Bridgewater's Dalio fears rising risk of US recession

Bridgewater Associates founder Ray Dalio said on Monday that the risks of a recession hitting in the next 18 to 24 months are rising.

In a blog post the hedge fund manager wrote that an aggressive response to better than expected economic data from the Federal Reserve and more fiscal spending could lead to an economic slowdown.

Dalio said: “What we do know is that we are in the part of the cycle in which the central banks' getting monetary policy right is difficult and that this time around the balancing act will be especially difficult.”

There is concern from investors that interest rates will be increased as the economy continues to strengthen in what the hedge fund manager calls an “inappropriate oversight” as he believes there should be a discussion regarding the chances of another recession and “what that recession might look like prior to the next election”.

Billionaire Dalio, who founded hedge fund Bridgewater Associates in 1975 which now manages approximately $160bn, earlier this month predicted the stock market would make one big move higher but amended his expectations in the LinkedIn post stating that spurts in growth and wage numbers “signaled that the cycle is a bit ahead of where I thought it was.”

"We are in the part of the cycle in which the central banks’ getting monetary policy right is difficult and that this time around the balancing act will be especially difficult," he said.

He added: "While most market players are focusing on the strong 2018, we are focusing more on 2019 and 2020 (which is the next presidential election year). Frankly, it seems to be inappropriate oversight to not be talking about the chances of a recession and what that recession might look like prior to the next election."