David Rosenberg took a jab at billionaire investor Bill Ackman for his bet against US Treasurys.
The top economist said falling US rents could see inflation “melt,” suggesting the Fed could end its hikes.
His view contrasts to Ackman who revealed he’s shorting 30-year US Treasurys as a hedge against high inflation.
Top economist David Rosenberg took a swipe at Bill Ackman, saying his Treasury bet could end as badly as his Herbalife wager.
The Rosenberg Research founder said a slowdown in the housing market could see inflation “melt” – suggesting the Federal Reserve could soon end its rate hiking cycle. That contrasts to Ackman’s view of stubbornly high inflation, which has led him to short US Treasurys.
“If the San Fran Fed’s research report on CPI rents is anywhere near the ballpark, headline inflation in a year will melt to 0.5% and to 1.4% for the core. Bill Ackman is destined to be as offside on Treasuries as he was on Herbalife!” Rosenberg said in a post on X.
In 2012, Ackman unsuccessfully opened a $1 billion short position against dietary supplement firm Herbalife. It became one of Ackman’s biggest-ever losses as Herbalife’s stock kept rising until he had to ultimately liquidate his position.
The Federal Reserve Bank of San Francisco highlighted a sharp slowdown in house prices and asking rents in 2023, in a recent economic research report.
“As policymakers continue to confront elevated inflation, changes in housing markets suggest pressure from shelter inflation could ease substantially. The forecasts we present in this Economic Letter indicate that future shelter inflation may decline considerably, reflecting the signals of slowing in recent rental markets,” the bank said.
With signs of inflation cooling, it could mean the Fed’s rate hiking cycle could soon come to an end. The Federal Reserve has aggressively steepened interest rates over the past year in a bid to cool 40-year high inflation, from near-zero levels to upwards of 5%.
The tight policy has worked to slow down the pace of consumer price pressures, with the latest CPI report showing inflation rose by 3.2%, below economists’ forecasts.
Pershing Square CEO Ackman, however, recently revealed he’s betting against 30-year Treasurys as a buffer against the impact of higher interest rates on stocks. Unlike Rosenberg, the billionaire investor said high defense costs, and greater bargaining power of workers could stoke inflation.
Bond prices tend to have an inverse relationship to interest rates. When interest rates go up, bonds usually fall. Traders may bet against bonds if they think their prices will drop.
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Source: https://finance.yahoo.com/news/top-economist-david-rosenberg-says-175845663.html