Financier Michael Berry has been called a cassandra because of his accurate predictions. His latest prediction is concerning.
Michael Berry became famous after the 2015 film "The Big Short" featured his bet on the mortgage collapse that triggered the 2008 financial crisis.
Michael Barry recently liquidated his entire portfolio of U.S. stocks. According to his point of view, the worst for the economy is yet to come. The reason for that is confirmation of Federal Reserve Chairman Jerome Powell on Aug. 26. He said that the central bank will continue to aggressively raise interest rates to fight inflation.
Some experts believe this tightening of monetary policy will lead to a sharp drop in the economy, in other words, a recession.
Berry did not hesitate to point out potential red flags for the economy, such as the household debt crisis, which pose serious risks.
"Consumer loans are rising at a record pace as consumers increase spending rather than cutting it in the face of inflation," the investor wrote on Twitter Aug. 12.
He points out that U.S. consumer credit increased by $40.2 billion in June compared to the previous month. According to the Federal Reserve data, it was the second-largest increase on record.
"Remember the savings glut problem? Covid helicopter money has taught people to spend again, and it's quite addictive. Winter is coming," Berry added.
"Winter is coming" seems to refer to the TV series "Game of Thrones". The characters used the phrase as a warning.
With these arguments, the financier substantiates his gloomy forecasts for the markets.
This content is for informational purposes only and is not intended to be investing advice.
