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Billionaire investor Bill Ackman is not afraid of Omicron. As the new Coronavirus Omicron variant is causing panic around the world with countries like Israel once again closing their borders, Bill Ackman seems to be unafraid. He has said that the Omicron variant could actually boost equities.
That is, said Ackman, as long as Omicron only causes minor problems.
Bill Ackman Tweeted about the Covid Omicron variant, “A thought. While it is too early to have definitive data, early reported data suggest that the Omicron virus causes ‘mild to moderate’ symptoms (less severity) and is more transmissible. If this turns out to be true, this is bullish not bearish for markets.”
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Ackman later felt obliged to clarify his statement. He added to the original Tweet, “I should have said: bullish for the equity market, bearish for the bond market.”
Bond and stock markets are negatively correlated: when one is up the other will be down. There are a number of reasons for this, but the main factor is interest rates. When interest is low it is cheaper for companies to borrow money thereby stimulating growth and an increase in stock prices. Meanwhile bonds offer less of a return and so people will put their money into stocks raising stock values further.
But when interest rates go up the opposite happens because people are more attracted to bond investments since they offer higher returns and are a safer bet. Also, since it’s more expensive to borrow money firms do not grow as much and so stock become less attractive to investors.
Well, for now the statement about Omicron seems to be accurate. As for bill Ackman’s comments on the markets, the next few weeks will see if he is right. But it’s basically just an either or proposition.
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I should have said: bullish for the equity market, bearish for the bond market https://t.co/Kvk0t4uViA
— Bill Ackman (@BillAckman) November 29, 2021
In other Bill Ackman news, Pershing Square SPARC Holdings, Ltd. an affiliate of Bill Ackman’s Pershing Square Tontine Holdings, Ltd., has filed a registration statement with the SEC relating to the proposed public offering of its subscription warrants to purchase common stock, or SPARs. If the registration statement is declared effective, the SPARs are expected to be distributed without cost to the security holders of PSTH, as described in the registration statement.
SPARC is a newly formed Delaware corporation, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other business combination transaction with one or more businesses. SPARC has not yet selected any specific business combination partner or engaged in any substantive discussions, directly or indirectly, with any potential business combination partner. The Sponsor of SPARC, Pershing Square SPARC Sponsor, LLC, is an affiliate of Pershing Square Capital Management, L.P.
