Investor Steve Eisman, known for his role in “The Big Short,” expressed concerns over the current stock market dynamics, particularly regarding the implications of tariffs. Speaking on Finance Newso’s “Fast Money” this past Monday, the former Neuberger Berman senior portfolio manager remarked, “I have one concern, and that’s tariffs. That’s it.” He highlighted that market sentiment appears to be complacent regarding the unfolding trade negotiations between the U.S. and its partners, China and Europe.
Eisman, who is now the host of “The Real Eisman Playbook” podcast, indicated that Wall Street may be underestimating the intricacies involved in these trade discussions. “I just don’t know how to handicap this because there’s just too many balls in the air,” he noted, suggesting that a significant trade conflict could still be on the horizon. Despite these apprehensions, investors generally appeared unfazed on Monday, with the Dow Industrials recovering from an early deficit of 416 points and the Nasdaq Composite also rebounding to finish up by 0.7%.
While Eisman is generally cautious, he maintains a long position in the market, having reduced some risk but choosing to hold steady. “I am long only. I’ve taken some risk down, and I’m just sitting pat,” he explained.
When it comes to the massive U.S. budget deficit, Eisman downplayed the risks associated with it. He stated, “If there was an alternative to Treasurys, I might be worried more about the deficit because I’d say if we don’t balance our budget, then people will sell our Treasurys and buy something else.” However, he pointed out that there are few viable alternatives. “But what else are they going to buy? They’re not going to buy bitcoin. It’s not big enough. They’re not going to buy Chinese bonds. That’s ridiculous. They’re not going to buy European or Italian bonds. That’s absurd.”
Concerning the rise in U.S. Treasury yields, Eisman appeared unconcerned. He pointed out that while the 10-year Treasury note yield has increased, it remains relatively low at around 4.5%. “It’s not like there’s some crazy sell-off,” he remarked, noting the benchmark yield was approximately 4.4% as of Monday evening. Addressing the possibility of the 10-year yield surpassing 5%, he stated, “Relative to where it’s been because rates were zero, it’s high. But relative to history, it’s not that high.”
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