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

After that CPI shock earlier in the week, Wall Street is showing a fresh batch of data on Thursday, with the overall retail sales figure coming in higher than expected. And a disastrous rail strike can be reversed.

But there is little to cheer billionaire investor and hedge fund manager Ray Dalio who, in our call of the day says the Fed has no choice but to keep raising interest rates, at a high price for stocks.

And he makes some pretty specific guesses. “I estimate that a rise in rates from where they are at around 4.5% will produce a negative impact of around 20% on stock prices,” Dalio said in a statement. LinkedIn position as of Tuesday.

Some plan the Fed could raise interest rates by 100 basis points next week, a move not seen since the equally inflationary 1980s. The central bank’s short-term rate hovers between 2.25% and 2.5%, but Nomura, for its part, sees that rate heading towards 4.75% by 2023.

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

Behind this prediction is the belief of the founder of Bridgewater Associates that the market seriously underestimates where inflation will end – at 2.6% over the next 10 years against what he sees as 4.5% to 5%. in the medium term, barring shocks.

Lily: Why a single U.S. inflation report rocked global financial markets — and what comes next

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

“The bottom line is that it seems likely to me that the inflation rate will stay significantly higher than people and the Fed want it to be (while the year-over-year inflation rate will come down) , that interest rates will rise, that other markets will fall and that the economy will be weaker than expected, and this without taking into account the tendencies of worsening internal and external conflicts and their effects.

The steps

Equity Futures
ES00

YM00

NQ00
are slightly lower post data as Treasury reports BX:TMUBMUSD10Y

BX:TMUBMUSD02Y
continue to climb and the dollar DXY
firmed up.

CL Oil Price
are lower, with gold GC00.
China Stocks CN:SHCOMP

Hong Kong: HSI
slipped after the country’s central bank left rates unchanged. European natural gas prices GWM00
are on the rise again. BitcoinBTCUSD
is trading at just over $20,000.

The buzz

Union Pacific UNP Stock,
South Norfolk NSC
and CSX CSX
rally in premarket after the White House says it has concluded a provisional agreement on the railways with the trade unions. No deal by Friday would mean strikes and havoc for supply chains, grain markets and even the next holidays. Read more here.

August retail sales rose 0.3% stronger than expected as Americans spent on new cars while weekly jobless claims fell for a fifth straight week and import prices fell 1%. Elsewhere, the Empire State manufacturing index rallied on the heels of a deeply negative reading, but the Philly Fed factory index deteriorated. Industrial production and business inventories are yet to come.

Adobe shares ADBE
are down after a report that the software company is mulling a $20 billion deal to buy graphic design startup Figma.

Vitalik Buterin, one of the co-founders of Ethereum, says the so-called “merger” is done, signifying the birth of a more environmentally friendly crypto. Ethereum ETHUSD
is just a little right now.

A new trial claims Tesla TSLA
made false promises about autopilot and full self-driving features. And move on Tesla, Apple AAPL
is now Wall Street’s biggest short bet.

Ericsson Eric

SE:ERIC

SE:ERIC
is down after a double downgrade at Credit Suisse, which cited inflationary headwinds. Analysts lifted Nokia FI:NOKIA

NOK
to outperform, although the stock barely moves.

Cathie Wood’s Ark Investment Management went on a shopping spree after Tuesday’s market crash, mostly picking up Roku ROKU.

Opinion: Pinterest never thought of itself as a social network. So far.

Patagonia billionaire Yvon Chouinard is donate your entire business – worth $3 billion – to the fight against climate change.

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Stock tickers

Here are the most searched tickers on MarketWatch as of 6 a.m. EST:

Teleprinter

Security Name

TSLA

You’re here

EMG

GameStop

CMA

AMC Entertainment

BBBY

Bed bath and beyond

HKD

Digital AMTD

NIO

NIO

AAPL

Apple

MONKEY

AMC Entertainment Preferred Stock

AMZN

Amazon

NVDA

Nvidia

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