Michael Burry expects long-term USinflation to trend higher than previously expected.- "
The Big Short " investor cited labor shortages, an onshoring boom, and changes to supply chains.
Michael Burry predicted higher long-term inflation in the US, fueled by a shift towards more domestic production, a post-pandemic shake up of global supply chains, and a chronic shortage of manual workers.
"Onshoring/blue collar shortages plus global supply chain restructuring raise long-term inflation's floor even as the bullwhip cycles lower to that end," he wrote in a $4 on Tuesday.
The investor of "The Big Short" fame attached a link to a $4 highlighting an onshoring boom in the US, after the pandemic sparked shortages, bottlenecks, and a surge in shipping costs.
The second part of Burry's tweet refers to the "Bullwhip Effect" — the idea that an upturn in demand from consumers or retailers reverberates up the supply chain, causing wholesalers to overstock and manufacturers to overproduce in preparation for a flurry of orders. The excessive supply results in lots of surplus inventory, spurring retailers to cut their prices to avoid being left with loads of unsold goods.
Burry's view seems to be that US companies, faced with the higher costs of domestic production versus outsourcing, will work through their bloated inventories and pursue more aggressive price hikes over time, resulting in higher inflation in the long run.
Burry $4 slower inflation later this year. He suggested retailers would slash prices to get rid of excess inventory, and consumers would cut back on spending as their savings dwindle and they continue to weather higher food, fuel, and housing costs.
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Burry is best known for $4 of the mid-2000s housing bubble, inadvertently inspiring the meme-stock movement by $4 in GameStop, $4 Elon Musk's Tesla and Cathie Wood's flagship Ark fund last year, and $4 about asset bubbles and market crashes.
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