Ray Dalio, founder of Bridgewater Associates LP, said returns from stocks will slow to 4 percent annually over the next decade, after equities almost tripled from their 2009 lows.
The U.S. Federal Reserve won’t be able to raise interest rates for a number of years as the economy hasn’t strengthened sufficiently, Dalio said today at the DealBook conference in New York. He didn’t elaborate on his forecast for equities.
U.S. stocks have gained about 25 percent annually, including dividends, since hitting a 2009 low as the Fed inflated asset prices with a series of unprecedented bond purchases. Economists forecast the Fed will delay tapering asset purchases until the March 18-19 meeting and policy makers will probably pare the monthly pace of bond buying to $70 billion at that time, according to the median of 32 estimates in a Bloomberg survey Nov. 8.
Dalio reiterated that he thinks the next major financial crisis will come from France because of a rise in debt-service payments that will have a “constrictive nature” on the economy. He said France’s debt will be difficult to roll over, resulting in funding gaps and wider credit spreads that will make the debt-service payments more difficult.
“It’s put France in the same category as southern European countries,” and changed the dynamic of the euro and the European Central Bank, Dalio said.