Investor Michael Burry said in a tweet late Monday that he expects the crisis surrounding the collapse of California’s Silicon Valley Bank to be resolved “very quickly” one day after comparing SVB’s collapse to the financial crisis of 2008 and the dot-com bubble of 2001.
“I’m not seeing true danger here,” Burry said in a tweet that has since been deleted. The manager of Scion Asset Management, who rose to fame after his bets against U.S. mortgage bonds in 2008 were profiled in the book and film “The Big Short,” is known for his often-bearish tweets about markets and the economy, which he frequently deletes shortly after publishing.
Burry slammed the management of SVB one day earlier, saying in a tweet that “people full of hubris and greed take stupid risks, and fail. Money is then printed. Because it works so well.”
SVB was taken over by U.S. banking regulators on Friday following a run on deposits. On Sunday night, the Treasury Department, Federal Reserve and FDIC announced that New York based Signature Bank had also failed, but that depositors at both SVB and Signature would have access to all of their money on Monday. Previously, Silvergate Bank, which had heavy exposure to the cryptocurrency industry, announced it would close also.
The Federal Reserve also announced a new lending program for distressed banks that would value their collateral at par.
SVB’s demise was triggered in part by being forced to sell long-dated Treasurys and mortgage-backed securities at a loss as its clients, many of whom were from the venture capital and startup community, pulled deposits from their accounts.
The news sent shares of other regional banks reeling as some customers rushed to pull deposits. However, the selling appeared to have exhausted itself by early Tuesday, as the SPDR S&P Bank exchange-traded fund KBE,
The rebound in bank stocks mirrored a broad rally in U.S. equity benchmarks early Tuesday: the S&P 500 SPX,
Burry’s market calls have occasionally proved prescient. After U.S. stocks rallied sharply in January, Burry advised traders to “sell” stocks ahead of the Fed’s two-day February monetary policy meeting, which concluded on Feb. 1.
Since the beginning of February, the S&P 500 has fallen by nearly 5%, according to FactSet data.
