Would you be willing to bet a billion dollars that stock prices are going to collapse? Needless to say, only an extremely small fraction of the population has that much money. And once you have accumulated a billion dollars, one would think that you would be extremely determined to protect it. But that is not what Michael Burry is doing.
(Article cross-posted from The Economic Collapse Blog)
During the financial crisis of 2008, his massive bets against the housing market made him incredibly rich, and now he is making another “big short”.
According to CNN, Burry has bet over 1.6 billion dollars that the stock market is going to crash…
Michael Burry, the “Big Short” investor who became famous for correctly predicting the epic collapse of the housing market in 2008, has bet more than $1.6 billion on a Wall Street crash.
Burry is making his bearish bets against the S&P 500 and Nasdaq 100, according to Security Exchange Commission filings released Monday. Burry’s fund, Scion Asset Management, bought $866 million in put options (that’s the right to sell an asset at a particular price) against a fund that tracks the S&P 500 and $739 million in put options against a fund that tracks the Nasdaq 100.
Burry is using more than 90% of his portfolio to bet on a market downturn, according to the filings.
Does he know something that the rest of us don’t?
If he is wrong, he will look like a fool. But if he is right, he will be a legend.
Michael Burry places a huge leveraged short position on the stock market with put options.
The Big Short Version 2.0 😳 pic.twitter.com/8SHtZ0r4V9
— Wall Street Silver (@WallStreetSilv) August 14, 2023
Without a doubt, the stock market is ripe for a crash.
The S&P 500 and Nasdaq 100 have both notched big gains so far this year. They’re up nearly 16% and 38%, respectively.
In the mid-2000s, Burry was famous for placing a wager against the housing market and profited handsomely from the subprime lending crisis and the collapse of numerous major financial entities in 2008. The event was chronicled by Michael Lewis in his bestseller “The Big Short: Inside the Doomsday Machine” and later adapted into a film where Burry was played by Christian Bale.
This stock market rally has been happening even though the overall economy has been really struggling. As economic activity has slowed down, demand for trucking services has slumped, and at this point the Cass Freight Index is down 8.9 percent on a year-over-year basis…
In terms of shipment volume in the for-hire market, the Cass Freight Index – which is concentrated on trucking but includes rail and other modes of transportation – fell again in July, to the worst July since July 2020, and July 2016, which had been in the middle of another freight recession (fat red line in the chart below).
Year-over-year, the index was down 8.9%, and compared to the peak in this cycle, in May 2021, it was down 12%.
And UPS and FedEx are both reporting that demand for package delivery is way down as well…
We’ve heard similar messages from UPS and FedEx. UPS reported a 9.9% drop in daily package volume for Q2, with June volume down 12.2%. FedEx reported an 18% drop in average daily shipments in its quarter ended May 31.
The economy is really struggling right now, and so the stock market should not be booming.
But for the moment, the rich are getting richer while homelessness absolutely explodes all over the nation. The following comes from Zero Hedge…
The Biden administration’s fight against homelessness is faltering ahead of the 2024 presidential election cycle.
A new Wall Street Journal report reveals the number of Americans ending up on the streets is happening at a “record rate” despite ‘Bidenomics‘ being touted as an economic savior for the middle class. Every working-class folk understands Biden’s policies have been absolutely horrendous — two years of negative real wages forced many to rack up insurmountable credit card debt during the highest interest rate environment in a generation while draining personal savings — all to make ends meet, like putting food on the table and paying rent. Compound this with the worst housing affordability period in decades (maybe relief in 2H24 or ’25), and it’s not hard to understand why the homelessness crisis is beginning to spiral out of control for Democrats.
I could go on and on about the dire state of the U.S. economy, but I am not going to repeat all of the statistics that I have shared in other articles over the past few weeks. if you are interested in seeing those numbers, this is where you can find them…
- “9 Signs That The U.S. Consumer Is About To Break”
- “7 Trends Which Indicate That Economic Disaster Is Approaching Very Rapidly”
- “10 Signs That The Mainstream Media Is Not Telling You The Truth About The Economy”
Of course it isn’t just the United States that is experiencing an economic slowdown. As Jim Rickards has aptly noted, “major economies are falling into the ditch” all over the globe right now…
It’s becoming increasingly apparent that we’re looking at a global recession, if not a global financial crisis. These are highly unusual. It’s often the case that one or more major economies are in recession while others display growth and help pull the weak performers out of the ditch.
But today, we’re facing a case where, one after the other, all of the major economies are falling into the ditch.
So many of the things that we have been warned about for a very long time are starting to happen right in front of our eyes.
We are clearly headed for very big economic trouble, and that should be apparent to everyone at this point. Michael Burry is planning to make a giant pile of money when the stock market finally crashes just like he did in 2008.
Will he be correct? I don’t know, but you certainly cannot accuse him of not putting his money where his mouth is.
Sound off about this on our Economic Collapse Substack.