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michael bury he's one of the few men who predicted 2008 profiting millions of dollars by shorting the housing market an amazing feat that was developed into a hit movie propelling burrie into the mainstream over a decade later bury is now suggesting a different crash one much worse in magnitude in today's video we dive deep into michael's tweets analyzing the dire predictions he's been making over the past few months predictions that suggest a terrifying and alarming situation developing in the united states so as you may already know michael bury stays out of the media outside of a speech done at a ucla commencement a 60 minutes report and a few other snippets finding any video footage of the guy is nearly impossible however in recent times he did create a twitter account which often posts various types of content not always finance related but content nonetheless i went ahead and accumulated all of his recent tweets regarding only markets filtering out the politics the music and all the other non-related posts what i ended up with is a collection of data that we can use to conclude where bury stands the findings as you will see are shocking we begin with three common themes we see throughout the past few months one of burries most tweeted topics is the us personal savings rate this metric has been tracked since 1959 and right now it's singly something special as we go through these themes you will start to piece together his overall thesis you'll see what i mean towards the end a lot of this stuff is centered around the consumer if you recall from previous uploads consumer spending makes up around 75 percent of the economy so if that portion begins to struggle the overall economy almost always suffers as well which brings us to this on may 27th he tweeted the following us savings have fallen to 2013 levels while revolving credit is back to the pre-covet peak a stat that suggests a looming consumer recession and more earnings trouble in summary what bury is alluding to here is the fact that americans are saving very little and increasing their debts at the same time the last time we saw similar statistics was right before 2008 and this has a lot of people scared for the future he went on to tweet on june 2nd a similar graph showing us personal savings divided by gdp this graph in essence is meant to show the financial health of the consumer taking into account the prosperity of the country versus the average person's savings the lower this line goes the more unhealthy the economy the last all-time low was set in july 2005 and as we can see the charge seems to be headed towards that record indicated by that red line bury suggests that if we continue at our pace we will hit that line late this year now these stats are obviously concerning yet the market doesn't seem to be pricing them in yet most companies are still assuming earnings growth in the near term if we look at a chart of future expected earnings we see that the largest companies in america are assuming nothing is wrong and as q2 and q3 numbers come in they will finally see the reality of the situation now outside of the savings rate i've noticed berry continues to be worried about housing he tweeted on june 11 an article from cherry creek mortgage with the following quote the cpi news this morning was so awful it changed the bond market's view of fed trajectory and the weakest sector broke in bond jargon mbs went no bid no buyers for mbs now what this means is pretty complex but in summary condensing it down to a simple explanation it means that mortgages as we know them are not worth it to investors under current yields aka investors are signaling that mortgages are no longer worth buying at this risk level the 10-year bond which is the instrument to watch when it comes to mortgage rates has cooled off in the last week but regardless fixed rates going from three percent to six percent in a few months has significantly changed market dynamics now everyone is worried about a slowing housing market bury included at the same time however his tweets are not an accurate gauge of what his money is doing as far as filings go we can see that barry isn't shorting the housing market at least not from the research i did it only shows that he's short apple via put options so it's really hard to tell what his true thoughts are about the future of markets when it seems that his tweets don't always align with his positions now the final argument berry focuses on when outlining his bear case is the differences between what is happening now and what happened in the 70s many people see the inflation occurring right now and the troubles we have with oil prices and compared this period to the 1970s claiming we must be going through something similar michael disagrees with this arguing that in the 70s we had a growing labor force following a post-world war ii baby boom today we have the opposite with our current birth rate at 1950 levels and nuclear families at 1959 levels despite the fact that our population is nearly two times bigger today than what it was back then this fact according to him changes the dynamics of the situation significantly with growth limited by a red-hot labor market that is extremely tight despite the current financial conditions so essentially burry is saying that this time is different in fact this time it's worse we have an aging population inflation a massive real estate bubble an equity bubble and serious political division if you put all the things michael berry talks about together you get one of the most bearish summaries possible from what i could gather piecing together as tweets he believes consumer spending is going to fall while at the same time housing is going to slow down these two components make up the overwhelming majority of the overall economy then throw in inflation declining birth rates and political tension and you have a recipe for a disaster in fact in the last few weeks he's tweeted out various materials suggesting that while he remains bearish train wrecks like this one we are living through right now materialize over years not days it takes many quarters for the market to truly come to grips with the reality of the situation and throughout history we have seen bear graphs take dozens of months to truly bottom out my only critique of bury is that he's not very direct with his statements he tweets out various material that suggests a complete meltdown of markets while at the same time he refuses to elaborate and remains hidden from the media for such a strong opinion i do believe you not only have to put your money where your mouth is but you have to publicly defend all those challenges that come to you thank you guys for watching as always please make sure you hit that like and subscribe button if you enjoyed it
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