“Big Short” investor Michael Burry warned Tuesday that rosy corporate earnings reports in the coming days may be the last positive results for some time as the US economy teeters on the brink of recession.
Burry, the hedge fund boss who famously bet against the 2008 subprime mortgage market, has provided an increasingly bleak view of market conditions as companies contend with decades-high inflation and other major obstacles.
“These earnings reports and by Jove the whole season have a ‘Last Hurrah’ feel,” Burry tweeted.
Burry did not say whether he was referring to a specific company. But his remarks came after shares of tech giants Microsoft and Google parent Alphabet rose on rosier-than-expected earnings despite economic headwinds.
Burry’s tweet has since been deleted, but it was captured on an account that archives his posts. Burry has a habit of deleting his tweets shortly after posting them.
US stocks have substantially fallen this year as the Federal Reserve tightens monetary policy to combat decades-high inflation. Meanwhile, geopolitical tensions, especially the Russia-Ukraine war, have contributed to supply chain snarls that have upended shipments since the COVID-19 pandemic began.
Earlier this month, Burry warned that various debilitating factors, including geopolitical tensions, labor shortages and supply chain difficulties would “raise long-term inflation’s floor.” Inflation hit 9.1% in June, well above the Fed’s 2% target.
Burry asserted on July 1 that a lengthy market selloff in response to tighter monetary conditions was “maybe halfway” over.
Days earlier, he suggested that struggling retailers were contending with the “bullwhip effect,” a supply chain phenomenon in which disparities between product demand and actual sales result in bloated inventory levels – forcing companies to dump products at a lower cost to clear their warehouses.
Walmart said it was contending with a similar problem after slashing its full-year profit forecast earlier this week. Shares plunged after the retail giant said higher food and gas prices were limiting the buying power of its customers.
Walmart also indicated it would slash prices on some items to clear inventory.