 "US Secretary of the Treasury Scott Bessent and Howard Lutnick stand as US President Donald Trump speaks, at the White House, in Washington, US, on February 3, 2025. Reuters File")
Billionaire hedge fund manager Bill Ackman has accused US Secretary of Commerce Howard Lutnick of profiting from the expected collapse of the US economy.
In a post on X, Ackman said that the real reason Lutnick is indifferent about the US economy crashing is that he is counting on it.
Referring to the financial services firm, Cantor Fitzgerald, that he led for 35 years before joining the Trump administration, Ackman said, “He and Cantor are long bonds. He profits when our economy implodes. It’s a bad idea to pick a Secretary of Commerce whose firm is levered long fixed income. It’s an irreconcilable conflict of interest.”
Ackman was referring to Cantor’s investment in long-term bonds. In times of economic slowdowns, the kind of one that the United States is feared to be entering right now, long-term government bonds’ yields go up. In such slowdowns, historically, stocks have usually tanked and bonds’ yields have gone up as governments increased borrowings and investors found bonds safer than stocks.
Following the rollout of US President Donald Trump’s tariffs last week, markets in the United States and across the world have tanked — the Dow Jones is 8.75 per cent, Nasdaq is down 10.6 per cent, and S&P 500 is down 9.9 per cent. The crash, coupled with other economic indicators, such as consumer sentiment at a four-year low, has led to fears that a recession is coming. As countries have started announcing retaliations, Moody’s Chief Economist Mark Zandi has said that there does not appear to be a way for the United States to escape a recession. He had previously raised the odds of recession from 15 per cent to 45 per cent.
However, not everyone agrees with Ackman when it comes to Lutnick’s purported conflict of interest.
In a post on X, economist Nouriel Roubini said that Ackman has got it completely wrong. He said that Trump is pursuing tariffs because he and others in his orbit, such as Lutnick and trade adviser Peter Navarro, are committed to the protectionist ideology.
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View All“They truly believe they need to totally destroy China forever to reshore manufacturing to the US as ‘China screwed us for 40 years’. So you are clueless on what is driving these religious tariff zealots. And you think that they may listen to you as you pontificate from your billionaire elite bully pulpit,” said Roubini.