Michael Burry, the hedge fund manager who famously shorted the 2008 subprime mortgage crisis, predicts that the economic repercussions of the Federal Reserve’s rate hikes may see the bank reversing its decision.
Responding to CNN’s article about big retailers like Walmart and Target having oversized inventory, Burry said that the supply glut at retail is the result of the Bullwhip effect in play.
He also believes that the deflationary effect will be visible in the Customer Price Index. If true, this will lead the Fed to ease on rate hikes and its quantitative tightening policy.
Cryptocurrencies had suffered heavy losses amid growing fears of inflation. The market fell further in response to the interest rate hike by the Federal Reserves.
Therefore, cooling inflation and reversal by The Fed might lead to a bounce-back of the crypto market. But recent indicators show that inflation is far from cooling, with May’s reading coming in at an over 40-year high of 8.6%.
