Michael Burry’s New WARNING | MARKET CRASH, Inflation, Shorting Stocks

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Let’s go in-depth into Michael Burry’s latest insights into inflation, a stock market crash & shorting stocks…
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Michael Burry we all know he’s the genius that predicted the 2008 financial crisis, he shorted stocks and made an absolute tonne of money. Now fast forward 13 years since that crisis, and Burry has started to become very vocal on what’s been going on the stock market. If we look at his twitter account, he’s been warning about Inflation, he’s warning about market crashes and he’s given advice on shorting stocks and where he see’s opportunity in today’s market.

Now the interesting thing is that if we type in his twitter account and go to it, we see that every one of his tweets has now been deleted.

I have no idea why he deletes his tweets, but it seems that the SEC has been keeping a tight leash on Burry ever since he started tweeting about Tesla, Bitcoin, robinhood and meme stocks. He recently even received a subpoena from the SEC in connection with its investigation into GameStop and that whole saga. So all Tweets from Burry are deleted and great we no longer get insight into the mind that predicted the 2008 financial crisis.

Well that would be the case, except one, smart, savvy person, created a twitter account called Michael Burry archive. This account collects and stores every tweet from Michael Burry and means they never get fully deleted.

And this is important because Burry is someone who’s not afraid to share his mind. He’s not afraid to be politically incorrect. He’ll tell you exactly what he thinks when it comes to the important topics…

Ok, let’s see what he’s tweeted. “The great inflation fear is returning. The inflation fear is gaining traction in the various corners of the market, putting a serious dent, in the feds assurances that it is transitory. Global angst among businesses about inflation is mounting as raw material costs rise, increasing pressure on them to raise consumer prices. The 10 year treasury yield has broken through a key resistance. Leaving more room to climb, while inflows into inflation protected ETF Funds accelerated this year. Strong relationship between inflation and commodities suggest more upside for raw material prices ahead”.

Ok, there’s a couple of parts of this tweet that we need to break down, but let’s be clear about this, Michael Burry is warning about strong inflation ahead. The Fed says it’s transitory, don’t worry too much about it, Burry says it’s here to stay. Let me show you his thinking…

Ok the first part was the cost of raw materials. With this fun pandemic that we’ve all had to go through, some of the people who suffered the most were the exporters and importers.

If we look at the price of raw materials the index shows us that they increased by nearly 18% compared to the previous year. This was led by the raw material cotton which went from a $1 in April 2020 to $1.87 a year later. Rubber a similar story $1.05 in April 2020 to $1.66 in 2021 just over a year later…

So Raw materials prices have shot up. Now what is the follow on effect from this. Businesses they don’t just accept the cost increase and decide to make a loss, no, they pass on the prices to the end consumer. This forces the price of consumer goods to go up, aka, inflation increases.

That is one big contributory factor to inflation, but it’s not the only factor pushing up prices. Burry also talked about interest rates.

Let’s take a look at the history between inflation and interest rates over 70 odd years. As we can see when interest rates started rising inflation started rising. We’ve seen this numerous times throughout history.

So what’s currently going on with interest rates? If we look at the 10 year treasury yield, the key indicator, interest rates have been going up. As per Burry’s tweet, it’s broken through a key resistance, leaving more room to climb.

So, if we go by what history tells us, the increase in interest rates is going to lead to one thing, and that’s more or at least sustained inflation going forward…

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DISCLAIMER: It's important to note that I am not a financial adviser and you should do your own research when picking stocks to invest in. This video was made for educational and entertainment purposes only. Consult your financial adviser. * Some of the links on this webpage are affiliate links. This means at no additional cost to you, we earn a commission if you click through and make a purchase and/or subscribe. This has no impact on my opinions, facts or style of video.