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• Hedge Fund investor said bullwhip effect will force Fed to reduce rate hikes
Michael Burry, the founder and fund manager of Scion Asset Management, on Monday, tweeted that the “Bullwhip Effect” happening in the retail sector may force the US central bank to reverse rate hikes and its Quantitative Tightening (QT) policy.
‘The Big Short’ fame Burry linked a CNN news article ‘Just keep your returns: Stores weigh paying you not to bring back unwanted items’, which reported retailers considering letting customers keep products they want to return rather than having to take the items back and add them to already bulging inventories.
The bullwhip effect is the demand distortion that travels upstream in the supply chain from retailers to wholesalers and manufacturers, created by high demand and variance of orders which may be larger than sales.
Pointing at the CNN report, Burry tweeted, “Deflationary pulses from this- -> disinflation in CPI later this year --> Fed reverses itself on rates and QT --> Cycles.”
In April, Burry deleted his Twitter account after several investors ignored his repeated warning and dire predictions of a market crash.
Picture Credit: The Street
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