Money Rehab with Nicole Lapin
Are We Back to 2008? With The Big Short's Steve Eisman
Fri, 11 Apr 2025
Is 2008 repeating itself? That’s the big question in the headlines, and today Nicole is talking to the perfect person to answer that question. Steve Eisman doesn’t need much of an introduction—he’s the investor who famously saw what no one else saw in 2008 and bet against the market before the crash (he was portrayed by Steve Carell in The Big Short). Today, Steve tells Nicole whether he thinks history is repeating itself, whether we're on-track for a recession, and his thoughts for new investors. Check out Steve's new podcast here: https://podcasts.apple.com/us/podcast/the-eisman-playbook/id1806975494
Chapter 1: What are the signs of a potential 2008-style market crash?
He was portrayed by Steve Carell in that movie, so kind of a big deal. Now he's talking about what he's seeing in the current market on his podcast, The Eisman Playbook, and today right here on Money Rehab. So I asked him the big question, is this history repeating itself? And he answers that and a lot more.
He tells me whether he thinks we're on track for a recession, where he sees opportunities in this market, what he thinks Trump is going to do next, and his advice for new investors. Steve Eisman, welcome to Money Rehab.
Chapter 2: How does Steve Eisman view the current market conditions?
Glad to be here.
Damn, it's been a week. How are you doing?
Really? Did something happen this week?
Yeah, no, I haven't looked at the news lately. Who do you think needs a hug right now?
Who needs a hug? I think a lot of people need a hug. I don't know about you, but I think everybody's pretty emotionally exhausted from this week.
Yeah, I need a hug. I mean, for those who haven't listened to Steve's podcast yet, The Eisenman Playbook, please run, don't walk, and listen. You and your team talk about the story of 08, where you guys met with the CEO of Wamuu, who knew you were short their stock. And as soon as you walked in, you said, you look like you need a hug.
He did, badly. And I hugged him.
A lot of people need a hug these days. It goes a long way. I want to do some time travel back to 08, but I want to start with where we are right now.
Sure.
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Chapter 3: Is a global recession on the horizon due to trade wars?
Volatility is here. I wish I could say make volatility your friend because I personally don't really know how to do that. Some people do. It's here. You're just going to have to tolerate it for a while.
Well, the VIX, the sort of fear index has been up for a while. P's have been high. Multiples have been high. There's been a lot of warning signs flashing across the market for a while now, even before all the tweets on tariffs and announcements on tariffs. Do you think even if we didn't have all this tariff drama, we were bound for a correction anyway?
No, I don't think we were bound for a correction at all. I... I'm actually, generally speaking, pretty positive on the U.S. economy. I think the U.S. economy is more dynamic than it's been certainly in my lifetime. And so the long term is very good. But this is certainly a wrinkle.
I mean, historically, we've had a correction every couple of years anyway. So, of course, 10 percent.
You know, every now and then you get somebody at some interview who says, you know, generally it's like Tommy Lee. He'll say something like on a day when the market goes down. Well, it's a correction. It's healthy. And my response to that is I don't need to be so healthy.
I mean, do you think that the market was sick?
No, I don't think it was sick before this at all.
So you have said that you thought if tariffs continued, we'd be in a global recession. They have paused for 90 days now. Do you still think that?
I think there's a lot more going on here than just, you know, terrorist trade war. And I think to understand that you need to go back to the 90s. President Clinton, we had President Clinton. And President Clinton ushered in NAFTA and he brought in China into the world trading system. And he did so, he made two arguments.
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Chapter 4: Are tariffs impacting the U.S. economy significantly?
Do you think it's a conspiracy theory or do you think that's what's going on? Because I haven't dropped.
You haven't dropped.
So it's weird. What's going on?
You know, every now and then you get into an environment where people in the bond market start to question the reserve status of the dollar. And so you get these short-term periods where either the dollar sells off or yields go up because people are selling the bond, which is basically the same thing. And I think we're in a little bit of that right now.
And that's why I think yields haven't dropped. I don't think that's a long-term problem, though.
So you think yields will go down?
Well, if we have a recession, it will definitely go down.
Do you think it's also potentially people are covering the losses from the market by selling bonds?
I mean, I don't know where hedge funds stand right now. Yesterday was so crazy. Clearly, there were a lot of people over their skis and they were just covering like crazy. But I can't answer that question. I don't know.
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Chapter 5: What investment strategies does Steve Eisman recommend during volatility?
No, subprime mortgages scared me to death. This does not scare me that much.
Does anything scare you right now?
Yeah, what scares me is the potential for a trade war. That scares me. I wouldn't put that as a zero probability. President Trump is playing high stakes poker right now.
Do you think he's just going to say, psych, just kidding?
No, I don't think he's going to say psych, just kidding. I mean, you could like President Trump. You could dislike President Trump. I'm not making a political pitch here. But I think one thing that is extremely admirable about him is that he's one of the few politicians I've ever seen where he actually goes out and does what he told you he was going to do. He campaigned on this.
This is what he told you he was going to do it. And he did it. And everybody's like, I can't believe he did it. I said, what do you mean? This is not like, you know, when President Bush got elected the second time, or it was the first time, I can't remember which one it was. And then they immediately tried to change social security.
And everybody said, what do you mean you're trying to change social security? You didn't mention this on the campaign. This was front and center throughout the campaign. So I don't understand why people are shocked. I guess they just, you know, I think part of the issue that people have is everybody that we know took Econ 101.
And in Econ 101, they all taught you that free trade is good, tariffs are bad, trade wars are terrible. And they showed it to you with graphs and tables and pictures. And it's all very, very convincing and mostly right. Except what they didn't tell you is that free trade can obliterate industries.
When you took Econ 101, they made it sound like if you divide the world between guns and butter, one country should produce all guns and the other country should produce all butter and everybody would be better off. And what was never discussed was, yeah, but what happens to all the people who are making butter who lose their jobs? They make it sound like they're all going to get a job making guns.
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Chapter 6: Could a sovereign debt crisis occur in the near future?
Some of them would go out of business. For that part of the industry, of the economy, that would be very bad. and how much of an impact it would have on the entire economy of the United States. I can't dimension it, but it maybe would cause a recession. Maybe, I don't know. When JP Morgan goes down, planet Earth burns. Hard stop. It's the end.
People can't get their money, but nobody trades stocks. Things stop. You know, I had, after a wait, I was talking to a friend of mine who ran a small chemical company in New Jersey. And I said to him, like when it was over, I said, what was 08 like for you? And he said, well, he said the first nine months of 08 were good. And then things stopped. I said, you mean like things slowed down?
He said, no, things stopped, nothing moved. And that's because people were worried about the money, the money that they had in the bank. You know, when you're worried about the money that you have in the bank, things stop. When there's a global trade war, there's a recession. It's a whole other dimension.
Yeah, you're mourning paper losses in this case. And back then you were worried about getting anything out.
Anything. Right. You were worried that things were going to go to zero.
Now we're just like, oh, well, my portfolio isn't up 20%. I've lost money.
Down 10%. Right. Yeah. David Portnoy, for example, was upset over the weekend, I think, that he was down $7 million. He was down $7 million from $100 million. Nobody likes the come down. But there's a difference between going from $100 million to $93 million versus going to $100 million and worrying that your $100 million is gone.
Yeah, but I don't even know if Dave's $7 million was some paper gain that he rejoiced and he thought he had. Did he actually lose money? The most important gains in the market are the days you buy and sell.
Yeah, you look at your portfolio and it's lower and you feel bad. That's how we all react.
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