Bill Ackman says the economy is starting to slow and the Fed is likely done hiking


Pershing Square’s Bill Ackman on Monday sounded alarms on the economy, which he believes has begun to decelerate on the back of aggressive rate hikes.

“[T]he Fed is probably done. Ackman told CNBC’s SquawkBox that he believes the economy has begun to slow down. The level of real rates is high enough for things to slow down. “

In an effort to combat stubbornly high inflation the Federal Reserve raised interest rates to their highest level since 2001 while signaling that borrowing costs would remain elevated for longer. Last month, the central bank forecast that it would raise rates once more this year. Wall Street has become increasingly concerned about a possible recession, as the economy is feeling the lag effect of the massive tightening measures implemented since March last year. The economy is still strong, but it has definitely weakened. There are many signs of a weakening economy. “

The hedge fund manager, a billionaire, said that he believed long-term Treasury rates could go even higher under the current conditions. Ackman said he’s still shorting 30-year Treasury bills as a hedge. Ackman says that the 30-year Treasury rate is likely to rise. Ackman said that “the 30-year Treasury is likely to go higher.” We think that structural inflation will continue to rise in such a world. “

Ackman stated that investors who borrowed short-term at a fixed rate, and are now being repriced in the commercial property market will have a very challenging period. “

I think that is the biggest threat,” he said.

U.S. regulators recently approved Ackman’s unique SPAC structure — called “SPARC,” a special purpose acquisition rights company — in which he will inform investors of a potential acquisition planned for the SPAC before they are asked to pledge funds.

Correction: The Federal Reserve has taken interest rates to the highest level since early 2001. The time period was incorrect in an earlier version.