Michael Burry is a well-known investor. Many retail investors scrutinize his every word and social media post in search of hints about smart investment strategies.

His stock portfolio is reviewed to see which firms he trusts and which he does not. Burry, who manages the hedge fund Scion Asset Management, has shorted some of the companies that do not, betting that their stock values will fall in the short term.

Burry’s words are especially awaited in times of great uncertainty, such as this one. Investors are concerned about whether a hard landing – a recession – is imminent or whether the Federal Reserve can create a gentle economic landing.

Investors have shown signs of optimism in recent weeks. They appear to believe that inflation, one of the major issues in 2022, is on the decline.

The renewed market optimism resulted in a 4.6% increase in the S&P 500 index this year, to 4,016.95 points as of Jan. 24.

Many experts believe that lower pricing for goods and services will induce central banks to moderate their aggressive interest rate hikes. They argue that such a shift in monetary policy could help the economy avoid a painful landing.

Except that, in their euphoria, investors appear to be missing key warning signs, such as the large job cutbacks that are still taking place in the tech sector, which lost about 100,000 employees last year. According to data, IT companies have already lost over 58,000 jobs this year. 12,000 are from Google (GOOGL), and 10,000 are from Microsoft (MSFT).

Burry Tweets What Appears to be a Pessimistic Parallel

Burry, on the other hand, is pessimistic. He even seems to imply that it is all an illusion, with the markets in for a rough ride.

The investor, who generally communicates in cryptic messages, tweeted a graph showing the S&P 500 from September 2000 to the beginning of 2003, essentially the dot-com bubble and the aftermath of 9/11, on Jan. 23. He drew a circle around the months of September 2001 and April 2002.

The S&P 500 managed to stabilize somewhat during this circling time after being in continuous fall since a high of 1,530.09 points on September 1, 2000.

Between September 2001 and April 2002, the S&P 500 rose twice, to about 1,178 and 1,176 points. The index then fell for four months to a low of 771 points. It then climbed to 966 points before plummeting again.

Michael Burry’s image posted is accompanied by a single word: “Maybe.

The investor did not say anything else, but he seemed to be drawing a connection with the current time period. He later removed the post, restarting a habit. When Elon Musk took over Twitter on October 27, he stopped removing posts.

Burry had Raised That a Recession is in the Works

Burry’s warning comes as no surprise, as the investor predicted at the start of the year that the US economy would enter a recession this year, regardless of how you define the term “recession.”

Inflation peaked,” Burry tweeted on January 1. “However, this is not the cycle’s final apex. We expect the [consumer price index] to fall, maybe to zero, in the second half of 2023, and the US to be in recession by any definition.

He goes on to explain a vicious circle. The Federal Reserve, which has raised interest rates to levels not seen since the 2008 financial crisis, will reverse course and decrease rates, while the federal government launches a stimulus program to support struggling people.

All of this will result in a resurgence of inflation, similar to what happened during the covid-19 pandemic.

Essentially, we will witness a reenactment of what occurred after March 2020.

The Fed will cut, while the government will stimulate. And there will be another increase in inflation. It’s not difficult,” Michael Burry wrote.

Burry became a legend as a result of the 2008 financial crisis, one of the worst financial disasters in history. It made him an example to follow in defiance of traditional financial standards.

The Big Short

The 2015 film “The Big Short” depicts how an investor with no prior knowledge of banking or real estate realized the sector had devolved into a sandcastle. Financiers and bankers had developed exotic products based on mortgages provided to financially distressed households and borrowers with weak credit.

He chose to gamble on the subprime mortgage market collapsing, earning the label “Big Short.” History has proven him correct. Burry became somewhat of a Wall Street oracle due to the move.

According to his Twitter account, Cassandra B.C., he welcomed this role. He acts as a spoiler for traders and risk-takers.

Michael Burry had warned in recent months that the economy would deteriorate significantly, that enormous layoffs of white-collar workers were on the way, and that the stock market would face a test after two years of prosperity during the pandemic.

All of these predictions came true in 2022.

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