Bill Ackman gives an X for his thoughts, where the billionaire investor takes to the global digital speakers’ corner and thrashes out his innermost musings over an array of issues from socio-economics, geopolitics, and finance.  

On the recent Palestinian-Israeli war, which broke out on October 23, Bill Ackman posted, “I am pro-Palestinian. “I am anti-terrorist, not anti-Palestinian. It is not inconsistent to be pro-Israel and pro-Palestinian.” 

Bill Ackman gives an X for his thoughts on issues relating to finance is a good one for investors to follow. 

The worst treasury bond bear market in 2023 culminated in the collapse of five known banks, was underreported by mainstream headlines.

“Bill Ackman gives an X for his thoughts on issues relating to finance is a good one for investors to follow”

WEALTH TRAINING COMPANY

But here is Bill Ackman giving an X for his thoughts posted in the first quarter of 2023 as the banking crisis unfolded. 

“The gov’t has about 48 hours to fix a-soon-to-be-irreversible mistake. By allowing @SVB_Financial to fail without protecting all depositors, the world has woken up to what an uninsured deposit is — an unsecured illiquid claim on a failed bank. Absent,” posted Ackman in March 2023 and is relevant today.  

Bill Ackman then explained what would follow and the mechanics of the current banking liquidity credit crisis, currently playing out.  

“The giant sucking sound you will hear will be the withdrawal of substantially all uninsured deposits from all but the ‘systemically important banks’ (SIBs). These funds will be transferred to the SIBs, US Treasury (UST) money market funds and short-term UST. There is already pressure to transfer cash to short-term UST and UST money market accounts due to the substantially higher yields available on risk-free UST vs. bank deposits,” he wrote.

“These withdrawals will drain liquidity from community, regional and other banks and begin the destruction of these institutions.  

“The giant sucking sound you will hear will be the withdrawal of substantially all uninsured deposits from all but the ‘systemically important banks’ (SIBs)”

BILL ACKMAN

Here is the fallout;

“Already thousands of the fastest growing, most innovative venture-backed companies in the US will begin to fail to make payroll next week. Had the gov’t stepped in on Friday to guarantee SVB’s deposits (in exchange for penny warrants which would have wiped out the substantial majority of its equity value) this could have been avoided and SVB’s 40-year franchise value could have been preserved and transferred to a new owner in exchange for an equity injection. We would have been open to participating,” he added.

“it wasn’t too long ago, when Bill Ackman bagged billions shuffling a large treasury bond short bet, which made him 1.25 billion dollars in profit”
Wealth Training Company

But for those of you who remember, it wasn’t too long ago, when Bill Ackman bagged billions shuffling a large treasury bond short bet, which made him 1.25 billion dollars in profit.  

“Bill Ackman’s Pershing Square treasury short would be in the money if capital flow in treasuries fell sending, their corresponding price lower and yields higher.

The logic is there is zero attraction for investors to own the 10-year Treasury with a 1.85% yield, and core inflation is running at 7%. Put simple investors of what is perceived to be haven treasuries are now guaranteed to lose money with a negative 5.15% yield,”

“Moreover, if US treasuries represent the pillar of Western finance used as collateral by commercial banks to secure trillions of dollars of loans then, you can understand we are in a high-octane situation,” 

Indeed, fast forward a year to 2023, and five banks went belly up.

The first quarter of 2024 and the bank liquidity crisis are equally dire, bearing in mind.

Fed Chair Powell has implemented 24-fold increase in interest rates from 0.25 to 5% in a little more than a year. 

That kind of move in a system so leveraged with debt is akin to a gorilla handling a box of fragile glasses. Many things are going to break.