This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
The unthinkable seems to have happened. Michael Burry’s vociferously bearish prediction fizzled out yesterday after Fed Chairman Jerome Powell gave an all-green signal to the markets, allowing Jim Cramer’s bullish call to eke out a huge win. Now, as the market – and speculative stocks like Bed, Bath & Beyond (BBBY) and Carvana (CVNA) – continue to rally like there is no tomorrow, bears are sporting sizable sparring wounds.
For the benefit of those who might be unaware, Michael Burry gained fame a few years back when he correctly identified the subprime mortgage crisis of 2008. In more recent times, Burry has scored big wins by placing unconventional bets on US prison stocks. Meanwhile, CNBC’s Jim Cramer has scored nary a correct call in the interim. In fact, so erroneous has been Cramer’s stock-picking performance that it has popularized an entirely new genre of contrarian investing – one that involves flipping Cramer’s recommendations.
Cramer says buy
Burry says sell
This is it
— Inverse Cramer ETF (Not Jim Cramer) (@CramerTracker) February 1, 2023
Coming back, Michael Burry posted a tweet yesterday containing the word “sell” ahead of the FOMC meeting later in the afternoon. Around the same time, Jim Cramer issued a bullish call on US stocks.
“Financial conditions have tightened significantly over the last year” in response to question about the easing of financial conditions we’ve seen over the last couple months. Could have responded a lot more “hawkishly” if he wanted.
— Bespoke (@bespokeinvest) February 1, 2023
While the Fed raised the benchmark interest rate by an expected 25 basis points, the real shocker came during Powell’s post-FOMC press conference, where the Fed chairman adopted a much more casual attitude toward the recent significant easing in financial conditions – a byproduct of the bullish spirits that have captured the market since the start of the year. This messaging was perceived by the market as an all-green signal to keep rallying, justifying Jim Cramer’s bullish call in the process. For his part, Michael Burry has once again deleted his Twitter account.
BBBY up 45% to celebrate start of Chapter 11 grace period
— zerohedge (@zerohedge) February 2, 2023
As an indication of the animal spirits currently gripping the market, and very much in line with Jim Cramer’s bullish call, consider the fact that Bed, Bath & Beyond (NASDAQ:BBBY) confirmed on Wednesday that it had failed to make a $28 million interest payment on debt notes of around $1 billion. This essentially places the company in the bankrupt category. It also comes amid persistent reports that Bed, Bath & Beyond is working on filing for bankruptcy protection under the Chapter 11 process. However, the company’s stock is up around 16 percent at the time of writing. In today’s pre-market trading, the stock was up as much as 45 percent!
Strong bounce for U.S. auto sales in January, up to 15.74M (annualized) vs. 15.5M est. & 13.31M prior … brings level to highest since May 2021 pic.twitter.com/0FjT0PwnMI
— Liz Ann Sonders (@LizAnnSonders) February 2, 2023
In another indication of the unhinged bullishness that has gripped the market, consider the fact that the online used car dealership company Carvana (NYSE:CVNA) is up 30 percent at the time of writing, adding another feather to Jim Cramer’s prescient call from yesterday. Just like Bed Bath & Beyond, Carvana is widely expected to go bankrupt, with some of the company’s major creditors signing an agreement a few weeks back to cooperate with each other in case of bankruptcy, thus maximizing their bargaining power. Nonetheless, the stock seems to be benefitting today from reports of resilience in the US auto industry.
Bears are putting all the blame on Burry for the market pump.
— AMC 2 Moon (@AMC_Apee) February 2, 2023
While one correct call does not constitute a trend, we are nonetheless surprised by Jim Cramer’s turn of fortune. Perhaps, the specter of an upcoming Inverse Cramer ETF has finally spurred the CNBC anchor to up his stock-picking game. We will surely continue to follow all developments on this front. Stay tuned.
