shine trader live reports:
Bill ackman, a billionaire hedge fund manager and founder of Pershing square capital management, called on the Federal Reserve on Friday (October 29) to withdraw its monetary policy support for the U.S. economy during the pandemic as soon as possible.
He wrote on twitter, “I shared our views on inflation and monetary policy with the New York Fed last week. Our conclusion is that the Fed should immediately reduce its bond purchases and start raising interest rates as soon as possible.” he added, “we are still ‘playing and dancing’, and now it’s time to turn off the music and calm down.”
Ackerman’s call to reduce the size of bond purchases (taper) and raise interest rates as soon as possible comes at a time when the Federal Open Market Committee (FOMC) of the Federal Reserve will start a two-day policy meeting next Tuesday. At present, the market expects that FOMC will announce the reduction of the bond purchase plan of US $120 billion per month next Wednesday. Most investors believe that starting from November, the monthly purchases of US $10 billion of treasury bonds and US $5 billion of mortgage-backed securities will be reduced, and all the reductions will be completed next summer.
For Ackerman, insisting on taper is not a radical thing, but his call for interest rate hike is heavier. Since the new crown pandemic, the Federal Reserve has kept its benchmark interest rate near zero, and most FOMC officials said that the first interest rate increase would not be earlier than the end of 2022.
However, according to CME’s fedwatch tool, traders have recently made more active pricing on the Fed’s interest rate. The futures contract points out that the Fed will raise interest rates by at least 50 basis points in 2022, and the probability of raising interest rates again on the basis of December is still 50%. Ackerman said he has also begun positioning his portfolio for higher interest rates.
Ackerman wrote on twitter, “as we have previously disclosed, we have invested in hedging against the risk of rising interest rates because we believe that rising interest rates may have a negative impact on our long stock portfolio.”
According to the company’s statement, the total rate of return of Pershing square in 2021 was 15.7% and 12.2% after deducting expenses this year, lagging behind 22.5% of the standard & Poor’s 500 index. The fund achieved brilliant results in 2020, with a net return of 70.2%.
According to the data released by the U.S. Department of Commerce, although personal income fell by 1% in September, a decrease of more than 0.4% than expected, the annual inflation rate in September increased at the fastest rate in more than 30 years. The US personal consumption expenditure price index (PCE) rose 0.4% in September, up 4.4% year-on-year, the fastest growth rate since January 1991.