Steve Eisman Says Federal Reserve Chairman Jerome Powell is Confused by Economic Data Signals

Renowned Wall Street figure Steve Eisman, famously known for his role in the film “The Big Short,” has expressed that Federal Reserve Chairman Jerome Powell is just as perplexed as investors when it comes to deciphering conflicting economic signals. Eisman believes it is premature to consider investing in bonds at this time.

Eisman, who currently serves as a portfolio manager at Neuberger Berman, voiced his views during a recent interview, where he suggested that Powell’s confusion may have been a crucial factor in the decision to maintain interest rates during the recent Federal Open Market Committee (FOMC) meeting.

“After listening to Powell’s press conference following the interest rate meeting, it appeared that he, like many others, was struggling to reconcile the multitude of data points. Perhaps this uncertainty is the reason behind his inclination to postpone any interest rate hikes, as Powell himself seems unsure about the appropriate course of action,” stated Eisman.

Eisman further acknowledged Powell’s emphasis on the impact of higher mortgage rates on the housing market, while also noting that household and small business finances may be in better condition than initially projected.

Despite market speculation on a possible end to the current phase of Fed rate hikes, Eisman firmly dismissed the likelihood of an imminent rate cut. He maintained that unless a severe recession materializes, the Fed is likely to maintain the status quo in order to avert repeating the mistakes of the past. He drew attention to the regrettable consequences of prematurely easing monetary policy during the 1980s, which led to a resurgence in inflation.

Market expectations surrounding the halt of the tightening cycle by the Federal Reserve became apparent on Thursday. Consequently, US bond yields experienced a decline, with the 10-year bond yield dropping by approximately 12 basis points to reach 4.668%. The main US stock index concluded the day in the red, with the Dow Jones witnessing a notable gain of over 560 points, reflecting its most impressive performance since June.

When probed about his stance on purchasing bonds in anticipation of declining interest rates, Eisman retorted, “I believe it is premature to make such a prediction. Personally, I wouldn’t proceed with such a move.”

Steve Eisman, the individual whose character was depicted by Mark Baum in the acclaimed film “The Big Short,” rose to prominence on Wall Street due to his accurate short-selling of mortgage-backed securities (MBS) prior to the bursting of the subprime mortgage bubble in 2007.

Steve Eisman, one of the prototypes of the “Big Short”, said on Thursday (2nd) that Federal Reserve Chairman Jerome Powell is as confused by economic data signals as investors and that it is too early to buy bonds.

Wall Street legend and Neuberger Berman portfolio manager Eisman said in an interview Thursday that investors may not be the only ones troubled by conflicting economic data. In fact, it also confused Fed Chairman Jerome Powell, which may have been the reason why rates were kept on hold at the most recent Federal Open Market Committee (FOMC) meeting.

Eisman said: “I listened to Powell’s press conference after the interest rate meeting, and I think he, like everyone else, was confused by all the different data points, and maybe that’s why he was for delaying raising interest rates because Powell is doing so.” don’t know what to do.”

Eisman believes Ball, like everyone else, is confused by all the different data points (Photo: REUTERS/TPG)

Eisman noted that Ball highlighted the impact of high mortgage rates on housing, but also noted that household and small business balance sheets may be in better shape than originally thought.

Although the market believes that the current cycle of Fed rate hikes is over, Eisman ruled out the possibility of a rate cut in the near future.

He added that unless there is a very serious recession, the Fed will be more motivated to keep interest rates unchanged to avoid repeating the mistakes of the 1980s, when the Fed eased monetary policy prematurely, causing inflation to accelerate again.

On Thursday, the market anticipated the end of the Federal Reserve (Fed) tightening cycle, and US bond yields fell back, with the US 10-year bond yield falling around 12 basis points to 4.668%. The main US stock index closed strongly in the red on Thursday (2nd). The Dow Jones gained more than 560 points on Thursday, its best one-day performance since June.

Meanwhile, asked if he would buy bonds in anticipation of lower interest rates, Eisman responded: “I think it’s too early to make that prediction. I wouldn’t.”

Eisman is one of the main male characters in the movie “The Big Short” Mark Baum’s character in the movie “The Big Short” is based on Eisman. Eisman’s great record is making a name for himself on Wall Street by short correctly mortgage-backed securities (MBS) before the subprime mortgage bubble burst in 2007.

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