June PCE data comes out on Thursday, a day late for the Fed's policy meeting. The latest PCE reading was for May, showing that the headline PCE price index increased 6.3% Y/Y, the same rate as in April and core PCE price, excluding energy and food, rose 4.7%, down slightly from 4.9% a month earlier. The CPI, by contrast, measures the prices on fixed basket of items. The Fed, though, prefers to look at personal consumption expenditures, a gauge that reflects consumer behavior of substituting cheaper items when prices rise. The most recent reading of the consumer price index, which is for the month of June, showed no relief in inflation, rising 9.1% Y/Y, accelerating from May's increase of 8.6%. 'We're going to want to see evidence that really is coming down before we declare any kind of victory,' he said.Īckman expects Powell to hold his 'hawkish resolve on not only maintaining higher rates for longer, but also being open to a terminal rate meaningfully higher than 3.4%.' House Committee on Financial Services on June 23, he said he'd be 'reluctant' to reduce the federal funds rate until there are clear signs that inflation has come under control. Powell has addressed the question before.

economy, which is exactly what the Fed has been trying to avoid. Ackman, founder and CEO of the hedge fund Pershing Square (NYSE: SQ) Capital Management, offloaded 3. He contends that inflation has become embedded in the U.S. Hedge fund manager William Bill Ackman sold his entire stake in Netflix (NASDAQ: NFLX), a move that resulted in a 400 million loss after the streaming service provider’s shares tumbled due to a decline in subscribers. 'Interestingly, the more the market believes that the Fed will immediately reverse course, the less effective raising rates will be in moderating inflation, and the more the Fed will have to raise rates,' Ackman explained. That situation presents a conundrum, he added. The yield on the 2-year Treasury, which closely tracks the fed funds rate, fell 9 basis points on Thursday to 2.87% and has declined for four of the past six trading days.With the market pricing in a peak federal funds rate of 3.4% in December then falling to 2.7% by YE2023, Federal Reserve Chairman Jerome Powell is likely to be asked at his press conference Wednesday what factors would cause the central bank to start lowering rates, billionaire hedge fund investor Bill Ackman said via tweet Tuesday morning. In late May, he said his Pershing Square fund had already a monetized a “chunk” of a derivatives bet shorting short-term Treasuries We’re going to be looking at this, keeping our eyes open, and reacting to incoming data both on financial conditions and on what’s happening in the economy.”Īckman is not a disinterested party. We’re not going to be completely model driven about this. So I would think it would, but you know what? We’re going to find that out empirically. “I think that the neutral rate is pretty low these days. Powell more directly answered that question in the June press conference, when asked whether the Fed bringing rates as high as it’s forecasting in the dot plot, just shy of 4%, would break the back of inflation. hedge-fund manager’s activism has produced significant returns in years past for. In past inflation episodes, the Fed has had to lift rates above the prevailing levels of inflation to kill it, he said.Īckman said the Fed should clarify how it has arrived at the idea that the rate is neutral. Some investors love him, others hate him. Powell’s views on the neutral rate have only served to materially ease financial conditions making the inflation problem worse and his job more difficult,” said Ackman. It makes no sense in a world with 9%, 6% or even 4% inflation. “A neutral rate of 2.25-2.5% only makes sense in a world with 2% stable inflation. have made a mistake, when the central bank chief said a fed funds rate between 2.25% and 2.5% is right in the range of neutral, the level that neither restricts not stimulates the economy. He authored a tweetstorm, where he did say inflation will begin to come down soon. Asked if prices on a Tesla would go up, he replied: “too early to say for sure.”īill Ackman, the founder and chief executive of Pershing Square, agrees, in part. “More Tesla commodity prices are trending down than up fwiw.” Of course, not necessarily for his products. “Inflation might be trending down,” tweeted Elon Musk, the chief executive of Tesla

Bill ackman