Famed investor Michael Burry delivered arguably his most dire warning about the current US economy to date late Thursday – suggesting he is concerned the ongoing downturn could be worse than the Great Recession.
Burry, the boss of Scion Asset Management, noted that one of his market analysts said his comments were “spooky” because he voiced his concerns on Sept. 29 – the anniversary of a 777.68-point drop in the Dow Jones Industrial Average in 2008 that ranked at the time as the largest single-day plunge in history.
“Today I wondered aloud if this could be worse than 2008,” Burry said in a now-deleted tweet. “What interest rates are doing, exchange rates globally, central banks seem reactionary and in [cover your a–] mode.”
The Dow had plummeted nearly 500 points before Burry’s tweet and has pared more than 20% from its high of nearly 37,000 — putting it into bear market territory. It was down nearly 100 as of 1 p.m. Friday.
The Federal Reserve and other central banks around the world have scrambled to hike interest rates in recent months in a bid to tame decades-high inflation. The World Bank and others have warned that central banks risk causing a global recession while pushing forward with rapid, simultaneous rate hikes despite signs of slowing economies.
Burry, whose bet against the US housing market was made famous in the 2015 film “The Big Short,” is one of several prominent voices warning of potentially dangerous global economic conditions.
Earlier this week, ex-Treasury Secretary Larry Summers, a frequent critic of the Fed’s delayed response to inflation, warned that global economic risk levels are similar to those seen in 2007 ahead of the Great Recession.
“In the same way that people became anxious in August of 2007, I think this is a moment when there should be increased anxiety,” Summers told Bloomberg.
Like Burry, Summers noted that there is widespread uncertainty about the policy actions of central banks as they attempt to stabilize economies.
The Bank of England was forced to intervene this week after the value of the British pound crashed to an all-time low. Investors were rattled after the UK government backed sweeping unfunded tax cuts and increased spending — a plan that sparked fears of even worse inflation.
Burry has amassed more than 1 million followers on Twitter, where he often shares — and quickly deletes — his thoughts about the state of economics and politics.
A month ago, the hedge fund wizard said a stock market downturn that he expects to be “the mother of all crashes” was underway.
Burry also raised eyebrows after disclosures in August that his firm had sold off its entire stock portfolio during the second quarter, dumping shares of major names such as Google parent Alphabet and Facebook parent Meta.