Billionaire investor Ray Dalio warned on Thursday that stocks face mounting pressure from rising bond yields and the prospect of weaker corporate cash flows, even as earnings continue to grow. The Bridgewater Associates founder told CNBC that equities have so far weathered the global bond sell-off because earnings growth has kept expected stock returns attractive relative to bonds, but that advantage will narrow. His warning comes as U.S. Treasury yields hover near multi-decade highs amid large government deficits, persistent inflation and rising borrowing tied to artificial intelligence investment. Dalio also urged investors to focus on free cash flow rather than earnings alone, saying he expects free cash flows to deteriorate despite continued earnings growth. He estimated the bond bear market is only beginning and that tighter credit and spending will eventually weigh on economic activity and equity markets.
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