““Once people realize that the Fed doesn’t have to keep raising rates and will soon cut rates… that will be a buy signal for the markets.”“
Billionaire Pershing Square Capital Management founder Bill Ackman shared some comments about the US markets and economy during a short interview with CNBC’s “Squawk Box” on Tuesday morning.
after, after Criticizes the Fed For not acting aggressively enough in May, Ackman is clearly happy to see Federal Reserve Chairman Jerome Powell doubling down on a plan to keep interest rates higher for longer.
“I think they said they’re going to do what they have to do which is raise prices and hold them for a long time,” Ackman said on Tuesday. Inflation was our biggest concern, which is why we wanted the Fed to raise interest rates.
When asked where he sees inflation 12 months from now, Ackman replied that he expects price pressures to go down “a lot,” dropping to 4%, if not 3.5%, from a peak of 9.1% in June, This is the highest level recorded in 41 years.
“I think inflation is going down,” he said. “I think people are expecting the Fed to back off.”
Once investors realize that the Fed is the winner in its fight against inflation, Ackman expects stocks to rebound. “Once people realize that the Fed doesn’t have to keep raising rates and will soon cut rates… that will be a buy signal for the markets.”
This reflects an expectation of a “soft landing” in the US expressed by Goldman Sachs GS,
Economist Jan Hatzius, who wrote a lot on this topic.
US stocks have stumbled this year, as have bonds, In what by some measures was one of the worst years for the markets in decades. S&P 500 SPX Index,
It’s down 17.5% so far this year. Stocks turned lower shortly after the opening on Tuesday as Europe’s energy crisis and expectations of further interest rate hikes by the central bank continued to weigh on investors’ appetite for riskier assets.
Regarding the Pershing Square portfolio, Ackman said it hasn’t changed much since the beginning of the year — apart from the company’s portfolio. Short-lived position on Netflix NFLX Corporation,
The latest SEC filings in Pershing Square support this. As of the end of June, the company’s portfolio consisted of focused bets on Lowes Inc. LOW,
Chipotle Mexican Grill CMG,
Hilton Worldwide Holdings HLT,
Howard Hughes Corp. HHC,
and Canadian Pacific Railway CP,
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”