A New Damning Warning by Michael Burry | The Great Reset.

well break out the anti-venom for 2023

welcome aboard and happy New Year

Michael burry has yet another massive

warning for us coming right on the heels

of a big warning from the international

monetary fund and a lot of catalysts

this week to kick off the year oh man

we've got some dirty ones this week

including from the Federal Reserve whom

of course everybody is paying attention

to hey everyone meet Kevin here we are

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members so the international monetary

fund and told us that we should expect a

tougher 2023 macro environment as at

least one third of the world goes in

recession especially as the world's

three biggest economies slow down

specifically the eus the EU the European

Union and China it's have previously

been said that if the United States

sneezes the world gets sick that's

because when you've got the personal

savings rate for individuals in the

United States now plummeting it's not

uncommon to see that uh oh well we might

actually end up having a Slowdown in the

rest of the world as United States

spending really slows down now keep in

mind this is motivated by this fall in

the personal spending rate or savings

rate take a look at this chart here this

is a chart of the personal savings rate

and its average going all the way back

to

2016 early part of 2016 here and it

shows you really how if we draw really

an average line here we could see that

even through the crazy spikes of the

covet savings rates where everybody was

getting stimulus transfer payments we

usually sit around a savings rate close

to about seven to eight percent well

right now we're in that red circle in

the bottom left where that personal

savings rate is just plummeted in that

personal savings rate often leads

consumer discretionary spending and

remember the consumer makes 70 of the

market so if the three biggest economies

are slowing down heavily for 2023 yeah

recession for a lot of the world is

definitely likely because remember the

velocity of money you spend a buck here

that could be five dollars that

circulate throughout the economies of

the world and a lot of those are Global

and for the first time in 40 years China

is looking like it's going to be growing

slower than the rest of the world again

that's the first time in 40 years that

China is looking to be growing slower

than the rest of the world job this is

probably also why they've been inspired

to remove the covid zero restrictions

that they've had for nearly three years

of coveted restrictions which is insane

they started in January of 2020. you got

21 22 23 they're finally loosening up

it's pretty wild but now they're

threatening to respond to other

countries potentially with sanctions for

countries who are instituting travel

curbs like testing requirements if you

travel from China to the United States

and now China's like hey you can't do

that meanwhile when people had to travel

to China from the United States they'd

have to stay in covid quarantine hotels

for two weeks it's kind of a ironic

although it just seems to be a lot of

talk right now I think they think if

they saber rattle a little bit people be

less punishing to China

BlackRock also warns that hey don't

expect central banks to ride to the

rescue you unfortunately here in 2023 as

they fight stubborn inflation down

especially Services inflation which

we've got some numbers coming up for

that soon which that also leads us to

Michael burry's warning take a look at

this here this is Michael burry's tweet

from just a couple days ago here

actually this is from late yesterday

inflation peaked but it is not the last

peak of this cycle ooh

we are likely to see a lower inflation

reading possibly negative by the second

half of 2023 Michael burry basically

saying inflation's going straight down

straight to negative within the next six

months essentially here and the US will

be in recession by any definition this

is kind of making fun of the idea that

look last year we had two quarters in a

row of negative GDP and the White House

is like well that's not how we Define a

recession you know we wait for the

National Bureau of economic research to

determine we're in a recession but it

takes them like a year to figure that

out and everybody's like well

technically a recession is two quarters

of negative GDP so it looks like we're

in a recession anyway Michael Murray

says oh don't worry we'll be in a

recession and inflation will be down but

that could lead the Federal Reserve to

cut and stimulate along with the

government to send those stimulus checks

again and we will have another inflation

Spike it's not that hard well so let's

touch on that because California sent

out a nice little stimulus check in

September and October and California

represents about 11 percent of the

country's population guess what happened

we saw a temporary surge in spending and

potentially a little boost to inflation

solely because California spent sent out

stemi checks imagine if the FED starts

printing money again and the government

sent me checks during a recession to

prop up that lower income threshold the

people who are suffering the worst right

now thanks to higher food and commodity

prices like gas well yeah maybe Michael

burry will be right however there is

still the train of thought that maybe

just maybe will actually be more likely

to follow the pattern of the last 40

years since the late 1970s and early 80s

we've actually been in a pattern known

as the great moderation and the great

moderation is essentially a period of 40

years where inflation has been trending

down actually towards zero or one

percent and that has motivated central

banks to actually worry more about

deflation rather than inflation leading

most central banks to adopt policies

known as zerp and nerp zurp is a zero

rate policy and nerp is a negative

interest rate policy and all of this

really in my opinion comes down to

whether you think inflation is

transitory if inflation was truly caused

by covid Massive coveted and supply

chain disruptions massive money Printing

and stimulus during the covet era and

the supply chain disruptions leading to

a lot of demand for products and

services just at a time more Supply

chains were disrupted and war in Ukraine

if those were the true causes of

inflation rather than the entire

collapse of our existing monetary system

then it would make sense that we would

actually return to the great moderation

era and maybe that trend line of

inflation trending towards deflation

will return this would actually mean

that Matthew Woods Kathy Wood is is most

likely to be correct that if inflation

does return to levels fighting deflation

and we actually maybe do have to fight

deflation over the next year as

companies start competing and lowering

prices well then Kathy Woods would Kathy

Wood would be right we would be in a

situation where we were back to money

Printing and maybe no inflation that

would be wonderful but Michael burry

warns of the opposite he warns that no

we are potentially just going to go

right back to another inflationary cycle

and then the federal have to get even

dirtier because as soon as you go to

another inflationary cycle now you break

what are known as inflation expectations

and that's even more dangerous see now

inflation expectations while they're

elevated or at least trending down you

break the reputation the FED has any

control over inflation then you could

potentially really be looking at another

other big short now I do want to point

this out in our course member live

streams we regularly look at earnings

calls to try to understand trends that

are coming up and this is the Winnebago

earnings call and I have to say I

thought this was a very interesting line

on page 13 of their earnings call they

mentioned that so certainly quote if we

were to see inflation or sorry if we

were to see significant deflationary

elements within our building materials

and our costs of goods sold we would

consider what that means not just in the

context of cost but what our competitors

might be contemplating as well in retail

conditions let me just translate that

fancy sentence there

hey yo man if prices continue to start

trending down we're gonna start thinking

that our competitors are gonna drop

prices and then we're gonna have to drop

prices and because we think they might

drop prices we might try to drop prices

before they do basically we're gonna

start a race to the bottom to make sure

people are buying our RVs and not

someone else's now I personally thought

that was incredibly interesting because

you're actually seeing the opposite of

what we saw last year last year January

I was personally freaking out because

every earnings call I was looking at I'm

like holy crap dude every company is

talking about how big their PP is they

all are bragging about the size of their

PP they're purchasing power and their

pricing power is off the charts that's

what everybody was bragging about last

year now I think very few companies

actually have pricing power left because

you have to start cutting prices we

actually saw the same thing and it's

weird but also on page 13 of the

Carnival Cruise Lines earnings call keep

in mind that all the course member live

streams are archived so going back like

three or four years so you could look at

all of them it's a benefit oh you can

see all my mistakes all the things I've

found correctly through fundamental

analysis everything it's actually really

interesting you could type in certain

ticker symbols and see my analysis on

them the course member live streams are

amazing uh so take a look at those

linked down below but look at what we

have here this is page 13 of the

Carnival Cruise Lines earnings call and

look at this an analyst here says you

guys have been discounting in such a way

or I I know that I know criticism by at

least one of your competitors a

competitor is saying this about Carnival

Cruise Lines is that Carnival has been

discounting in such a way that it's

going to be difficult to recover from

that discounting anytime soon and now

you don't want to see the financial

statements of Carnival we talked about

those in the course member lives let's

just say they're not looking good but

look at this this is the CEO of Carnival

talking to hey look you know with

respect to how we optimize Revenue uh

you know our goal is basically to fill

the ship because we need occupancy

because occupancy leads to more onboard

spending if we already have the staff

there why would we not fill the ship

right and this in my opinion is actually

a little bit more of a concern that at

least in the near term yeah Michael

burries right inflation's plumbing and

Kathy Wood also going to be right

inflation is probably plummeting we're

going to see this deflationary cycle but

do we actually think that's going to

lead to another inflationary surge well

if we're back to the trend of the last

40 years no if we break that Trend hmm

monetary policies is going to be in a

whole new world and anything we've been

used to in the last 40 years is going to

be flipped so really Michael burry here

is fighting history by arguing that

we're gonna have a second massive Spike

of inflation but I guess we'll see

including I guess what we'll see are

some of the catalysts coming this week

including what the FED has to say but

first let's go in order today at 6 45

a.m all times Pacific time we'll be

getting the purchasers manager index uh

that is a pricing sort of a survey

inflationary survey for manufacturing

tomorrow at 7 A.M we'll get the joltz

read this will be really important the

joltz numbers are going to be huge

because this is the job openings and

labor turnover report and what's very

important about it is we want to know

hey for that jolts report are we finally

starting to see fewer job openings

that's actually what we want we want

fewer job openings uh and so that joltz

report is expected to come in with a

survey of 10 million job openings The

Last Read was 10.3 million if we come in

hot again it could be a red Catalyst for

the market that would be a larger number

than the survey again that's 7 A.M the

jolts report that'll be at the same time

as we get the ism Institute for Supply

Chain management prices paid survey

another inflationary survey and tomorrow

we'll also be getting the fomc meeting

minutes

at 11 A.M from the last Federal Reserve

Open Market Committee meeting this is

when Jerome Powell released the last

summary of economic projections which

were a lot more hawkish than expected

and Jerome Powell was a little bit more

hawkish during his discussion than

expected and so what I would like to see

is are the minutes actually going to

cool down the aggressive Powell that we

saw and the aggressive summary of

economic projections something in the

style of Allah uh in the style of uh hey

look uh you know the last couple reports

were promising but you know we have to

be more aggressive based on what we've

seen over the last say six months and

the trend even though the last couple

reports were promising so we're going to

go more aggressive but hey you know

maybe we could be less aggressive if

reports continue to come in kind of like

they have in the last couple reports

remember they always like to say what

report doesn't make a trend and then two

reports come out good and they're like

two reports doesn't make a trend so

we'll stay aggressive hopefully the

minutes are something in that style if

the minutes are in the style of hey we

had two great reports but even if we

have another five great reports we're

still going to be hawkish

it could be could be setting up for a

red day tomorrow let's just put it that

way we'll see Thursday we'll be getting

the ADP report that's the private uh

jobs report uh we found this one

actually potentially to be a little bit

more accurate than the Bureau of Labor

Statistics labor report which has been

over counting a payroll substantially

even the Philly fed has found this out

uh that were over counting jobs by

potentially one to two million over the

last nine months that's insane ADP

report is expected a read of 145 000

Jobs versus The Last Read of 127 000 we

get us uh the s p and that's different

from the ism report the SMP service

Services PMI Rapport at 6 45 tomorrow

I'm sorry that's on Thursday along with

the ADP report and then Walgreens

reports at 4am on Thursday Friday we'll

get the jobs report this will be a big

one I'll be live streaming 5 30 a.m for

this one we're expecting 200 000 jobs

compared to the 263 000 in the last

report expecting average hourly earnings

to come in at point four percent that's

4.8 percent annualized still above the

fed's target but it would be better than

an inflationary spiral which is a little

bit of a concern like what we had last

jobs report where average hourly

earnings actually popped up point six

percent we'll also be getting the uh yet

another ISM uh uh purchaser's manager

index PMI index prices paid report at 7

am so a lot of inflationary numbers this

week a lot of these surveys uh whether

it's the ism prices paid the s p price

is paid manufacturing prices paid but

also on Friday we'll see what kind of

orders we're getting from factories and

durables durables or things like washing

machines and appliances these have been

plummeting for like a year so I would

expect these to continue so we'll see

and look

My Hope for 2023 is simply this that the

recession starts because once the

recession starts the stock market tends

to bottom right around when the

recession starts I personally hope that

recession kind of is now so that way we

could really start that bottoming

process for stocks and we can go up so

usually stocks lead us out of a

recession lead keyword us out of a

recession on unemployment lag

substantially and Rises a lot later

uh and if that's the case then I believe

the wealthy or individuals so think top

10 top 20 of incomes they'll be the ones

who will start spending substantially

again first I think you'll start seeing

Venture Capital Investments you'll start

seeing people buying more Teslas you'll

start seeing longer wait times for

Teslas you'll start seeing people buying

private jets all that stuff will come

back with the stock market recovering up

all that sort of craziness anyway thank

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goodbye