Michael Buerry was one of the first to predict the collapse of the mortgage market in the United States in 2008. Back in February 2021, he first warned of high inflation, which would follow the unprecedented scale of the Fed’s money.
Last year, he published a call to prepare for inflation. And he published data on the allocation of the US government and the Fed stimulating benefits for trillion dollars.
At that time, he went against the general course, because then everything looked good - the Fed printed money, and inflation remained at a low level - 1.7%.
But Buerry, looked 12 months in advance, and now the inflation level has taken off to 8.6%. And he did not jump with the joy of the fact that his forecast came true. Instead, he actively explained why he believes that this is only the beginning of the economic crisis.
Let's take a closer look at Michael Buerry's arguments to understand the course of his thoughts.
Its main message is that the worst is still ahead. He is so sure that he believes that S&P 500 can fall by another 50% of the current level.
Buurri wrote on May 3 on the change of paradigm and speculative peaks: in 2009, the bottom of S&P 500 was 13% lower than in 2002; In 2002 - 17% below the bottom of 1998 during the LTCM crisis; In 1975-10% below the bottom of the 1970s.
And according to him, the S&P 500 will be approximately 15% lower than the 2020 covid level-1862 points (-50% of the current level). This is a very bold forecast that was met by great criticism.
Everything that you see and hear creates a feeling of a bear trend. But in fact, mass sales have not even begun yet, because the outflow of funds from the market has not yet begun, investors continue to pour money.
Therefore, Buurri believes that in the next few years we can see a sharp increase in sales, which will lead to an even greater drop in the stock market.
Perhaps now the situation has reached a critical point, but this is just the stock market. Do not forget that the point of view of Bürry is based on economic indicators.
We already know Buerry's view on the inflation problem and see how the US Federal Reserve increases interest rates so that borrowed funds become less accessible to business.
But do not forget that increasing interest rates also affects the basis of any economy - consumer.
In conditions of high inflation, which leads to a significant increase in interest rates, consumers have less money for expenses. Since, more and more of their income goes to serve debts.
Often it becomes the starting point of the vicious circle. A reduction in discretion of costs leads to a reduction in sales from the company we invest in.
Therefore, everyone wants the consumer to violate this trend. However, recently, Buurri hinted that now the affairs of consumers are not too good.
The volume of personal savings in the United States fell to the level of 2013, and the debt on renewable credit cards grew with a record pace, returning to a well -being, despite all trillions of benefits that fell on their heads. The decline in consumer expenses and income problems is approaching.
It is clear that Buurri is concerned about the reduction of savings. Because, this forces ordinary people to use more borrowed funds in conditions of growing interest rates.
And because, reducing savings means a decrease in expenses that are the basis for companies.
Results
In general, Buerry believes that we are faced with:
As a result, this leads to a decrease in business profitability and a reassessment of their shares. Buurri is sure that this is only the beginning.
For today, thanks for your attention!
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