‘Big Short’ Investor Steve Eisman: Forget The Banks, AI Now Controls US Economy’s Fate
Steve Eisman, the investor known from 'The Big Short,' argues that bank credit quality is no longer the primary indicator for the next economic downturn. Instead, he believes the entire future of the US economy now hinges on the success or failure of AI. Eisman reviewed Q2 results from major banks like JPMorgan, Bank of America, Wells Fargo, and Citigroup, finding non-accruing loans 'benign.' He warns that risk has shifted to private credit, heavily exposed to software company loans, which may struggle as corporate budgets move from software subscriptions to AI hardware. He cites IBM's 25% drop after a pre-announced miss as evidence of a 'short-term SaaS apocalypse.' Prediction markets show a 12% chance of a US recession by end of 2026 and a 17% chance of an AI bubble burst. Goldman Sachs posted 92% earnings growth fueled by AI financing needs.
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