Michael Burry, the investor of “The Big Short” fame, is selling almost all of the assets in his equity portfolio and issuing a warning about a stock market crash comparable to the 2008 mortgage crisis.
A document filed by Burry’s Scion Asset Management with the U.S. Securities and Exchange Commission (SEC) shows that he now only holds one stock as of the second quarter of 2022, down from 12 in the first quarter.
Burry liquidated his shares in Warner Bros., Sportsman’s Warehouse Holdings, Stellantis N.V., Nexstar Media Group, Ovintiv, Cigna, Global Payments, Bristol-Myers Squibb, Booking Holdings, Alphabet and Meta Platforms.
He now has only $3.3 million worth of shares in The GEO Group, a company that invests in private prisons and mental health facilities.
The investor, who successfully bet against the housing market before the 2008 financial crash, says that consumer spending habits and rising debts could drive an economic winter.
“Net consumer credit balances are rising at record rates as consumers choose violence rather than cut back on spending in the face of inflation. Remember the savings glut problem? No more. COVID helicopter cash taught people to spend again, and it’s addictive. Winter coming.”
Burry’s comment comes as the Federal Reserve Bank of New York’s Center for Microeconomic Data reveals that the total US household debt now stands at $16.15 trillion, up by $312 billion, or 2%, in the second quarter of 2022.
“Mortgage balances – the largest component of household debt – climbed $207 billion and stood at $11.39 trillion as of June 30.
Credit card balances saw their largest year-over-year percentage increase in more than twenty years, while aggregate limits on cards marked their largest increase in over ten years. Transitions into delinquency ticked up but remained very low compared to historical levels.”
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