- The billionaire investor Chamath Palihapitiya hit the Federal Reserve for buying bonds from foreign companies in one Tweet this week.
- "Does @federalreserve really believe that buying foreign corporate bonds with US taxpayers will help America?" asked the social capital chief and Virgin Galactic chairman.
- The central bank's emergency facility bought debt from Japanese Toyota and British oil giant BP this month and tracks an index that gives Toyota, German automakers Volskwagen and Daimler the biggest weight.
- "This is what a kleptocracy looks like," Palihapitiya said, arguing that purchases are boosting markets and distracting from the economic impact of the pandemic.
- You can find more stories on the Business Insider homepage.
Billionaire investor Chamath Palihapitiya blew up the Federal Reserve to buy bonds from foreign companies Tweet this week.
Social Capital chief, Virgin Galactic chairman and partner in the NBA's Golden State Warriors, questioned how support from outside the United States helped Americans fight the coronavirus pandemic.
"Does @federalreserve really believe that buying foreign corporate bonds with US taxpayers will help America?" he asked, referring to a Zero hedge story about the trend.
"All it does is move the markets higher and distract us from what's actually happening with jobs and earnings on Main Street," continued Palihapitiya. "This is what a kleptocracy looks like."
The investor weighed in after the Fed revealed details through its secondary market corporate credit facility (SMCCF), which it launched to avert a credit crunch during the COVID-19 crisis.
The facility bought debt from more than 85 companies on June 16, including the U.S. divisions of Japanese automaker Toyota and UK energy giant BP.
The New York Fed too put the broad market index that the facility will track. The most heavily weighted were bonds from Toyota and the German automakers Volkswagen and Daimler, which each accounted for more than 1.7% of the index. BMW, Hyundai, Bayer, Unilever, Reliance and other foreign companies were also on the list.
In particular, some of these names employ thousands of Americans and are large enough that their bonds are included in many market indices.
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The SMCFF, which is managed by the BlackRock asset manager and is partially funded by the US Treasury Department, could spend up to $ 250 billion on existing corporate bonds. As of June 16, nearly $ 430 million was spent on individual bonds and $ 6.8 billion on exchange-traded funds.
The facility has already been criticized for buying bonds issued by Berkshire Hathaway because it is operated by one of the richest men in the world and most recently had $ 137 billion in cash.
"Warren Buffett doesn't need a Fed setback," said Danielle DiMartino Booth, director of market research firm Quill Intelligence. said CNN. "It's really embarrassing."
(tagsToTranslate) Finance (t) Markets (t) Investing (t) Chamath Palihapitiya (t) Federal Reserve (t) Bonds (t) Coronavirus (t) Pandemic