While the may have closed out of correction territory Wednesday, the recent tumble in U.S. equities caught many investors and even big hedge funds flatfooted.
But hedge fund Passport Capital, led by John Burbank, doesn't appear to be among those knocked down amid the slide, having seen the correction coming.
"We had been expecting a market breakdown for some time," Burbank told CNBC's "Closing Bell" in an interview. "What's remarkable is how commodities have traded and emerging markets have traded the last couple years and yet the faith in the U.S. economy has been so high and the faith in the Fed hiking rates has been so high it really propped up the dollar and U.S. markets."
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Burbank predicted a continued slide in equities, calling the recent recovery a "reflexive bounce."
Like others have, the hedge manager labeled the strengthening dollar as a great risk. With emerging market currencies continuing to break down Burbank compared the situation to a repeat of what happened in 1998.
"I'd say what we're learning in the last year is what happens when credit conditions tighten and the dollar rises," Burbank said, naming those factors among the top reasons why commodities and emerging markets have endured higher pressure.
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Pointing to QE, Burbank claimed loose policy allowed emerging market companies and countries to get cheap credit they never should have received. That would only be made more toxic with a continued dollar rally, China slowing and oil prices crashing, he said.
"Liquidity is not very good," Burbank added. "All we're seeing now is price validating and showing you the way things really are. I don't see any reason why this is going to stop."
Burbank admitted there was a chance the Fed could still hike rates, though it would be "irresponsible" if they did, he said.
"I think we're very late cycle in the U.S., the dollar has anticipated this, but if they do hike the dollar is gonna rise. [If] the dollar rises, I think it's risk off."