Legendary investor Steve Eisman, whose foresight on subprime mortgages was spotlighted in “The Big Short,” has fired off a cautionary salvo for investors looking into the equity market for solutions, declaring that traditional investment analysis has become virtually worthless amid the current trade tensions.
What Happened: In light of President Donald Trump’s recent tariff announcements, Eisman, speaking in his new podcast, believes traditional analysis can’t keep up: “You can’t model it (news flow). There is no other variable that matters. You can do any fundamental work on a company you want… but take it and throw it out the window.”
His warning arrives as markets struggle with Trump’s “Liberation Day” tariffs, unveiled on April 2, which levied substantial duties on U.S imports. The fallout has jolted investors, sending the VIX Index near five-year highs and overshadowing conventional market metrics. Eisman hosts his podcast with longtime collaborators Danny Moses, Porter Collins, and Vincent Daniel. Together, they argue that policy-heavy fluctuations are overshadowing economic fundamentals.
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In May 2024, Eisman, in a Bloomberg TV interview, called fears of tariff-driven inflation “ridiculous.” Now, while not necessarily predicting economic disaster, he appears to be signaling that the traditional tools investors rely on are ineffective in the current climate.
Why It Matters: Wall Street’s early surge was reversed on Tuesday as the White House confirmed plans for “massive” new tariffs on China, jolting the Dow down by over 500 points. Investors, who initially took solace in bargain valuations and the hope that trade fears might ease, watched the rally collapse once the administration announced it would impose “an additional 84% in levies” starting Wednesday.
“It’s finding the bottom now. It’s finding the bottom now,” said White House trade adviser Peter Navarro, dismissing recession concerns by predicting “Dow 50,000. I guarantee that, and I guarantee no recession.” However, major banks such as Goldman Sachs and JPMorgan Chase warn that escalating tariffs may spark a global economic slowdown. Even some Trump allies, including Elon Musk, have labeled tariffs “bad policy” that rests on “extremely flawed logic.”
Cover Image via International Monetary Fund
