Billionaire investor Ray Dalio, founder of Bridgewater Associates, expressed concerns about the stock market's resilience amid rising bond yields and potential declines in corporate cash flows. Speaking at the Milken Institute Asia Summit, he noted that while earnings growth has so far supported stock prices, this advantage is diminishing as bond yields increase.
Dalio emphasized the importance of monitoring free cash flows rather than just earnings, suggesting that deteriorating cash generation could signal liquidity issues for companies. He also predicted that the ongoing global bond sell-off, driven by heavy government borrowing and corporate investments in technology, would continue to exert upward pressure on interest rates.
Although he refrained from predicting an immediate market correction, Dalio indicated that tightening financial conditions could eventually impact credit availability and economic activity, which may spill over into equity markets