Folks, we have to talk about what Michael Bury is saying. If you have followed him at all, which I'm sure you probably have, you know he's quite the drama king. He's known for the big Short, although I hear he's quite a tall guy. Who knows what else may be misleading, but ever since the Big Short, he's been sounding the alarm on pretty much everything.

He's quite the negative Nancy. He frequently likes to tweet some ominous economic warnings and then deletes it, getting the media even more interested in covering his conversation. He names his Twitter handle Cassandra in reference to the trojan priestess from Greek mythology who was cursed to deliver true prophecies that were never believed but almost always came true. He must feel that he is the financial goddess of unwanted prophecy telling and before you cast him aside as an eternal bear who's eventually going to be right by sheer fact that he's always predicting collapse.

The truth is that eternal bears have the ability to be very, very sensitive to a lot of the red flags that a lot of other people just can't seem to see. and Michael Brewery has been sounding the alarm for most of the last six months, but has increasingly been sounding the alarm the last couple months. so I want to go through violently with you and read and react to the different tweets that he sent out. Most have already been deleted, but they've been archived so we will still be able to go through them.

I think you're going to get a lot of value from hearing out his perspective and before we get into it, this video is sponsored by our fifty percent off Fourth of July sale on Ziptraderu coupon code. America50 will get you that discount and it is going to be expiring midnight on July 4th. That's 50 off our one-time fee for lifetime access to the program. You can learn all about what we offer with the link down below.

If you are somebody who has found value in our free videos on the Youtube channel, you're gonna find even more value in our program. Okay, let's get into it and a big shout out to at Bury Archive for archiving and recording all of these deleted tweets. And before I really break these down, I do want to preface this by saying that he likes to talk in basically haiku, so I'm just really given my interpretation. I may actually end up misinterpreting him, so don't sue me.

Okay, November 10th, 2021 Bury Tweets Inflation: It's not just reopening anymore. not that anyone could have seen this coming. He then shows a chart of Uscpi month over month increases, continuously heating up. About a month and a half later, Jerome Powell himself would retire the use of the word transitory.

Looking at the chart very posted, you can see throughout much of early 2021 Reopening: Cited pricing pressure increases in Orange accounted for the vast majority of pricing pressures. But then all of a sudden in the last few reports, it was almost all non-reopening components and energy costs contributing to U.s Cpi. Month-over-month increases, Reopening components. What are those? Well, those are things like used cars and trucks, airfares, food away from home, lodging, travel expenses, hospitality pricing pressures that had been artificially kept low because of economic shutdowns during the pandemic, and because of low demand even in the early stages of reopening that.

We're then seeing huge inflows in demand in 2021 and thus had pricing pressures increase. But then he's saying, hey, wait a second. The last couple of months you're not seeing pricing pressures come from those reopening components anymore. you're now seeing it come from non-reopening components and energy.

Non-reopening components are everyday goods and services. things like housing, food. All of these everyday goods and services are inflating fast, which were signs to him that this wasn't just a transitory reopening inflation, but on everything. Inflation, as we know that has H2b, correct energy and non-reopening components have continued to skyrocket out of control as supply chains for even the most basic of everyday items have just been completely hammered.

We can't even grow regular basic food anymore because fertilizer is in a huge huge shortage. November 12th he tweets an article about Eevee truck maker Rivian, which of course, saw a massive, massive inflowing of new capital and spec capital on its ipo where he said quote more speculation than the 1920s, more overvaluation than the 1990s, more geopolitical and economic strife than the 1970s players grabbing the barrel of Kyle Rittenhouse's rifle while the Sec and Fed nod approvingly He's making some pretty damn big references here. more speculation than the Roaring 20s, which ended in the Great Depression, more overvaluation, more overvaluation than the 1990s aka when Shell companies would get billions of dollars evaluation for simply having a website and no real business model. And then he's saying more geopolitical and economic strife than the 1970s, which were marked with record inflation, high oil prices, and overall energy prices, anti-war protests, and of course, the resignation of Richard Nixon and the whole Watergate scandal.

And then Bury is suggesting with this last reference that the Fed and Sec stood by while investors grabbed at a loaded rifle pretending that that rifle wouldn't end up shooting them. This tweet is pretty damn chilling, and for the record, I made a video on Rivian back at the time of the ipo and I said, hey, you know what the time to buy an ipo stock is when all of the euphoria settles and things have settled down quite a lot. And that's my take with pretty much every ipo. Now I thought maybe Rivien would go down 40 or 50 after ipo.

I didn't think it would go down like 80, which it has. but still, the point here is that all of these people were buying up an ipo despite the wide range of people in the market that understand that ipos are pretty much the worst time to buy. And he may be insinuating here that the Fed and the Sec loaded the gun with their policies and were allowing this to go on without even a warning. He came back April 12, 2022 alongside this picture from Bloomberg terminal with a tweet saying nigh perched with a multiple problem If you look back at the market situation, on April 12th, we were trading at about here.

The market had been tanking since the beginning of the year, but it was just coming off a bear market rally and people had faith we'd get back to new all-time highs. Well, at that point he was saying, no knee multiple too high He's saying, well, wait a second. Even with the little correction we had, the price to sales ratio is high. Historically, you look at heights.

between 2017 and 18, you look at dot-com bubble heights. We're way way higher. Meanwhile, he's saying, hey, the Fed's going to have to embark on a massive multiple crunching at the same time. Though I do want to note that there's this logical fallacy that you can tell if something's frothy on a macro level by just looking at the multiples.

Every single decade for the last four decades has seen higher and higher multiples on average because of monetary policy People who said throughout much of the last decade that they couldn't buy anything because the multiples were so much higher than they were even at the dot-com bubble. Well, they missed out on pretty much the entire rally from 2009 onwards to 2020, and then of course in 2021. When it comes down to multiple, the multiple somebody is willing to pay is based on how conducive the Fed is to that multiple. Four decades of lowering interest rates has resulted in four decades of increasing multiples.

If right now, inflation wasn't out of whack and the Fed wasn't tightening and wasn't raising rates, Well, it's very, very likely that multiples would have stayed frothy and probably gotten even frothier in the coming years. But with inflation and what brewery is saying right now is that, hey, well, this environment isn't conducive to these kinds of multiples because the Fed is going to be crutching them April 13th, Watch profit margins fall and then price sales ratios. Early in on, inflation, pricing power runs ahead of Sticky Wages, supply contracts, Inflation laughs. Last, needs not peak.

But once, he may be a decent short seller. But folks, his poetry leaves some to be desired. So let's break this down. He says first, profit margins fall as companies have to pay more money to pay for input costs to actually create output to sell to customers.

At first, they attempt to raise prices to pass on those increased input costs to consumers, who then pay it, getting bailed out by savings and then debt, And as wages and supply contracts continue to underpace the rate of inflation, all of a sudden, well, those savings and debt are completely maxed out. Eventually, they run out of money to keep paying those higher prices, and companies start seeing less demand boom cascading downward. So they are forced to lower prices and profit margins are completely destroyed as they're lowering prices at the same time where input costs are going up and at the same time that consumer demand is going like this. and no little blue pill is going to get that back up.

And as you see this play out, price to sales ratios drop as markets sell off shares of these companies that don't have that high in pricing power. April 14th and this is probably the most important tweet of this whole lineup. The Fed has no intention of fighting inflation. Serial half point hikes are for getting elevation before stocks and the consumer tap out.

Same with rapid fire quantitative tightening. The Fed's all about reloading the monetary bazooka so it can ride to the rescue and finance the fiscal put. So let's read that again. The Fed's all about reloading the monetary bazooka so it can ride to the rescue and finance the fiscal put.

He's not referring to put options, He's referring to keynesian puts, which is another way of saying fiscal stimulus from Congress. Another round of stimulus. So he's saying, hey, the Fed isn't raising rates to actually curtail inflation. The Fed is raising rates specifically so they can reload that monetary bazooka that they just unloaded massively in 2020 and pave the way for even more fiscal stimulus from the Federal government.

If you're in a crisis that necessitates a lowering of an interest rate in order to get out of it and bazook your way out of it. Well, that's kind of a problem if your rates are stuck at zero percent. But if you've got a little bit of elevation, you've raised rates again, and you've unloaded some of your balance sheet. Well, all of a sudden, you've got a little bit more power in that bazooka, right? You got a little bit more bazooky in you.

If the Fed can make things worse now and kill the consumer and slow down the economy, it'll have more firepower later to step in. When things get real bad and the real crisis starts April 22nd, how far can the stock of a good growing company fall? One destined to be one of the greatest companies in the world? Remember when Amazon fell 95, But the Fed, But the Fed didn't have inflation like this hanging over its head. Then either event shows a chart of Amazon losing 95 of its value from 1999 to 01.. So he's basically saying, hey, even the companies with the brightest futures got destroyed 95 after that dot-com bust.

In this current environment, a lot of companies, some of the biggest tech companies have seen their valuations drop 50 60, 70 percent or more. He's saying things weren't as bad back then because the Fed didn't have this level of inflation hanging over its head. You take that further and you think back to the previous tweet that we just talked about Brewery is insinuating here that the Fed may not actually be trying to get inflation down, but inflation is going to force the Fed's hand to bleed the market dry with a thousand mini hikes before it can't eventually step in and come to the rescue with a bazooka. And that's by extension, sell-offs like Amazon's 95 sell-off is going to be.

Well, a best case scenario: April 22nd He says at least I tried and this was a day. The market took a massive dup, which then led to six more weeks of massive dumping and then a slight contrarian rally and then more and more dumping. April 26 He says the problem is: 850 billion in direct stemi checks, 400 billion in cash out refinances, 1 trillion in forgivable loans, another 4 trillion in direct. He's saying all of these pricing infusions are in the economy now and the consumer is out of money.

So what recapitalizes the consumer now? Higher wages can't beat all of the insane money they threw into the economy over the last 18 months. So now you're in the situation where consumers have gutted themselves, they've spent all the money they've gotten, and now pricing pressures are much higher and wages haven't caught up. So the point here is, there's nothing left to recapitalize the consumer now, which means consumers are left with dying purchasing power and businesses are going to see a dying consumer base and a overall recession. May 3rd, he points out the correlation between P E ratios in blue and long-term interest rates in red, showing that as interest rates went up slower than necessary to stamp out inflation in the 1950s and 1960s, price-to-earnings continued climbing alongside the booming economy.

But then as rates started going up faster to fight those inflationary pressures. And then you eventually got into those Volcker days where a Volcker went and nuked the economy. Well, Finally, price to earnings got obliterated. And then of course in the coming years as interest rates went back down, price to earnings climb back up as well.

Also, on May 3rd, he says dead cat balances are the most epic. 12 of the top 20 Nasdaq one-day rallies happened during the 78 drop from the 2000s top. Nine of the top 20 S. P 500 rallies happened during the 86 percent drop from the 1929 top.

He's saying that in history, the biggest market rallies tend to be on an overall downtrend and tend to be dead cat bounces. Considering that this year has been full of aggressive uptrends, despite an overall downtrend, this point is ringing true. Personally, I prefer alive cats to dead cats, but to each their own. May 4th: After 2000, the Nasdaq had 16 Bear Market rallies greater than 10, averaging 22.7 percent before bottoming down 78.

After 1929, the Dow had 10 Bear Market rallies greater than 10, averaging 22.8 before bottoming down 89. He's saying here, wait, the market can rally up 20 or more and still be in a very, very aggressive downtrend Despite the fact in 2022, every single time the market's up for a week, people are shouting, this is the bottom, It's over. Too much fear, too much fear. Now he's saying, do Not Trust The Bear Market Rallies because history shows that when you get into a tightening period, then most of the time, your Bear Market rallies tend to just be that Bear Market rallies that lead to another downtrend May 7th.

Third time's a charm. He shows three different lines of the 10 years leading to a financial crisis. The yellow line is the S P 500 ending in 2000, the white line is the S P 500 ending today, and the green one is the Dow 1929. He's saying that human nature has stayed pretty much the same the last 100 years, and throughout three of these massive crises, markets rally the fastest right before they are about to sell off in collapse May 23rd.

Some compare the Us as of today to the 1970s, but the 1970s saw rapidly growing labor force participation due to the post World War Ii baby boom. We have the opposite today: birth rates at 1950 levels and nuclear families at 1959 levels despite a 2x larger population didn't help. He's basically saying one of the bailing out factors of the 1970s and the rapidly devaluing currency of that time is all these folks from the baby boomer generation coming of age and joining the labor participation pool, increasing an overall economic output that we just don't have today. In fact, we have the opposite factors working against us.

You saw labor force participation steadily increased from 1965 all the way into 2000, but birth rates in the Us have been declining for decades at the same time that the older generation of baby boomers is retiring and thus withdrawing their economic output at a time where we have less people coming into the pool. Which means that labor force participation as a percentage of the total population has been obliterated the last two decades, making the economic production to consumption ratio completely out of whack, meaning that printing more and more money has come alongside. At the same time, less and less goods and services being produced. May 27th, U.s personal savings fell to 2013 levels, the savings rate to 2008 levels, while revolving credit card debt grew at a record-setting pace back to the pre-coveted peak despite all of those trillions of cash dropped in their laps looming a consumer recession and more earnings trouble.

So this reiterates and builds on a tweet that we covered earlier where he said at first pricing power seems to exist past what wages would allow as inflation outpaces wage increases. but that only lost to an extent Because what's bailing out that purchasing power are excess savings and the availability of debt. But once consumers have maxed out their debt and completely depleted their savings all of a sudden, guess what happens? They don't have any money anymore, which if you have been paying close attention kind of goes back to his prediction here that the Fed isn't really interested in taming inflation at all, but rather is just reloading its Bazooka to help pave the way for it to come to the rescue and save consumers again. June 24th, He asks what brings a Christmas in July and the answer is a disinflationary, overstock consumer recession At Christmas.

There's a few different ways to interpret this, and my take is that earnings reports may still look decent in July due to inflation continuing to push up numbers. But then by Christmas actual Christmas, you'll have the double whammy of not just excess inventories causing companies to get destroyed profit margin wise and having to discount prices, but also consumers not wanting to buy as much as usual because they're out of freaking money. June 25th, He quotes Tom Siebel who said he doesn't think this is going to be over until everybody swears they will never own an Nft, They will never own Crypto, and they will never own a technology stock. essentially making a contrarian argument that you hear quite a lot where speculative bubbles aren't finished until every single last dollar of speculative capital is gone.

Notice, the quote here, though, contains tech stocks. Bury, of course, is not a big believer in Nft or Crypto, but the fact that he includes tech stocks means that he's not making an argument completely from fundamentals saying that there shouldn't be any dollars in these assets, but he's saying that people should be so, so depressed and so discouraged that they don't believe in even tech companies anymore when people have completely capitulated and decided that everything is completely worthless. That is when Michael Bury believes that we have hit a bottom. June 25th.

Who knew This year was so much fun because of all the doomed rallies? He shows that some of the biggest rallies happened this year, and this is a follow-up to a tweet prediction he made earlier that we covered just a few minutes ago where he showed that overall the biggest downtrends tend to have some of the most aggressive contrarian rallies that's both in the dot-com bust and in the 1929 collapse. Now Yesterday he tweeted January 1973 President Johnson died Foreman beat Frazier and Roe V Wade happened. He's trying to make a parallel between what's going on now and what happened back then. He says the Dow hit its highs for the 1966 1982 period as cyclical inflation reduced the spending power of the dollar to just 35 cents.

There was never a deflation to reverse that. now 10 cents. He's saying, wait a second, There's no such thing as an overall successful deflation. We've just been on a cyclical path of worsening and worsening and devaluing our currency, then to 35 cents on the dollar, now to 10 cents on the dollar.

and he's making the inference here that the result will be a long drawn out period of the market hitting no new highs similar to how the Dow didn't hit. If you read between the lines here, the Dow didn't hit a new high for another nine years after this January happened. So he's saying, hey, this is the same situation. We may not hit a new high for a long time, and yesterday he tweeted an article of stores considering paying customers to not return items to them and then said the supply glut at retail is the bull whip effect.

Google it Worth understanding for your investing endeavors. Deflationary pulses from this leads to disinflation in Cpi later this year, and then that leads to Fed reversing itself on rates and Qt and then that leads to the next cycle. So now he's making a prediction here that builds on his consumer recession and deflationary bust by Christmas prediction, thinking that the excess inventory is going to bring down prices of consumer goods by the end of the year, which he said is at the same time going to come with a consumer recession. And here he's saying that that is going to lead to the Fed reversing itself on rates and quantitative tightening and leading to the next cycle.

Which kind of goes back to what he has been saying all along. The Fed isn't actually trying to fight inflation, but it's simply trying to get some elevation in rates and reload that bazooka so that when we inevitably get into a massive recession all of a sudden, the Fed can come in as the savior. Based on this, it seems like he thinks the Fed is coming to the rescue sooner rather than later as early as when the Cpi starts showing that disinflation, which is towards the end of the year, right? So anyways, that pretty much sums up where he's at with this. But for me, the main takeaway is that the Fed is raising rates into an already salary and economy, and a lot of the factors like a dwindling labor participation rate, a depleted savings rate, a maxed out debt rate, and commodity shortages that aren't going to be going away anytime soon.

All these things are coming together to create this crisis that we don't know how long is going to last, but we know how it's going to end. and we can only hope that it ends in a way that reduces casualties, creates a springboard to a recovery, and hopefully makes it so that in the future we don't get into a similar situation. Unfortunately though, history hasn't been friendly to people who have wished for all those things. but eventually we will rebuild and there's going to be some insane opportunities throughout this crisis when everybody's at fear mode.

Anyways, that gaps off the video. If you appreciated this big breakdown that took a lot of digging, make sure to hit that ravishing like button down below and subscribe. If you want to get up to 50 off Ziptrader, you make sure to sign up with our link down below coupon Code America 50. If you want to get up to 10 free stocks with Moomoo plus a share of Lucid, I'll put a link to Moomoo down below as well.

Have a good one folks and I'll see you in the next video.