Bill Ackman Cheers Money Market Funds Hitting Record $7.4 Trillion As Jerome Powell Snubs Trump's Rate Cut Demands
Billionaire Bill Ackman expressed optimism as money market funds reached a record $7.4 trillion, suggesting that potential rate cuts could redirect this capital into equities. Despite his bullish outlook, some investors remain cautious, with historical data indicating that rate cuts often follow gains in the S&P 500. The Federal Reserve, led by Jerome Powell, continues to adopt a cautious stance amid economic uncertainty. U.S. stocks rose recently, driven by Nvidia's market cap surge, although futures for major indices were lower the following day.
Billionaire Bill Ackman said that he was “bullish” as the money market funds hit a record, hinting that any rate cuts could direct these monies into the equity markets.
What Happened: The founder and CEO of Pershing Square Capital Management, L.P., emphasized his “bullish” view while highlighting an X post by Barchart, which underscored that the money market funds hit a staggering $7.4 trillion as of the most recent data.
Ackman’s stance reflected optimism, suggesting this capital could flood into equities if interest rates drop. This was supported by historical data from 40 years showing that a rate cut follows solid gains for the S&P 500 over one to three years, as highlighted by Forbes.
During volatile times, investors increasingly favor money market funds or cash equivalents, a clear sign of heightened caution amid ongoing economic uncertainty and fluctuating interest rate outlooks. –
However, the Federal Reserve and its Chair Jerome Powell remain unfazed and continue to be in the “wait-and-see” mode as the June Fed minutes, released Wednesday, mentioned the words “uncertain” and “uncertainty” around 28 times.
The possibility of a tariff-induced inflation has kept some Federal Open Market Committee members on hold, while some participants are ready to start cutting again.
Why It Matters: While Ackman sees this as a bullish sign, Chamath Palihapitiya sounded an alarm that the markets were “risk-off” in May, when these funds had scaled $7.24 trillion.
Meanwhile, Fundstrat’s Tom Lee said that most of his institutional clients “hate” the V-shaped recovery from April lows, as over $7 trillion of liquidity parked in the money markets has made the investors wary of the current up move in the stocks. –
However, his views were aligned with Ackman’s that once the Fed starts cutting rates, the markets are poised for further upside.
Price Action: U.S. stocks climbed Wednesday, buoyed by Nvidia Corp.‘s NVDA shares soaring to an unprecedented $4 trillion market capitalization and a fresh all-time high, pushing the Nasdaq to close at a record high.
The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, ended higher on Wednesday. The SPY was up 0.60% at $624.06, while the QQQ advanced 0.71% to $556.25, according to Benzinga Pro data.
On Thursday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading lower.
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