Donald Trump’s greatest weakness is his fear of falling stock prices, Michael Burry says.
“The stock market is Trump’s kryptonite,” the investor of “The Big Short” fame wrote in a brief note on his Substack over the weekend.
The president’s goal in waging war with Iran has morphed from “revolution” to “just get out before the market crashes too much,” Burry continued. “It’s a shame that Americans died for this.”
Burry was reacting to news that Trump was considering “winding down” the US military campaign against Iran after destroying much of the country’s missile capabilities and protecting American allies in the Middle East.
“And Iranian oil can be sold again because the stock market fell,” Burry commented on his note, attaching another news story that the US was allowing the sale of Iranian petrochemical products that had already been loaded onto shipping vessels in a bid to temper the surge in oil prices.
In a subsequent note, Burry wrote: “Trump now gives Ultimatum on Strait of Hormuz. He would love to win this before the market open. What changed from Friday’s the war is essentially over, I am not sure.”
The benchmark US stock index, the S&P 500, breached 7,000 points for the first time in late January. It has slumped by around 6% since then to below 6,600 points at Monday’s close.
It’s worth noting that the decline also reflects an exodus from software stocks such as Adobe, down nearly 30% this year, as investors fear customers will cancel their subscriptions and use AI tools instead.
The conflict between Iran, the US, and Israel has caused massive disruptions to oil and natural gas flows through the Strait of Hormuz, a key shipping route.
Combined with attacks on energy infrastructure in the region, that has fueled a 66% rise in Brent crude and a nearly 60% surge in West Texas Intermediate crude since the start of this year, to around $100 and $90, respectively.
Soaring gas prices have worsened the affordability crisis in the US ahead of the midterm elections in November, and rekindled inflation fears that could prevent the Federal Reserve from cutting interest rates further.
Moreover, Trump explicitly ran for president with the promise of putting “America First” and not getting the US wrapped up in yearslong conflicts like the Iran and Afghanistan wars.
Burry, who pivoted from running a hedge fund to writing on Substack late last year, has previously said Trump’s “kryptonite is the American stock market,” adding that: “Nothing else touches him.”
Other investors have noticed the president’s reluctance to weather severe market pushback to his policies, and have sought to capitalize on that pattern through the so-called TACO trade: Trump always chickens out.
Burry is best known for predicting and profiting from the collapse of the mid-2000s housing bubble, after his massive contrarian wager was chronicled in the book and movie “The Big Short.”
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