europe.

Turkey finds around $ 24.4 billion more.

The queue to pay homage to the Queen is 2.6 miles long and continues.

The tickers

These were the most searched tickers on MarketWatch at 6:00 am Eastern time:

Ticker

Security name

TSLA

Tesla

GME

GameStop

AMC

AMC entertainment

BBY

Bath to bed and beyond

Hong Kong

Digital AMTD

NIO

NIO

AAPL

Apple

APE

AMC Entertainment Preferred Stock

AMZN

Amazon

NVDA

Nvidia

Random reads

Scientists try to teach robots comic timing

Sausage, mozzarella, batter. Meet the South Korean hot dog.

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