Michael Burry Ditches Gold as US CPI Hints at Fed Rate Cut

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Michael Burry, known for predicting the 2008 financial crisis, has chosen to offload his entire investment in Sprott Physical Gold Trust (PHYS). Over the last half year, the trust experienced a 23% growth, and gold served as a shield against inflationary pressures.

Burry’s choice to exit this investment could signal a shift in his perspective about the U.S. economy, given the recent deceleration of inflation in the country.

Michael Burry Ditches Gold as US CPI Cools

Michael Burry, in recent developments, has liquidated all his holdings from the Sprott Physical Gold Trust (PHYS). Over the past six months, the trust has experienced a notable rise of approximately 23%. This surge could potentially be attributed to gold’s inherent role as a hedge against inflation.

Michael Burry’s choice to sell off this investment suggests a shift in his investment strategy, as it appears he’s moving away from assets tied to inflation.

Burry shockingly sold out of all his Gold

He is now heavily bullish on the consumer, strength of the dollar, China, and the US Job Market

We think we have a good reason why he changed his mind on the US economy…

A thread worth reading below

— Michael Burry Stock Tracker (@burrytracker) August 15, 2024

Following the latest US Consumer Price Index (CPI) report, it appears that inflation has significantly decelerated. Specifically, the CPI increased by 0.2% in July, and the yearly rate dropped to 2.9%, the lowest since March 2021. This decrease in inflation might suggest that the Federal Reserve is considering lowering interest rates, which could potentially influence Burry’s thought process.

Burry Bullish Shift Towards Consumer Spending and the US Dollar

Apart from offloading his gold holdings, Michael Burry has also placed a sizeable wager on the American consumer and the robustness of the U.S. dollar. By acquiring a substantial share in Shift4 Payments (symbol $FOUR), a payment processing firm that caters to more than 200,000 businesses across retail, hospitality, and food service industries, Burry is expressing his confidence in these sectors’ growth potential.

The current position within his portfolio takes up approximately 13.97%, indicating that Burry continues to hold faith in consumer spending habits.

Given the recently released July retail sales figures showing a surprising 1% rise, instead of the anticipated 0.3%, it appears that Burry’s investment in Shift4 Payments is a well-timed strategic decision to capitalize on this sustained positive consumer sentiment. Moreover, his focus on consumer-oriented stocks could indicate growing faith in the robustness of the U.S. economy, as inflation decreases and the dollar strengthens.

Investments in Real Estate Signal Confidence in Recovery

Expanding his investment range, Burry has also invested in the real estate investment trust, Hudson Pacific Properties ($HPP), which has lost more than 49% of its value in the current year. Burry, who has been famous for his bearish approach to investment, seems to be betting on the rebound of the beaten-down commercial real estate.

Recently, Hudson Pacific Properties has been experiencing some difficulties, yet Scion Asset Management’s decision to invest could indicate a belief that the company will recover, particularly if the Federal Reserve lowers interest rates, which historically benefits the real estate sector. This investment strategy aligns with Scion Asset Management’s history of investing in sectors or assets that are currently out of favor but have the potential for a strong comeback.

After the latest inflation data was released, Bitcoin experienced a significant drop and is currently being traded at approximately $57,200, marking a decrease of over 4% in the last 24 hours, with a low point of $56,750. This Bitcoin price decline has led to the liquidation of other major cryptocurrencies. For example, Ethereum (ETH) fell by 5%, trading at around $2,543, and XRP‘s price dipped by 2% to approximately $0.5584.

As a result, it’s clear that changes in U.S. economic data have a growing impact on the cryptocurrency market. This is because more and more investors seem to prefer secure investments over riskier ones, given the evolving economic environment.

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2024-08-16 00:47