ATS

Michael Burry, the investor made famous by the movie "The Big Short," and the founder of Scion Asset Management, said in a tweet Monday that the "Bullwhip Effect" is happening in the retail sector.

Burry added that this could lead to the Federal Reserve reversing its rate rises and its Quantitative Tightening policy.

The Tweet reads:

"This supply glut at retail is the Bullwhip Effect. Google it. Worth understanding for your investing endeavors. Deflationary pulses from this- -> disinflation in CPI later this year --> Fed reverses itself on rates and QT --> Cycles."

The tweet also links to an article from CNN, which states retailers are considering allowing customers to keep items they return so they don't have to take them back and add them to swelling inventories.

It's not the first time in recent months that Burry has raised concerns about the economy. In May, he tweeted that the current market conditions are "like watching a plane crash."

Investors: don’t make another move until you read this.

As inflation skyrockets, savvy investors have seized the opportunity and found this simple yet clever way to reevaluate their stock picks. And with last May’s staggering benchmark of an 8.6% inflation rate (a 41-year high), why shouldn’t you have every possible strategy in your pocket – especially when it’s clear inflation is here to stay?

“Inflation is a terrible thing when it gets going. You can’t get that genie back in the bottle too easily; we saw it in the ‘70’s,” said Carl Icahn just a few weeks ago.

And yet, so many investors are sticking to their same old, predictable strategies – amidst one of the most impactful data shifts in recent memory. This is, quite simply, a huge mistake.

How Much Could You Lose?

When news of record-high inflation hit, a major sell-off ensued. One of our colleagues (call him Joe Investor) watched his sizable investment in JPMorgan Chase & Co (JPM) come crashing down.

Needless to say, Joe panicked. Can you blame him?

After all, market sentiments (and general Wall Street buzz) were all sending the same message: join the crows and sell, quickly, before it gets worse. Indeed, as the weeks wore on, JMP stock only dropped further and further. The stock is now nearly 14% lower than where it sat this time last year. And few analysts are predicting an immediate rebound.

What Good Investors Do to Avoid Unnecessary Losses

But here was Joe’s first smart move.

He realized that new market factors like inflation required a new way to approach the data in order to make clear, unbiased decisions. Because even though today’s inflation rate is at a near-decades-high, that doesn’t mean it’s without precedent. And considering JPMorgan’s 80-year history on the NYSE, digging deep into its financial records may offer a better insight than, say, speculative gut intuition.

Asia Pacific stocks were up on Wednesday morning as markets are worried about whether the global economy can weather interest rate hikes.

Japan's Nikkei 225 fell 1.11% by 10:16 PM ET (2:16 AM GMT).

South Korea’s KOSPI fell 1.61%.

In Australia, the ASX 200 dived 1.28%.

Hong Kong’s Hang Seng was down 1.16%.

China’s Shanghai Composite was down 0.38% while the Shenzhen Component was down 0.32%. China took a surprise move Tuesday to cut quarantine times for inbound travelers to seven days from 14 days in centralized quarantine facilities. The step lifted market hopes of China’s shift to another COVID-19 strategy which could cost less economic damage.

The S&P 500 sank while the tech-heavy Nasdaq 100 dived over. Treasuries were steady, leaving the 10-year yield at 3.18%. Oil prices pushed past $112 a barrel on tight supply.

Investors are skeptical that the U.S. Federal Reserve could raise interest rates sharply while avoiding an economic downturn.

“The Fed still believes it can thread that very fine line between tightening financial conditions while not hurting the economy too much,” State Street Corp. macro strategist Emily Weis told Bloomberg.

“We’re still not sure they’re going to be able to pull that off. That’s what we’ve seen reflected in the markets over the last month or so.”

New York Fed President John Williams and San Francisco’s Mary Daly said that they had to cool inflation but insisted that a soft landing was still possible.

In Europe, central bank President Christine Lagarde affirmed plans for an initial quarter-point rate increase in July.

The below tip of the day is from one of the experiences we had last day on the members area. I share it with you now:

Last Friday candlesticks had formed a very strong sell signal with several currency pairs including NZD-USD which was the best one, but unfortunately market was opened on Sunday afternoon with a big gap almost in all of the pairs that had already formed the signals.

Usually when market opens with a gap, it is used to go against the gap direction and fill it because those who already had a position from the last week, when they see they are in a big profit because of the gap, they get overwhelmed and close their positions to collect their profit and so price goes to the other direction. But last night it didn’t fill the gap and kept on going down. In these cases I just call it bad luck and then forget about it and wait for another trade. I never enter if I am late. If I can enter on time and with the price that I should enter, I do it, otherwise I ignore the trade. This is a very important aspect of discipline that a trader should have. Our greed pushes us to enter even when it is late but we should prevent it. I know it is a pain to see a good and a strong signal runs away from you while you are not on board, but this is part of the game too. We can not catch all the movements.

I read somewhere that a trader said he preferred to be late than wrong. But I think being late can sometimes be as risky as being wrong. So I prefer to be right and on time than wrong or late.

Maybe many of you, have been trying forex for several months or even a few or few years but have not been profitable so far. You make some profit every now and then and lose it with some bad trades. Let me share a million dollar secret now. It is the right time to do it.

You will become profitable only when you become able to control your greed. You should be able to ignore some positions and signal that don’t look good and strong or you are late and it is not safe to enter. If you review your memory, you will see that most of the bad positions you have taken are because you have not picked a strong signal or because you had missed a strong signal but you pushed yourself to enter and make some profit and get out. But they went against you right after you entered. Maybe they have been waiting for you to enter to change their direction. Sometimes it really looks like that a position has been waiting for you to enter and right when you clicked on buy or sell button, it changed its direction. It is because you are late or you have picked a poor signal.

Being late or picking a poor signal is because of nothing but greed. You can not ignore the money that it may make for you. So you take it. When it comes to trading, everybody is greedy. This is normal. Everybody likes to work less and make more. I knew myself as someone who could be everything but greedy. But when I started trading, I discovered my greed. It showed up. It is hard to know it first. You have no idea. It pushes and controls you but you don’t feel it. You are not aware of its presence. You will become a profitable trader only when you know it and you become able to control it.

I just wanted to open your eyes and help you see the bigger picture. Start from a $1000 account, be happy with 25% per month and be patient for 24 months. Then withdraw $53,000 per month!!!

But maybe you have been trying to triple your account every week or every month and that’s why you have not been profitable so far. Please think about it.