A top hedge fund investor believes stock and AI bears will be left on the sidelines once macro tailwinds take effect.
In a new Fox Business interview, billionaire Bill Ackman of Pershing Square Capital says many investors are torn between fear of an AI bubble and belief in long-term transformation.
To make matters worse for investors, Ackman notes that some stress is emerging in private credit markets, adding to the search for downside risks after years of strong performance.
“And I think, you know, people sort of scratching their heads about the AI investment. Is this a frightening investment, or is this the future? And then I think that this whole sort of private credit thing is a bit of an overhang. You’ve seen some cracks in private credit that concern people. In a market that has done generally very well over a long period of time, people are looking for risk.”
But Ackman says the macroeconomic backdrop looks favorable for stocks and other risk assets. Specifically, he mentions recently enacted tax incentives that allow companies to deduct major capital expenses upfront, which he believes will unlock business spending.
“I think we will have the Fed cutting rates, if not end of year, sooner or later, I think they should. Business fundamentally is a confidence game in a good way. And the president, I think, gives business leaders a lot of confidence about making investments, about making acquisitions.
I failed to mention the tax bill. The tax bill is hugely pro-economy because an airplane [company] can take the depreciation in the year that you buy the plane, same thing for factories and real estate. And that bill was announced and became law.”
The billionaire notes that the effect will not be instantaneous.
“But it takes time for it to have an economic effect… So I think you’re going to see some real tailwinds: M&A activity, the tax bill, AI, productivity, and just the general confidence that the president instills in business leaders.”
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