Big Short investor shorting again

Michael Burry, the investor made famous for shorting the subprime mortgage market of 2008, is betting against Wall Street once again.

Featured in the 2015 film “The Big Short”, Christian Bale played the part of Michael Burry, a man with an uncanny eye for figures who bet big against the subprime mortgage market when it seemed that this market would go up forever.

Now Burry is betting against the general Wall Street trend once again. He’s making his bet against equities, and has liquidated all his U.S. stock positions as of June 30 this year.

Wall Street’s more benign outlook

Amid falling oil prices, the inflation figure for July came out at an unexpectedly low annual rate of 8.5%, which was much lower than the market had been predicting.

This good news, once digested by the market, led to a much-needed rally across equities and the crypto market alike. It was generally perceived that inflation had probably peaked and that the Federal Reserve would accordingly be a lot more dovish in the way of future interest rates before starting to print again.

Household debt crisis?

For Burry, this is all just a pause before the crisis really hits. The investor is predicting a household debt crisis that could have a really deleterious effect on the market.

Burry tweeted the following statement on his Twitter account, together with a Bloomberg graph showing that U.S. consumer borrowing had increased $40.2 billion in June over the previous month, which was the second largest increase ever. As usual, the tweet was then deleted.

“Net consumer credit balances are rising at record rates as consumers choose violence rather than cut back on spending in the face of inflation,”

In order to confirm his thesis, Burry has now liquidated his entire stock portfolio, as he waits for what he believes will be a much worse continuation of the stock market melt-down.

Bitcoin?

Burry has never been a fan of Bitcoin, and has described it as a speculative bubble that will crash. He called it correctly when bitcoin hit $60,000, saying that he would have liked to short it at that point.

However, bitcoin is now quite a long way down from those market highs, and given the precarious state of the global economy, an asset class that is outside of the debt-based financial system may be a clever play for the future.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice