The Big Shorter Strikes Again 💥

Famed asset manager Michael Burry (of “The Big Short” fame) is credited with predicting the Housing Crash. But now, Burry’s predicting diminishing returns for a famous money manager: Cathie Wood. 

In its latest regulatory filing, Burry’s fund opened a bet against against the ARK Innovation ETF. Scion Asset Management purchased 2,355 put contracts against the ETF. According to Fintel, the value of the bet is worth over $30 million.

Hours after the news broke, ARK Invest’s Cathie Wood shared her two cents. Wood said that Burry “doesn’t understand the fundamentals that are creating explosive growth and investment opportunities in the innovation space.“

For Burry, it’s probably nothing personal. Earlier this year, Burry opened a put position against the Russell 2000 Growth ETF. He closed that bet in the latest quarter before opening up the ARK-related one. But that’s not even his wildest bet: Burry grew his existing $530 million put position against Tesla, the pick that brought Wood & ARK Invest to fame. In the latest quarter, Burry sized up the $TSLA short by 34%.

After reading all that, it’s hard to appreciate Burry’s other big bets and headlines — Burry made news earlier this year when he dropped serious dough on interest rate bets and Big Tech companies like Facebook and Alphabet. 

The market’s in the red today. But what if we told you that this is actually a Freaky Friday moment that happens every month? 🤔

That’s the summary of a Bloomberg article published this morning. The article noted that the S&P 500’s worst dips have happened in the middle of the month. 

The article observes that the dip coincides with monthly options expiration, which happens near the middle of the month. Afterwards, though, the index soldiers on to new highs. Given the timing of this week’s dip, that trend seems to hold up. 

Despite these “blips,” the S&P 500 has not experienced a major correction since election season. The worst we’ve seen YTD is a drop just shy of -5% — for comparison, the dip around the 2020 election was -7%.

With each passing month, the probability of a more aggressive correction rises. According to one Morgan Stanley wealth manager, some valuations (namely in tech) are reaching levels comparable to past bubbles. 🙊

While the Teslas and Microstrategies of the world buy Bitcoin, one emergent tech player is buying gold bars. We’re talking about Palantir, the big data analytics company run by Alex Karp and Peter Thiel.

One of those two names might sound familiar, but the real question is: are the Palantir guys a couple of boomers? I mean, who buys $50 million in gold bars?! 😅

The decision to pivot away from cash (and towards alternative assets) has become a popular move for companies and their balance sheets. In fact, many companies now allow customers to pay for products or services in cryptocurrencies or physical assets like gold — Palantir already accepts payments in Bitcoin and gold. 

Why the pivot from cash? Companies are worrying about global currencies, inflation, and related issues. Palantir could be afraid of another COVID-esque “black swan event,” but the company’s move might also have something to do with its $2.3 billion in cash holdings. 

It’s hard to know if adding alternatives to the balance sheet is anything more than Doomsday Prep. With that being said, the dollar is an unstoppable force and inflation is an immovable object. Inflation is rising, but so is the dollar.

$PLTR is up 2.57% YTD, compared to $SPY‘s 20.4%. Oh yeah, and $GLD is down 8.4% YTD.

If China investors could go back and change one thing?? They’d probably want to stop the $DIDI IPO from ever happening. It’s been downhill for Chinese stocks since the rideshare company went public.

The iShares MSCI China ETF ($MCHI) has fallen 16.4% YTD amidst the crackdown on Big Tech, media, entertainment, gaming, education, and other industries. Many falling businesses are listed on American stock exchanges as ADRs — which has attracted alarm from regulators and investors.

SEC Chief Gary Gensler cautioned investors of Chinese companies, saying “[investors] may not be aware that they are buying shares of shell companies instead of direct stakes in Chinese businesses.“ One hedge fund giant warned that ADRs are “uninvestable” due to ongoing policy changes in China. While China has not explicitly banned listings on foreign stock exchanges, the country obviously wants to keep companies domestic… and that could make for some big problems.

But if you thought China’s stock-related drama was over after the ADR situation, problems in the media and gaming industry, and investigations into Big Tech? You were wrong. China dropped new regulations which continue to spook investors. A new set of “draft rules” issued by the China State Administration for Market Regulation target Big Tech and entertainment companies. The rules aim to prevent unfair online competition.

The news sent the Nasdaq Golden Dragon China Index, which holds 98 of China’s biggest firms listed in the US, tumbling for the sixth straight day. It fell 4.5% today, -33.7% YTD.