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Michael Burry Warns of the Bullwhip Effect, Says the Fed Could Reverse Course

Published 06/27/2022, 07:03 AM
Updated 06/27/2022, 11:09 AM
© Reuters.  Michael Burry Warns of the Bullwhip Effect, Says the Fed Could Reverse Course

By Sam Boughedda

Michael Burry, the investor made famous by the movie "The Big Short," and the founder of Scion Asset Management, said in a tweet Monday that the "Bullwhip Effect" is happening in the retail sector.

Burry added that this could lead to the Federal Reserve reversing its rate rises and its Quantitative Tightening policy.

The Tweet reads:

"This supply glut at retail is the Bullwhip Effect. Google it. Worth understanding for your investing endeavors. Deflationary pulses from this- -> disinflation in CPI later this year --> Fed reverses itself on rates and QT --> Cycles."

The tweet also links to an article from CNN, which states retailers are considering allowing customers to keep items they return so they don't have to take them back and add them to swelling inventories.

It's not the first time in recent months that Burry has raised concerns about the economy. In May, he tweeted that the current market conditions are "like watching a plane crash."

Latest comments

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yeah......retailers going to start giving stuff away cause it costs to hold. coming down on prices and still make a profit is going to be very hard. people also having to deal with high rent,food, and transportation costs. they will cut demand on things not needed making it even harder.
You heard the man. Time to go LONG. The road to 7k starts now
keep dreaming
Fundstrat’s Tom Lee: “Increasingly it appears that markets mistook the ‘bullwhip’ effect on the supply chain (including food) for secular inflation.”
One time right doesnt mean all time right. But mr bury got it right when predicted June 17 crash
the problem is people will remember burry for getting it right in 2008 when he got it many times wrong thereafter
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