The Ghosts of the 2008 Financial Crisis Are Wandering the Markets

Are we about to relive the financial crash of 2008?

This question has been on people’s minds since a cryptic tweet on May 24 by iconic investor Michael Burry, known as one of the first to bet against subprime mortgages in the mid-2000s. Burry correctly predicted the collapse of the housing bubble. The hit movie ‘Big Short’, starring actor Christian Bale, chronicles his incredible bet against the tide of an exuberant market.

‘Plane crash’

“Like I said about 2008, it’s like watching a plane crash,” Burry said on Twitter on May 24. “It hurts, it’s not fun, and I’m not laughing.”

He did not add any further messages, leaving Twitter users and investors to speculate. The confusion added to the tension.

The Nasdaq Composite fell 2.4%, and the S&P 500 fell 0.8%. Although the Dow fell as low as 1.6% at the beginning of the session, it reversed and rose 0.2% at the end of the day.

Investors worry about an overheating economy and fear a recession is on the horizon. They are currently in a state of panic at any sign of an economic slowdown. On Tuesday, May 23, the social network Snap Inc. (BLAST) – Snap, Inc. Get a Class A Report It has issued a profit warning about disruptions in supply chains, rising prices and Russia’s war in Ukraine, making companies cautious about digital ad spending.

“2008 housing market is responsible but 2022 why what???” A Twitter user asked Burry.

“Enormous amounts of monroe pressure created a bubble over every asset. 2008 was nothing compared to the future. A house that should have been worth 500,000 is now insane at 2.2 million. The US dollar as a currency has been destroyed,” another user replied.

“Is everything a bubble? or are Western Currencies overvalued?” another user asked.

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Another user tried to reassure others by saying “Stop comparing this to 2008”. “It’s nothing like 2008. I dare say we’re in better conditions than 08. Better connected and better prepared. Technology is on our side, news travels faster. In today’s world, emotions can change in the blink of an eye. ( No pun intended ).

Nervousness and Bad News

All these messages show the panic and tension currently affecting investors. They are desperately searching for a glimmer of hope in a landscape completely overwhelmed by bad news. Almost all asset classes are affected, even cryptocurrencies, including bitcoin, which is supposed to protect against inflation.

For the seventh consecutive week of decline, the S&P 500 is experiencing its worst streak since 2001. Big tech stocks like Apple (AAPL) – Apple Inc. Get Your ReportMicrosoft (MSFT) – Get Microsoft Company ReportAlphabet (GOOGL) – Alphabet Inc. Get Class A ReportAmazon (AMZN) – Amazon.com, Inc. Get Your ReportTesla (TSLA) – Get Tesla Inc ReportFacebook (Meta Platforms) (Facebook) – Meta Platforms Inc. Get a Class A Report or Nvidia (NVDA) – Get NVIDIA Company Report declining despite solid fundamentals. Investors seem confident that companies will soon start delivering bad news.

On the macroeconomic level, the housing market is cooling: new home sales have fallen, with higher prices and a large increase in mortgage rates.

Market participants are also eagerly awaiting the latest reports on weekly mortgage applications and durable goods orders before markets open on May 25. Investors await the minutes of the Federal Open Market Committee’s final meeting.

Hours after Burry’s tweet, he deleted it and other posts. It is known that he frequently deleted his tweets after the incident.

On May 16, Burry, who runs Scion Asset Management, announced that he had suspended Apple. Basically, Apple is betting on the sharp decline in its stock. Hedge fund Scion Asset Management announced in a filing with the Securities and Exchange Commission that it had 206,000 put options on Apple shares as of the end of the first quarter.