On Friday, November 12, EST, Michael Burry, the founder of Scion Asset Management, the prototype of the movie "Big Short" and the founder of Sciion Asset Management, who once relied on short subprime mortgages to make a lot of money, issued a warning to the SEC and the Federal Reserve about market risk, tweeting his concerns about inflation and that market risk is multiplying.
Burry noted that inflation-adjusted real wages have fallen by 2.2 percent since Jan. 1, necessitating a re-examination of inflation. As he says, never forget that inflation is a massive regressive tax.
The latest data released by the US Department of Labor this week showed that the US October CPI data rose for the 17th consecutive month, and the October CPI rose by 6.2% year-on-year, and the growth rate accelerated again, higher than the previous value of 5.4%, also higher than the market expectation of 5.9%; up 0.9% month-on-month, higher than the market expectation of 0.6%, the highest month-on-month increase in 4 months, up sharply from the previous value of 0.4%. The United States is facing its worst inflation acceleration in 30 years.
Meanwhile, the latest U.S. consumer confidence in Michigan in November hit a 10-year low on Friday, and U.S. consumer confidence unexpectedly collapsed in early November, hitting a 10-year low as Americans were panicked about inflation. Expectations for inflation in the United States in the coming year hit a new high since 2008.
Coincidentally, just yesterday, Bridgewater Fund Dalio sounded the alarm at a time when U.S. inflation hit a new high since 1990, and the value of the portfolio does not really mean the growth of wealth. People mistakenly believe that rising asset prices mean they are getting richer, and they ignore that their purchasing power is being eroded by inflation.
Regarding the valuation of Rivian, one of the biggest U.S. IPOs in U.S. history that drove the market crazy this week, the investor expressed his concern about market risk by citing a previous Wall Street Journal editorial that called Rivian a "government unicorn" because "we live in an era of free money and endless government subsidies." ”
Burry warned that market speculation is at an all-time high and that small startup Rivian has surpassed the valuation of internet companies.
On Wednesday, electric vehicle maker Rivian went public on the NASDAQ under the stock code "RIVN" for an issue price of $78 and raised $12 billion, the largest U.S. IPO since Facebook. On the first day of the IPO, it opened about 35% higher, with a market capitalization of more than $80 billion on that day, surpassing the veteran cars GM and Ford to become the world's seventh-largest automaker.
Burry commented, as in his tweet, that the "big bears" have been outspoken warnings of the current stock market bubble.
More speculation than in the 1920s. More overrated than in the 1990s. More geopolitical and economic conflicts than in the 1970s.
As mentioned in an earlier article on Wall Street, Burry's company held more than 230,000 put options in the second quarter of Cathie Wood's main fund ARKK, and increased the shorting of ARKK heavy stock Tesla, and the put shares held by it increased by 34% compared with the first quarter.
Wall Street Insider once mentioned that Burry's bearish Tesla has a long history. Back in September, he pointed out in tweets he deleted since then that Tesla's valuation was ridiculous compared to other companies in the industry, saying tesla had a price-to-sales ratio of 18 and an industry average of 0.35.
In fact, Burry stopped shorting Tesla from a month ago and said his position was just a deal.
Earlier, Burry warned that the FOMO (Fear of Missing Out) sentiment in the market had pushed asset prices to unbelievable high levels, and said that investors who bought meme stocks and cryptocurrencies could be devastated, and if retail stocks and digital currencies collapsed, the losses would reach the level of "national size".
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