(Bloomberg) -- Neuberger Berman senior portfolio manager Steve Eisman said he has “no idea” who will win the US presidential election — reversing an earlier prediction that Donald Trump would triumph — but said the markets will be fine in any scenario apart from a sweep by Democrats.
“I withdraw the prediction,” Eisman said Thursday in a Bloomberg Television interview, citing President Joe Biden’s decision to drop out. In July, he said Trump would win regardless of whether that happened.
Eisman, 62, rose to fame as one of the “Big Short” fund managers who successfully bet against subprime mortgages before the 2008 financial crisis.
If Democrats win both chambers of Congress and the White House, “the market is going straight down” in anticipation that taxes will rise, he said. If Harris wins, but the Democrats don’t sweep, the market will be “fine.”
If Trump wins, stocks will rise no matter what happens with Congress, because investors will assume tax cuts are a given.
Eisman said a Harris victory would boost solar stocks, which have underperformed partly for fundamental reasons and also because of political concerns.
Eisman reiterated earlier comments that the dominant themes in his portfolio are AI and technology, as well as infrastructure.
“Those are the best stories,” Eisman said. “In good times, people care about stories, and in bad times people care about balance sheets, and we’re in story time.”
Big Tech
In July, Eisman touted big-tech stocks, saying that an AI-driven boom will power growth in US megacap tech shares for years, as consumers begin using AI apps on mobile phones and personal computers. The enhanced technology will spur them to buy new hardware, boosting shares of Apple Inc., Nvidia Corp., Microsoft Corp. and Oracle Corp. Eisman has said he owns “a lot” of Nvidia shares.
One area that doesn’t present an exciting story is banking, he said Thursday.
“Nothing against traditional banks, they are well-capitalized and fine and safe, but can you construct a story that tells you you want to own banks?” he said.
Eisman also said investors are paying too much attention to the Federal Reserve’s moves, arguing that the underlying health of the economy is far more important.
“People spend a lot of money and a lot of time trying to figure out what God — excuse me, Powell — is going to do,” he said, referring to Chair Jerome Powell and the central bank’s decision Wednesday to cut interest rates by a half-point. “It’s much more important how the economy is doing. If the economy is fine, you can buy stocks. If the economy is going into a recession, you can’t. The rest is gobbledygook.”
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