Michael Burry (tweeted Aug 7, 2026) warns that despite circuit breakers and a…

Brief

Michael Burry (Aug 7, 2026) argues that market safeguards — circuit breakers and activist government/Fed policy — won’t prevent a ‘step function’ collapse driven by pervasive bullish narratives, over‑investment, high valuations, and inflation. He warns such a sudden move would break vol‑targeting funds, pod shops and ODTE risk systems, triggering chaotic, prolonged dislocation with historical parallels to 1929, 1987, 2000, and 2007.

Why it matters

Michael Burry (tweeted Aug 7, 2026) warns that despite circuit breakers and a more activist government and Federal Reserve — and even “a President selling stock tips” — markets remain exposed to a “step function” crash risk from ubiquitous bullish narratives, over‑investment, stretched valuations, and “pernicious inflation.”

Key details

Burry claims a sudden step move would overwhelm vol‑targeting funds, “pod shops,” and the ODTE (one‑day‑to‑expiration) options market’s risk controls, causing the market “machinery” to “blow a gasket,” capital titans to run “like chickens with their heads cut off,” and prolonged chaos, citing 1929, 1987, 2000, and 2007 as precedents.

".. a President selling stock tips .."

Cassandra Unchained (@michaeljburry)

Correct, we have circuit breakers now, a more activist government+Fed, a President selling stock tips, lots different amidst the decline of western civilization. Nevertheless, step function risk is on the table because of the ubiquity of the narrative, over-investment, valuations, pernicious inflation and other fundamentals about which I have been writing. Importantly, a step function move in markets is the one thing vol-targeting and pod shops cannot handle. Even the ODTE market would lose its risk management center into the whorling gyre.

This should be clear from my last post. The machinery of the market would blow a gasket and capital titans would be running around like chickens with their heads cut off. Chaos would make an appearance and maybe stay awhile. The trigger, as in 1987, 2000, 2007, and 1929, need not show up, and by its absence push the boom on til the last bear is about to turn off the lights.

— https://nitter.net/michaeljburry/status/2085752702718361955#m