Michael Burry has said that he thinks that inflation has temporarily peaked but he expects it to surge again in 2023. He believes that this will happen after the US enters a recession. This will result in the US government splurging on more stimulus spending and the Federal Reserve cutting interest rates. But is this a likely path to higher inflation, and if not, what might trigger a second spike?
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Timestamps
00:00 Introduction
00:31 Inflation Warning
02:47 US Recession
07:29 Fed Rate Cut
09:22 US Government Stimulus
11:43 More Likely Path To High Inflation
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Michael Burry, the famous investor who accurately predicted the housing bubble burst in 2008, has once again sounded the alarm on a potentially devastating economic threat. This time, he is warning about the looming threat of inflation.
In a series of tweets, Burry expressed his concerns about the current economic situation, stating that unprecedented money printing by governments and central banks around the world has set the stage for a surge in inflation. He also pointed out that the massive amount of government and corporate debt, coupled with the ongoing supply chain disruptions and rising commodity prices, could further fuel inflationary pressures.
Burry’s warning comes at a time when many economists and market analysts are already expressing concerns about runaway inflation. The US Federal Reserve has consistently maintained that the recent surge in inflation is transitory and attributed it to temporary factors such as supply chain disruptions and pent-up consumer demand. However, Burry believes that these inflationary pressures could persist for longer than expected and have a more significant impact on the economy.
The potential consequences of high inflation are severe. It erodes the purchasing power of consumers, leading to a decrease in their standard of living. It also increases costs for businesses, which could potentially result in lower profitability and job losses. Moreover, it can lead to higher interest rates, making it more expensive for individuals and businesses to borrow money.
In response to Burry’s warning, many investors and market watchers are beginning to reconsider their investment strategies. They are seeking ways to protect their portfolios from the effects of inflation, such as increasing their exposure to commodities, real estate, and other tangible assets that have historically been a hedge against inflation.
It is worth noting that Burry has a track record of making prescient financial predictions. His early recognition of the housing market bubble and his subsequent profitable bet against it earned him widespread acclaim and credibility. Therefore, his recent warning about inflation should not be taken lightly.
As the global economy continues to grapple with the aftermath of the COVID-19 pandemic, it is crucial for policymakers and investors to heed the warnings of individuals like Michael Burry. Proactive measures should be taken to mitigate the potential impact of inflation, such as implementing prudent fiscal and monetary policies and diversifying investment portfolios to guard against its adverse effects.
In conclusion, Michael Burry’s inflation warning should serve as a wake-up call for all stakeholders in the economy. While the true extent of the inflationary threat remains to be seen, it is essential to take proactive measures to safeguard against its potential consequences. Ignoring these warnings could lead to severe economic repercussions in the future.
Again, some quite superb analysis, do you run a portfolio/asset management function?
Prove those reserves really physically exist . Most likely just numbers on .. paper ? Or digital
This is quality work, with reference to good quality sources. Much better than the average Youtube or hot takes, a thumbs up for seriousness and attention to the complexity of the subject.
Even a broken clock is right twice a day.
The FED has been Wrong for 20 years . IMHO .
Employment is measured differently nowadays .
The sudden spike in inflation might have been the energy crisis following the invasion of Ukraine, but we all know that the sole reason for the inflation in the first place was the ungodly amount of printing of money by all central banks…
G'day guys, sorry I think your wrong, U.S debt to GDP during the lock-downs was around 97 -98%, however in September of 2019, the repo market was imploding, the fed had to pump in trillions of dollars to try to keep the Banksters afloat, this with stimulus caused the inflation, however the U.S just approved another1.7 trillion slush fund, which will, along with other rising price will doom loop, I think Burry is alright, another round of inflation about May, give or take a month.
Interesting video. Thank you.
What is expected gbp / usd in next 6 Months
In my humble opinion and i think some experts also highlithed this issue which is the missing key elements in all current prediction is debt. All we hear is similation and predictions based on historical patterns which have traditional economic cycle (inflation/deflation). Now the issue is the mechanism allowing government to control or stimulate these cycles have reached somewhere a red zone accumulating enormous debt.
QT (interest rise) increase debt so is the QE which is even worse by x10. Now we are in a place where countries will never pay for public debt especially the US. This is the next financial buble and the crisis that will lead to a global monetary reset. We are already seeing this with some countries like Sirilanka and Ghana etc… Now for major economies i think so far no one knows what to expect after this reset. Especially with geopolitical tensions and dollar weakining. What amaze me is why this still being ignored by analysts.
The economy is rolling along. Unemployment is very low. There's not going to be a deep recession and the Fed will keep raising 25 bps at a clip.
Ultimately though inflation is a choice.
JPMorgan Chase & Co posted stronger-than-expected fourth quarter earnings Friday and said the U.S. economy remains strong, with solid consumer spending and healthy business activity. My portfolio has good companies, however it has been stalling since last year. I have approximately $550k static in my reserve that needs growth.
Who knew that the "Federal Debt Held by the public" actually includes the Fed's holdings ?
Makes sense when you think about it.
12:36 – Energy -> government policy in the Western World believing in the ESG bullishit. That is THE issue.
Great work, well done. Much appreciated ✅
I agree with almost everything this speaker said in this well thought out video. But I must say I (like Mr Burry) think that during the upcoming recession the fed will chicken out and reduce interest rates somewhat despite what Mr. Powell says in his speeches. And the gov't will try to add a little stimulus to improve the economy with a federal election upcoming. And inflation will rise again as it always does in this situation.
But I do think a once in a lifetime buying opportunity will play out in the market next year.
1. QE for 10+ years.
2. Confisticate "enemy" country central bank asset.
3. Fed QT 2 years, while Biden added 5T debts in 2 years.
All these will have consequence.
So much useful information, thank you sir!
So much information think for this….
So much information thanks
This information is good
Currently feels like every 'expert' has their won view of what will happen next – a bit like predicting the closing level of S&P500 or FTSE at year end. Which expert will be most accurate? They can't all be correct so check back for progress in a few months.
I thought Burry’s tweet was actually hinting at some form of unforeseen financial crisis that forces the US to lower rates as an emergency measure. A sudden liquidity crisis in pensions / derivatives or real estate might be on the cards this year. Although I sincerely hope not.
!!