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Michael Burry just dropped a bombshell on one of the most shocking crises of all time. Just like 1999 and 2008, nobody knows what Burry sees, but the world is about to wake up soon. In Burry’s own words, “the theater took more than a decade to overstuff. Not likely everyone gets out in less than a year”. While it took ages for the theater to be stuffed with millions of people, the collapse will be quick and painful. Some people are inevitably going to be left behind, and it’s going to be their fault for not catching on. Even though the signs have been there for years, investors worldwide will still be in for a rude awakening.
I’m not going to point out the obvious and explain why money printing was a terrible idea. Everyone knows that the government messed up, but that’s not what I’m about to tell you. The Federal Reserve printed $5 trillion and this unsurprisingly led prices to rise. The inflation rate is currently at 8.6% as a result of this. Contrary to the mainstream media, Burry doesn’t think that inflation is going to remain elevated in the short term. It’s true that the Fed printed at an annual rate of $1.5 trillion during the pandemic, but the opposite is now playing out. The Fed is planning to cut the money supply at an annual rate of $1.1 trillion. If prices rose after the Fed printed trillions of dollars, it’s logical to assume that prices will drop after the Fed pulls back trillions. This is happening at the same time that supply chains are catching up to demand. Supply chains have been under pressure over the past couple of years, but this is starting to change. The world hasn’t been sitting back and letting the pandemic gloom over. It’s in our nature to adapt to the changing environment. New supply chains have been set up. Businesses have been becoming more efficient. More container ships are being built. The supply panic is on full speed by all means. One shipping analyst said that “last week, 13 more container ships were ordered, bringing the total for the year to 239. This is already the fifth-largest year on record for container-ship orders and we are only halfway through the year”. Such a large increase is obviously not sustainable. Another analyst explained how “the size of the overbook is obviously a reason for concern.” We’re starting to see the scramble to produce supply in the growth of inventories. Wholesale inventories are up 24% year over year. The problem with this newfound supply is that consumers are not spending as much. Consumer sentiment is at a one-and-a-half decade low according to the UMichigan consumer sentiment index. When you have an oversupply of goods and low consumer demand, prices are bound to drop at a rapid pace. Burry tweeted: “Question: In 2022, what brings a Christmas in July? Answer: A disinflationary overstocked consumer recession at Christmas”. Burry is hinting at an upcoming supply glut. A supply glut is when retail stores suddenly have far too much supply and not enough demand. As a result of a supply glut, retail stores will have to start dropping prices by introducing mass sales. That’s what Burry means when he says that Christmas will come early in July. Christmas sales always happen because businesses produce too many goods that need to be sold. The only way to sell those goods is by dropping the price. July 2022 will be an early Christmas, and not for a good reason. When there are too many goods on the shelves, corporate profits will drop immensely, which will eventually cause people to be laid off or see their salaries cut. Burry expanded on this concept by saying “This supply glut at retail is the Bullwhip Effect. Google it. Worth understanding for your investing endeavors. Deflationary pulses from this → disinflation in CPI later this year → Fed reverses itself on rates and quantitative tightening → Cycles”. The bullwhip effect is when a spike in demand causes the suppliers to order too much supply. This is because businesses tend to order a little more supply than needed as a safety net.
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fear porn
Well this is a good time to purchase everything at a lower price. Stock, index funds, even sales at stores.
I heard they found Capt'n Crunch dead in a bathtub full of milk. They think it's a cereal kller.
I know everyone loves Michael Burry from The Big Short. But Michael just reversed his position on runaway inflation which previously had no “bull whip” allusions. Like the rest of us – he’s guessing.
Every single sentence has the same exact tonal inflection and it is really really hard to listen to. I'm sure there's a lot of great information in there but it doesn't really tell a story nor does it keep you interested because the same pattern and the same tone is exhibited on every single sentence
Nuclear fusion has been just around the corner, since the 60's :p
This is happening right now with nVidia.
The fed put another 4.7 billion last month into the market. Don't let them full you. They are not pulling money out. They only say they are. They are doing the opposite only a little less now.
Wait till the war in Ukraine goes south
Ah, the circle of life
People have been saying this for a while. The example of cereal doesnt make sense because people dont stop buying foodstuffs due to inflationary tendencies. If a store has extra, they will continue to sell it, especially because it's not like it goes bad immediately. There will always be supply chain fluctuation. Worried investors can be bad investors, just like they can be sharp ones. But good ones always hedge against risk. For the most part, this will have limited impact on consumers in the long run.
Now homeowners, that's another topic altogether. The current pricing structure is bound to falter at some point… it sort of has to…
I really feel left aside hearing and seeing several testimonies from people on profits they make from Bitcoin/Forex Investment. Can someone recommend a good expert that trade on my behalf and generate profit for me.
This analysis is completely wrong. I feds reduce balance sheet and government continues to spend at same rate the money must come form either borrowing or taxes. Taxes reduces purchasing power just like inflation. Borrowing raises interest rates (because government is competing for the available money), which reduces purchasing power just like inflation – so the real problem – the source of it all – is government spending. If government spending is not dramatically reduced dramatically soon the results will be the same no matter how the economic value of the government spending is extracted from the economy.
End the fed! Private Fractional reserve banking only works for the few.
Abolish the Fed.
To all the normals out there stop spending your money live for nothing and kill these rich bastard leeches on society
Here are three guidelines to think about when investing over a short time horizon: Determine your level of risk Consider short-term instruments Synchronize goal timing with your assets
bullshit
THIS IS WHAT IS WRONG WITH THIS WORLD. WE SET OUR ECONOMY AROUND A CATHOLIC PAGAN HOLIDAY AFTER ANOTHER GOD. CHRISTMASS, THE MASS OF CHRIST. THERE IS ONLY ONE RELIGION THAT DOES MASS. ONE OF THE EVILEST PEOPLE IN THE WORLD, THE CATHOLIC POPE.
Safemoon Inu is going up during the downturn. The math with Safemoon Inu is incredible mathematics.. Safemoon Inu is going to be the story of crypto investments for 2022 and 2023.
Very interesting the Bullwhip of the 1970's.
No, bankreserves and hence QE does not influence the monetary system for ordinary people. The price increases we have seen is not inflation it's about supply shocks!
So the dumbass wholesalers should reduce the amount of inventory they expect to purchase buy an realistic amount to limit supply until equilibrium set in.