Billionaire investor Bill Ackman warned of inflation, discussed bitcoin, and explained why he’s staying in New York City in a recent interview. Here are his 12 best quotes.

Bill Ackman
  • Bill Ackman said inflation won’t be temporary and the economy is at risk of overheating with interest rates this low.
  • The hedge fund billionaire also said cryptocurrency is “fascinating” but he’s not comfortable investing in bitcoin.
  • Ackman also revealed his fund recently acquired a 6% stake in Domino’s.
  • See more stories on Insider’s business page.

Billionaire investor Bill Ackman warned inflation may not be temporary and said the Federal Reserve may have to raise interest rates in a Wednesday interview at the Wall Street Journal Future of Everything Festival. The Pershing Square Capital Management founder also revealed that his fund recently purchased a 6% stake in Domino’s Pizza, sending the shares up as high as 5.9% Wednesday.

Here are 12 of Ackman’s best quotes from the interview, lightly edited and condensed for clarity:

1. “We’ve admired it for years, and it was just never cheap enough. And then for about five minutes, it got cheap. I don’t know who sold or why, but we started buying around $330 a share, and then very quickly it moved up a lot,” on his decision to buy a 6% stake in Domino’s pizza during the pandemic.

2. “The surprise numbers that came out are not due to any weakness in the economy. The economy is crushing it. Businesses are booming. If you think about hospitality, you can’t get a reservation in New York anymore,” on the jobs report that badly missed estimates last week.

3. “There are plenty of jobs, people haven’t had to work partially because of the stimulus…When unemployment benefits step back and some of the stimulus wears off, there will be more of a supply of labor.” He added that raising wages is good for workers and the economy because workers will spend money.

4. “They’ve got a great product, a great value where they do have pricing power. And so they’re able to offset the incremental costs of paying higher wages with charging a little bit more for a burrito. You charge 50, 60, 70 cents more for burrito, you can pay your workers more, and it’s still very good value to consumers. The key in a world where there’s going to be inflation and there’s going to be wage inflation is to have a business that sells a product where there’s pricing power,” on Chipotle raising wages. (Ackman’s Pershing Square owns Chipotle stock.)

5.”I think it’s not temporary‚Ķ.Look at every commodity price right? Copper, lumber, energy even before the colonial pipeline issue. Look at housing prices, look at Bitcoin right? Everything is inflating. That’s driven by a once in a moment history. People are emerging from a pandemic with the endless spirit that comes from being locked up,” on inflation.

6. “I think they’re going to have to raise rates for sure. And I think they adjusted their policy just at the wrong time. Preemptive policy toward inflation I think is a better approach, particularly in a world where we have massive, massive economic stimulus,” on The Federal Reserve.

7. “I think with rates where they are, there’s a very good risk of the economy overheating.”

8.”I think crypto is a fascinating phenomenon. I think it’s a brilliant technology and I kick myself for not understanding it, it’s one of the best speculations ever… But it’s not a place where I would feel comfortable personally putting any meaningful amount of assets in. Therefore I wouldn’t invest our firm’s assets.”

9.”There’s no intrinsic value. Intrinsic value to me is driven by cash generation. You have to be able to build a discounted cash flow calculation,” on why he’s not comfortable investing in bitcoin.

10. “I would be concerned if a friend had a lot of their net worth invested in, in one or more cryptocurrencies, I’d want them to take some money and put it into something a little more durable.”

11. “New York is an extremely desirable place to live. It is a big tax burden and when high-income people do the math and they say, well, I could move to Florida and buy this amazing house and not the state taxes, it motivates some people, but…One of the benefits of being successful is you can choose where you live. So to run away from a location because the tax rate is higher, it seems kind of silly,” on the migration from New York to Miami and his decision to keep Pershing Square in Manhattan.

12. “I think it’s very, very important who the next mayor of New York is, and that we actually have a pro-business mayor. The mayor of Miami has done a great job recruiting technology executives. The next mayor of New York has to do the same thing.” He added that Raymond McGuire and Andrew Yang are both great candidates for mayor.

Read the original article on Business Insider

Billionaire investor Bill Ackman says sustained inflation could be a ‘black swan’ risk for the stock market

Bill Ackman
Bill Ackman.

Bill Ackman said in an interview with Interactive Investor published Thursday that sustained inflation could cause an unexpected tailspin in the stock market.

“I think one of the ‘black swan’-type risks for markets is a real spike in inflation that’s not just a three-month spike, that’s more sustained,” Ackman said. “Also, meaningfully higher interest rates, which I think will affect the discount rates that people use to value companies. And I think those could be countervailing stock-market forces.”

A “black swan” event is a rare and unpredictable event that could have severe consequences.

The Pershing Square Capital Management founder said that the trillions of dollars in stimulus from COVID-19 relief bills and President Joe Biden’s infrastructure proposal, historically low interest rates, and “benign policy” from the Federal Reserve would set the US up for “explosive GDP recovery and probably inflation.”

Ackman said he thought that with the pace of vaccinations, the US would be close to full employment and near all-time low unemployment rates at the start of 2022 – factors for the Fed to change policy.

“I think you could see certainly expectations change as soon as the next few months about how accommodative the Federal Reserve will be,” Ackman added.

Read more: Legendary investor Jeremy Grantham called the dot-com bubble and the 2008 financial crisis. He told us how 4 indicators had lined up for what could be ‘the biggest loss of perceived value from assets that we have ever seen.’

More investors have questioned whether inflationary pressures from the economic recovery will be temporary or have a lasting effect on markets. The Fed has signaled that it will keep its accommodative policy stance, which has long driven gains in stocks. The Fed’s chairman, Jerome Powell, has also emphasized that any rise in inflation would be transitory.

But many on Wall Street have predicted that the Fed will need to change its hand sooner than expected and that it will spook markets. The Wharton professor Jeremy Siegel told CNBC on Friday that the Fed would change its policy stance in 2021 and that it would cause a “day of reckoning” in the stock market.

Ackman recommended investors own businesses with pricing power to combat inflation.

“I think inflation is going to be real, and you’re going to see wage inflation. I mean, everywhere there are ‘help wanted’ signs. It’s very hard to hire people to fill its jobs, particularly with a stimulus package which includes extra unemployment benefits,” the investor said. “So it’s a lot of pressure on wages I think, which I think ultimately is a good thing but could have, again, depending on the nature of the business, could have a negative impact.”

Read the original article on Business Insider

Billionaire investor Bill Ackman warns that sustained inflation could be a ‘black swan’ risk for the stock market

Bill Ackman
  • Hedge-fund billionaire Bill Ackman said a sustained rise in inflation could be a “black swan” event to markets.
  • He detailed his take in a recent interview with Interactive Investor.
  • Ackman said the US could hit full employment by the end of the year, forcing the Fed to change its policy stance.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Bill Ackman warned that sustained inflation could cause an unexpected tailspin in the stock market in an interview with Interactive Investor published Thursday.

“I think one of the ‘black swan’ type risks for markets is a real spike in inflation that’s not just a three-month spike, that’s more sustained,” Ackman said. “Also, meaningfully higher interest rates, which I think will affect the discount rates that people use to value companies, and I think those could be countervailing stock market forces.”

A “black swan” event is a rare and unpredictable event that potentially has severe consequences.

The Pershing Square Capital Management founder said the trillions of dollars of stimulus from COVID-19 relief bills and Biden’s infrastructure package, historically low interest rates, and “benign policy” from the Federal Reserve is setting the US up for “explosive GDP recovery and probably inflation.”

Ackman said that with the pace of vaccinations in the US, the country will be close to full employment and near all-time low unemployment rates at the start of 2022. Those factors are the triggers for the Federal Reserve to change policy.

“I think you could see certainly expectations change as soon as the next few months, about how accommodative the Federal Reserve will be,” Ackman added.

Ackman’s interview comes as more investors begin to question whether inflationary pressures from the economic recovery will be temporary or have a lasting effect on markets. The Federal Reserve has signaled it will keep its accommodative policy stance, which has long driven gains in stocks, in place for much longer. Chair Powell has also emphasized that any rise in inflation will be transitory.

But many on Wall Street are predicting the Fed will need to change its hand sooner than expected, and that will spook markets. On Friday, Wharton Professor Jeremy Siegel told CNBC the Federal Reserve will change its policy stance at some point in 2021, and that will cause a “day of reckoning” in the stock market.

Ackman recommended investors own businesses with pricing power to combat inflation.

“I think inflation is going to be real, and you’re going to see wage inflation. I mean, everywhere there are ‘Help Wanted’ signs, it’s very hard to hire people to fill its jobs, particularly with a stimulus package which includes extra unemployment benefits,” said the investor. “So it’s a lot of pressure on wages which I think ultimately is a good thing but could have, again, depending on the nature of the business, could have a negative impact”

Read the original article on Business Insider