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Professional investor Steve Eisman shares his views on the global economy

Willing to go against the herd, Steve Eisman became famous for making money amid the financial crisis

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Read transcript

I wrestled daily with the thought of – is this industrial recession gonna lead to a global recession? I would just point out that under the best-case scenario, if the Fed starts lowering rates more the normal transmission mechanism is at least 12 months. So since the Fed started lowering rates in June under the best-case scenario you shouldn't see a pickup until the next summer.

I think there's a deep question to be asked whether Fed policy at these low level of rates has the same kind of impact as when rates are much higher, my suspicion is not. And the reason why it's not is normally when rates are higher and things start to get bad you get a tightening in lending standards, so credit is withdrawn. And by the Fed lowering rates, credit starts to loosen up, and eventually it worked its way into the economy.

There's no tightness in credit right now anybody wants a loan they get a loan, whether that's a corporation or a person. Lending standards have loosened. Credit spreads are as tight as they've ever been. So what's the Fed going to accomplish by lowering rates? I don't think it's going to work. But we won't know for at least a year.


This video is not personal advice or a recommendation to invest. If you’re unsure about the suitability of an investment please seek advice. Investments can fall as well as rise in value and you could get back less than you invest. Past performance is not a guide to the future.

The views in this video are those of Steve Eisman and may not be shared by Hargreaves Lansdown. Views correct as at 12.09.2019.


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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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