CPI rises a mediocre 0.2% MoM (eq. to ~2.5% annualized). In the last 3 months the growth has been 3.1% annualized. YoY 3.2%.

Core CPI also 0.2% MoM and 4.7% YoY.

Michael Burry did NOT short the market by $1.6B

1. He did NOT do it “now”. The filing reports on the previous quarter between April and July.

2. He is NOT “shorting” rather hedging his long portfolio. He has about a $100M of longs. And has bought S&P and Nasdaq puts to hedge his delta, lock in profits, and protect against a downturn. The figure shows his portfolio.

3. He did NOT pay $1.6B. This is just the notional value of the options. We don’t know the strike price or the duration to infer how much he paid.

But assume the puts are for three month into the future and strike price of 25% lower than today (a market crash). As shown in the figure this put will cost $1 (Nov30 puts on SPDR S&P500 at strike $350) or 0.3% of the notional price. In other words, Burry could have paid only $5M for all these puts to hedge a $100M long portfolio. In reality could be more or less. We just don’t know.

LONG AND VARIABLE LAGS

In recent years, panicked at the inflation they had unleashed, CBs embarked on the fastest rate hike ever. As they hiked more and more, inflation remain high and this has led many to forget monetary policy works with a long lag.

The day of reckoning is arriving. EU PMIs show a solid contraction both in goods and services.

As banks are tightening and shrinking the money supply, the data shows within a year we should see the real impact of this contraction. And there is a hell lot more to go.

With China also in deep trouble and global trade tanking no country is immune.