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Michael “Big Short” Burry hints at a 2008-style crash in a cryptic tweet

In a now-deleted tweet, legendary American investor Michael Burry issued an ominous warning of a 2008-style crash he believes could materialize soon, sparking more pain in US markets.

Burry, the founder of Scion Asset Management, rose to fame after predicting the collapse of the US housing market as detailed in the Michael Lewis book, which was later adapted into a Hollywood film, The Big Short.

Here’s what Burry said in the now-deleted tweet: “Like I said about 2008, it’s like watching a plane crash. It hurts, it’s not fun and I don’t smile.”

Years ago, Burry described a recurring dream he had when the real estate market collapsed in 2007. In his dreams he repeatedly saw planes crashing.

Certainly, the context-free tweet was largely open to interpretation, as Burry failed to respond to questions from Twitter users who inquired about the tweet. Burry also has a habit of deleting his tweets shortly after they are posted.

US stock indexes surged into the green after Wednesday’s open, but after the worst start to the year in history for tech stocks, investors remained cautious on fears the stocks could quickly reverse gains at any time.

It’s worth noting that Burry’s vague tweet followed the release of U.S. new home sales data for April, which showed a nearly 30% decline from April 2021, according to data from the Census Bureau and Department of Housing and Urban Development.

In other news, the S&P Global Flash US Services PMI fell to a three-month low of 53.5 in May from 55.6 the previous month, a sign that the all-important US services sector could be slowing.

But the data isn’t all bad: while inflationary pressures are widely blamed for driving the rapid repricing of global equities, particularly in the US, a quick look at the US 5-year break-even rate – a Measure of The spread between the 5-year nominal yield and the yield on 5-year inflation-linked securities, which is taken as a measure of inflation expectations five years from now, shows that it has narrowed to below 2.9%, which is a Drop of about 30 basis points equals points in less than a week. This would suggest that long-term inflation expectations are beginning to cool, despite Bill Ackman’s laments that the Fed is still not doing enough to quell unrelenting price pressures.

About a year ago, Burry warned that markets were headed for “the mother of all crashes.” Months later, US stocks and bonds plummeted as the Federal Reserve debated its plans for a series of rapid rate hikes. More clues about the Fed’s thinking are expected later on Wednesday when the central bank releases minutes of its two-day monetary policy meeting earlier this month, at which it voted to raise interest rates by 50 basis points.

https://www.marketwatch.com/story/michael-big-short-burry-hints-at-2008-style-crash-in-cryptic-tweet-11653488526?rss=1&siteid=rss Michael “Big Short” Burry hints at a 2008-style crash in a cryptic tweet

Brian Lowry

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