The man on whose story the movie “The Money Machine” is based, Michael Berry, warns: strong consumer spending could lead to trouble later on.
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The investor, who made about a billion dollars after predicting the 2008 crisis, tweeted yesterday (Friday) that credit balances rise “when consumers choose violence instead of cutting expenses in the face of inflation.” Berry concluded the tweet with the words “Winter is coming”, a reference to the popular TV show Game of Thrones.
Like most of his tweets, the meaning is not entirely clear – but he seems to be warning about the financial conduct of Americans while inflation continues to weigh on the economy. On Thursday, Berry noted that the Nasdaq’s rise from its June lows does not necessarily mean the bull market is back. He deleted the tweet shortly after posting it, as he usually does.
Berry then wrote that the 23% increase in the Nasdaq is “an increase in the bear market”. According to him, there were 26 rales in the bear market from 1929 to 1942 and from 2000 to 2002, and they averaged 23%.
Consumer loans in the US expanded by $40.2 billion in June compared to the previous month, the second largest increase ever, according to the Federal Reserve. Inflation is still hot, despite the slight decline since June, and credit companies such as Mastercard report an increase in demand and prices for products daily
Berry’s tweets come a week after he claimed there was “stupidity” in the markets as Hong Kong-based AMTD surged in value.
The S&P 500 climbed 12.6% in the past month, but is still 10.8% lower than it was at the beginning of the year. The Nasdaq index added 15.7% in the last month, but fell 17.8% since the beginning of the year.