Billionaire Investor Bill Ackman has criticized Commerce Secretary Howard Lutnick of having a conflict of interest and being “indifferent” toward the stock market selloff induced by the introduction of tariffs because of the latter’s fund, Cantor Fitzgerald LP’s exposure to bond investors.
What Happened: Ackman, the CEO of Pershing Square Capital Management, L.P., has slammed. Lutnick, who was the former chairman and CEO of Cantor Fitzgerald L.P. by stating that “He (Lutnick) profits when our economy implodes.”
This aligns with the inverse relationship between stocks and bonds during economic crises. When stocks crash, investors often move capital into bonds, driving up bond prices and lowering yields.
As the markets continue to crash after President Donald Trump’s tariffs, the 10-year Treasury yield has fallen to 3.90%. It is the first time that the yield has fallen to this level since before Trump was elected last year in October. Meanwhile, the two-year yield has dropped to 3.45%.
Cantor Fitzgerald, on the other hand, has been a major player in bond markets since its founding in 1945.
“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,” added Ackman in his post.
Why It Matters: According to Cantor Fitzgerald’s 13F filings, it holds positions in 275 publicly traded equity and debt securities, but has no significant exposure to bonds or bond-linked ETFs. However, the company is long bonds indirectly via these channels.
- Primary Dealer Role: As one of the 24 primary dealers, Cantor Fitzgerald must participate in Treasury auctions and maintain an active market, necessitating long bond positions not reported on 13F.
- Long Bond Fund: Cantor Fitzgerald’s Ireland-based Long Bond Fund invests in longer-dated Eurozone government bonds, representing a separate long bond position not typically on the 13F.
- Infrastructure Fund: The Cantor Fitzgerald Infrastructure Fund allocates 30% to public infrastructure equity and debt, but specific holdings aren’t in the 13F, as 70% is in private investments.
Furthermore, Ackman, in replies to his post, claims that his position is “long America,” aligning his interests with the country’s economic growth, while portraying Lutnick as “short America” due to his bond-heavy stance.
President Donald Trump‘s post-market close tariff announcement on Wednesday ignited a dramatic market selloff on Thursday, exacerbated by China’s retaliatory measures on Friday.
As of Friday, the S&P 500 was nearing the bear market zone as it closed 17.46% lower than its previous record high of 6,147.43 points. Dow was 14.99% down from its 52-week high of 45,073.63 points, whereas the Nasdaq 100 was already in the bear market territory, 21.71% lower from its high of 22,222.61 points.
Price Action: 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, slumped in premarket on Monday. SPY was down 3.39% and QQQ declined 3.64%.
On Friday, the SPY closed down 5.85% to $505.28, while the QQQ ended 6.21% lower to $422.67, according to Benzinga Pro data.
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