- The billionaire investment titan warns there's a "significant risk" of a possible economic recession in the United States in 2020.
- Dalio, co-CIO and co-chairman of Bridgewater Associates, says, "It's going to be globally a slow up. It's not just the United States."
- But the billionaire investment titan also says a pause in Fed rate hikes makes it possible to "extend the equilibrium."
Ray Dalio, founder of the world's biggest hedge fund, warned on Tuesday of a "significant risk" of a U.S. recession in 2020.
"It's going to be globally a slow up. It's not just the United States; it's Europe; and it's China and Japan," the billionaire investment titan said Tuesday in an interview on CNBC''s "Squawk Box."
"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," said Dalio, co-CIO and co-chairman of Bridgewater Associates.
Bond yields are signaling the Federal Reserve should not increase interest rates anymore, Dalio said in the interview at the World Economic Forum in Davos, Switzerland. "If it rises faster than that, I think we're going to have another problem."
The Fed, after its fourth hike of 2018 in December, had signaled two more rate increases for 2019. However, Fed Chairman Jerome Powell earlier this month said central bankers will be "patient" given continued muted inflation.
The Federal Open Market Committee meets again next week. No move is expected from the current benchmark fed funds short-term rate range of 2.25 to 2.50 percent.
"I think there is the possibility that you extend the equilibrium in a certain way where you have an easier monetary policy ... and you grow in a fairly slower way and that you don't have a classic recession for a while," Dalio said.
Dalio said earlier Tuesday during a Davos panel discussion that "the next downturn in the economy worries me the most." He also said he's concerned about "greater political and social antagonism" around the globe.
At Davos last year, Dalio had said, "If you're holding cash, you're going to feel pretty stupid."
It seemed like a good call at the time. The economy was chugging along and the stock market was off to a great start of 2018 after riding to record highs in the wake of President Donald Trump's election victory in late 2016.
However, shortly after Davos wrapped up last year, the market tanked in late January and early February. Stocks did eventfully get back to record highs in September. But Fed rate concerns in early October caused a bear market bottom in December.
This year, Dalio defended his 2018 statements, saying he had noted that corporate tax cuts would push the market higher. But he pointed out he had also warned at the time that if the Fed went too far on rates, a downturn could develop. "I think the Federal Reserve did make a mistake" last year, he told CNBC on Tuesday. "They [later] recognized things differently in terms of affecting the market and monetary policy."
In turn, Wall Street has gotten off to a good start in 2019.
Founded by Dalio in 1975, Bridgewater manages around $160 billion on behalf of about 350 clients worldwide, including public and corporate pension funds, university endowments, as well as charitable foundations.