Do you remember what Larry Summers said last year about soft landing?
This story of second marriage and the triumph of hope vs. experience seems to find an echo at the FED level...
Bankruptcy filings have recently reached levels on par with the 2008 Great Recession and the 2020 COVID-19 pandemic
This indicator often suggests that the economy isn't performing well, and has historically always been followed by massive stock market crashes. Source: whalewire
Maybe this is why Powell said that a soft landing is not the core scenario...
Recession confirmed?
Soft landing narrative is not new. It’s quite common before each recession
Source: Michel A. Arouet
Hard landing vs. Soft landing assets
Source: BofA
A wave of corporate debt refinancing over the next 6 months will spark a recession in 2024 warns Fidelity International
Source: Barchart, Bloomberg
"Soft landing" narrative is now the consensus. This also happened in 2000 and 2006...
Source: Game of Trades
Michael Burry is an outstanding contrarian investor and did exceptionally well during the 2006-2008 US housing crash
However, performance is not always repeatable and his next bets haven't paid off that well (at least the market views shared publicly - hedge fund long-term performance looks quite strong on a sharper ratio basis). Adam Khoo had a look at all of Michael Burry's recent predictions and he shared it with a chart on X. Here's a summary: In 2005, Predicted the collapse of the subprime mortgage market -> Housing market crashes in 2008, Global Financial Crisis. On Dec 2015, he predicted that the stock market would crash within the next few months. -> SPX +11% Next 12 months. On May 2017, he predicted a global financial meltdown-> SPX +19% Next 12 months. On Sept 2019, he predicted that the stock market would crash due to a bubble in index ETFs -> SPX +15% Next 12 months. Source: Adam Khoo Trader
