Bill Ackman turns bullish and he thinks that stocks will soon be a buy.
After criticizing the Fed for not acting aggressively to put out the inflation fire billionaire investor Bill Ackman believes the Fed is on the case and that inflation has peaked.
“The Fed is ‘doing what it has to do to fight inflation,” said Bill Ackman.
Bond King billionaire investor Jeffrey Gundlach has also recently taken to the stage praising the Fed for fighting inflation with aggressive tightening.
“The Fed is ‘doing what it has to do to fight inflation,”
Bill Ackman turns bullish arguing that his greatest fear was not Fed tightening but inflation
Bill Ackman feels more confident now that Fed Chairman Jerome Powell is 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 rates and keep them there for an extended period,” Ackman said on September 6. “Our biggest fear was inflation, and that’s why we wanted the Fed to raise interest rates,” he added.
So Bill Ackman turns bullish on stocks as he puts forward his thesis in his latest business interview.
When Pershing Square Capital Management’s founder Bill Ackman was asked where he sees inflation 12 months from now, Ackman replied that he expects price pressures will come down “a lot.”
Bill Ackman then quantified what he meant by a lot.
He believes inflation will be 4%, if not 3.5%, from a peak of 9.1% in June, which was the highest recorded level in 41 years.
“I think they said they’re going to do what they have to do, which is raise rates and keep them there for an extended period,”
So here is the takeaway from Bill Ackman turns bullish thesis
“I think inflation is coming off,” he said.
“I think people will expect the Fed to ease,” he added.
Peak inflation means the central bank liquidity cycle has reached peak tightening. The optimum time to buy risk assets is when the central bank has reached a trough in the liquidity cycle and when the investor psychology cycle is coming out of a depression.
Bill Ackman’s bullish thesis is based on central bank liquidity reaching a trough, in other words, the Fed pivoting from tightening, to normal to easing in the liquidity cycle
Admittedly determining where we are in the liquidity cycle is easier said than done. But when two heavy-weight investors come out praising the Fed, then saying they believe inflation has peaked that is a bullish signal.
Playing devil’s advocate, perhaps the only thing that could rattle Bill Ackman turns bullish thesis is where we are in the world order cycle.
Post unipolar world is rife with geopolitical uncertainties. We did not think the war in Ukraine would last so long, which has been a massive energy supply shock adding to record global inflation.