Bill Ackman is a billionaire hedge fund manager who founded Pershing Square Capital Management. He believes that “inflation has out of control” and that the Federal Reserve should “do its job” by applying “aggressive monetary tightening.”
Pershing Square founder Bill Ackman believes that ‘inflation is out of control’
Although headlines focus on Jerome Powell, the Federal Reserve chair, implementing rate increases and revealing that the central bank will tighten asset purchases this summer, many economists and financial professionals doubt the Fed’s ability to do its job. Additionally, the Atlanta Fed president Raphael Bostic stated to the media that Fed policymakers could halt interest rate increases.
Bill Ackman, the founder and CEO at Pershing Square Capital Management is a hedge fund management firm founded in 2004.
Pershing Square Capital Management founder Bill Ackman stated on Twitter Tuesday that the market will fix inflation if the Fed does not step in.
“Inflation is out-of-control.” “Inflation expectations are getting outof control,” Ackman tweeted. Markets are collapsing because investors don’t believe that the Federal Reserve can stop inflation. If the Fed fails to do its job, then the market will do it for the Fed, and that is exactly what is happening right now.” This statement was added by the billionaire hedge fund manager who is also considered an “activist investors.”
Today’s inflation crisis can only be stopped by either aggressive monetary tightening, or a complete collapse of the economy. Today’s unprecedented job opportunities, 3.6% unemployment, long term supply/demand imbalances in energy and ag, food, housing and labor, as well as the wage-price spiral, means that there is no chance of a significant reduction in inflation. Unless the Fed raises rates aggressively or the stock markets crash, which would cause an economic collapse and destruction.
Hedge Fund Manager: ‘Current Fed Strategy and Guidance Are Setting us up for Double-Digit Sustained Iflation’
Ackman isn’t the only one concerned about the Federal Reserve’s ability stop inflation. The Fed will not stop inflation, says Peter Schiff , a gold bug and economist.
Schiff stated Tuesday that it is not worth trying to understand why inflation is so high right now but how it has been in the past. Understanding how inflation entered the economy, the long lag between rising asset price and rising consumer goods price will help you to understand why high inflation is here to remain.
The Pershing Square executive noted that Fed policymakers are making dovish comments in Jerome Powell’s recent statements.
Ackman tweeted, “In the past day or so various Fed members have wiggled and made dovish comments proposing a modest rise in rates and a pause during the fall.” “The Fed already has lost credibility due to its late pivot and misinterpretation of inflation. There is no precedent economic for 200-300 bps of Fed funds to address 8% inflation and 3.6% employment.
The Pershing Square founder, like Schiff, explained that inflation could become a long-term problem. Ackman continued:
Current Fed guidance and policy are setting us up to sustain double-digit inflation. This can only be stopped by a market crash or massive rate rise.
The main difference between Schiff and Ackman lies in the Pershing Square manager of the hedge fund seems to be more optimistic that the Fed will fix things, as opposed to Schiff who believes the central banking will eventually fail. Ackman believes poor policy is why no one is buying stocks, and he talked about how the “downward spiral [can] end.”
Ackman stated that “it ends when the Fed puts an end to inflation and promises it will do ‘whatever is necessary’.” Ackman concluded Tuesday. “The Fed then shows it is serious by raising rates immediately to neutral and promising to keep increasing rates until the inflation genie returns to the bottle. Ackman added that stocks (of real businesses are) now cheap again.
Investors can feel confident that markets will rise once they are certain that runaway inflation is over. Let’s all hope that the Fed does it right.
