One of the investors who called and profited off the subprime mortgage collapse of 2008, Steve Eisman, is brushing off concerns over the rising US budget deficit.
In a new interview on CNBC, the Wall Street investor says the heavy demand for US treasuries from across the globe suggests there’s no cause for worry over the deficit.
“There’s a great slogan that I think really applies to politics and international affairs, which is when someone tells you who they are, believe them. But in the market, when someone tells you who they are, don’t believe them [until when] they actually do something with their money.
So all the people who are pontificating about this… The price of this risk is a 10-year Treasury yield. And what’s happened to the 10-year Treasury yield? It’s been directionless since December of 2022. So the more important question is given that all these people are pontificating about it, why hasn’t it moved? And again, I think the reason is there’s no alternative to Treasuries.
If there was a real alternative to Treasuries, then all of this stuff about the deficit is something that I would pay attention to. But as long as there’s no alternative, there’s nothing to talk about.”
Eisman also says the demand for US bonds all over the world is “insatiable” and that he believes investors will always show up in Treasury auctions to accumulate government debt.
Late last month, Eisman said he was optimistic about the stock market due to the long-term growth potential of the US economy.
“We’ve been in a bull market pretty much for the last 10 years with some fits and starts. And so buy the dip has become almost a religion. It’s a religion that right now I largely subscribe to because I am of the view… that the US economy is more dynamic than it’s ever been in my lifetime. So long term, I am very bullish.”
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