Michael Burry, the protagonist of the movie “Big Short” and famous for shorting the subprime mortgage bubble, warned on Friday (12th) that rising U.S. consumer debt would pose a major risk to the U.S. economy.
“In the face of high inflation and consumers opting for violence over spending cuts, net consumer credit balances are growing at a record pace,” Berry tweeted.
“Remember the savings glut problem? No need to explain. COVID helicopter money has taught people to spend once more, and it’s very addictive. Winter is coming,” he said.
Berry’s often obscure tweets regarding market risk suggest that the COVID helicopter money is likely a reference to the stimulus payments the U.S. government is offering to Americans as a way to revive the economy amid the coronavirus outbreak.
In a follow-up tweet, Berry suggested the recent stock market rally was just another bear market rally.
Berry wrote: “NasdaqThe index has now rebounded 23% from its lows. Congratulations! The average bear market rally is now in, with an average gain of 23% in the 26 bear market rallies from 1929 to 1932 and 2000 to 2002. After 2000, there were two bear market rallies of more than 40%, and one rebound of more than 50%, following which the market bottomed. “
Berry has warned several times recently that the market is regarding to crash and that the rally of recent months is fading. He tweeted in early August: “As the stock market rises, the déjà vu stupidity of the pandemic has not gone away, the market is getting stupid.”
