Michael Burry's true portfolio is not one directed at Tesla specifically, but one betting on to catch up with us. While TSLA makes up a large portion of this position, he also has 170M in TLT puts and 55M in TBT Calls. Bringing his portfolio to a net position of roughly 760M in derivatives betting on . Most interesting to me anyways is the TLT position. TLT runs inverse of the 10 and 30 year bonds. Last year as rates went to 0 to encourage spending, TLT shot up 18% in a week. This current climate of near 0 rates are fantastic for financing (because if you can lock in a 30yr mortgage for 3% and is 3%, that's essentially borrowing money for free. For 30 years. While an asset appreciates), but the spending is not beneficial for the valuation of the dollar.
As of December 2020, nearly 35% of all US dollars in existence were printed in the 10 months prior. There are two ways in which a functioning market would pay for this, one would be increased taxes which have been proposed but not passed. The other is through devaluing dollars and increasing relative cost of goods. The latter is much more expensive but generally goes under the radar. At some point the will need to SLOW DOWN the the economy. The most likely way for this to happen is to raise interest rates making borrowing money more expensive.
From a technical point of view the US 10 year bond is bull flagging on a larger time frame, this is probably the most consistent and is line with the point of view of the raising rates ahead of schedule. Conversely, TLT is bear flagging on the weekly, so there's no divergence there which is great for Michael Burry's analysis. In addition to TLT's , it's on the verge of breaking below a decade long support line it's followed and is on it's 200 day moving average.
Jerome Powell has stayed true to his word thus far and has, honestly, done quite well in keeping the market afloat and strong over the last 14 months or so. The real question is whether or not he was wrong in his assumption that rates can stay low for as long as he's promised and if is truly under their control.
Warwick, OptionsSwing Analyst