Bill Ackman bags billions shuffling a large treasury short bet which made 1.25 billion US dollars in profits.
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 safehaven 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.
“Bill Ackman bags billions shuffling a large treasury short bet which made 1.25 billion US dollars in profits”
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The fact that the dollar remains strong could be the main reason why international investors are still hanging onto treasuries. If an investor’s local currency depreciates 10% against the US dollar, owning US treasuries will still protect wealth. In other words, the investor is better off in treasuries than keeping funds in a low-yielding foreign deposit account.
So the US dollar index (DXY) is at 96.79, right on the 52 week high.
A strong USD supports global demand for treasuries, which is why the USD is likely to be kept stable in 2022.
But in the worst-case scenario, where it goes apocalyptic, and investors lose trust in the Fed’s monetary policy you’d see investors dump treasuries sending yields to levels that would trigger a tsunami of bad loans and engulf the global debt market. Demand for USD is complementary to demand for US treasuries, so if demand for the latter collapses that could take the US dollar down, marking an epic end of US hegemony.
Fed in control remains, DXY remains a store of wealth relative to other currencies, treasury yields are stable and rising, and precious metals, a rival safe-haven asset to treasuries, continue to get monkey hammered at price breakout levels.
But Back to Bill Ackman bags billions shuffling a massive short bet on treasuries only someone with privileged information would take out such a large bet against the largest buyer of treasuries, the Fed. Bill Ackman must either be telepathic or has a grapevine to the Fed.
“A strong USD supports global demand for treasuries, which is why the USD is likely to be kept stable in 2022”
WEALTH TRAINING COMPANY
Bill Ackman bags billions shuffling is a repeat rinse play
Remember the billionaire taking to the CNBC stage in an interview where he pronounced that “hell was coming” in March 2020 when the stock market crashed, and then he covered his shorts a few days later? So Bill Ackman bags billions shuffling in 2020, then again in 2022 as he makes all the right moves at all the right moments, which is essentially a bet on Fed policy, without the SEC even batting an eyelid.
We guess the real question we are interested in is as Bill Ackman bags billions shuffling, where is he putting the 1.25 billion dollar profit
“We recently purchased more than 3.1m shares of @Netflix , which makes us a top-20 holder. I have long admired Reed Hastings and the remarkable company he and his team have built. We are delighted that the market has presented us with this opportunity,” tweeted Bill Ackman.
But is this a case of when the billionaire says he is zigging, you’re better off zagging?
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