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Michael Burry, a guru of hedge funds, began the new year with another gloomy forecast for the US economy, stating this week that a recession is already begun and another inflationary increase is anticipated in the near future.
Burry, the CEO of Scion Asset Management who rose to national popularity after being featured in the 2015 film “The Big Short,” has frequently warned of persisting economic problems over the past year, as inflation has skyrocketed and markets have collapsed.
In his most recent warning, Burry claimed that the Federal Reserve’s decision to decrease the benchmark interest rate may lead to a resurgence of inflation, which has declined in recent months. The next scheduled meeting is for January 31.
“The inflation rate peaked. “However, this is not the last apex of this cycle,” Burry tweeted on Sunday. “It is conceivable that the CPI will be lower, possibly negative in the second half of 2023, and the United States will be in recession by any definition.
“The Federal Reserve will reduce interest rates, and the government will stimulate the economy. And there will be another increase in inflation. It is not difficult,” Burry noted.
The Federal Reserve enacted a series of strong interest rate hikes in 2018 in an effort to curb inflation levels that had remained elevated for decades, and it has suggested that additional rate hikes will occur in early 2023. In November, inflation jumped by 7.1%, the lowest rate of growth in a year.
Last month, Fed Chair Jerome Powell indicated policymakers hadn’t made a decision on the magnitude of the next interest rate increase. However, he reaffirmed the bank will continue to raise rates and keeping them in restrictive territory for some time to ensure prices have cooled before allowing rate reduction.
Michael Burry is the chief executive officer of Scion Asset Management.
Burry stated in November that the US economy was virtually bound to a “multi-year recession” because the Fed lacked viable measures to prevent a recession.
The Scion CEO has also expressed concern that the present economic climate will be “worse than 2008,” a reference to the Great Recession. Burry gained notoriety for betting against the housing market right prior to that cycle’s collapse.
Michael Burry has consistently warned of the deteriorating economic situation.
Burry is an enigmatic presence on Twitter, where he has over 1.2 million followers and uses the moniker “Cassandra” to reference his economic doomsaying. Typically, the head of the hedge firm deletes his tweets immediately after they are written, but several accounts archive and rebroadcast his words.
Last month, Burry completely canceled his Twitter account, but returned to the platform days later.
»Michael Burry, investor in “The Big Short,” predicts “another inflation spike«