‘The Big Short’ investor who predicted the 2008 crash warns the market is ‘underestimating’ the economic impact of DOGE’s mass spending cuts

• The markets have not yet been affected by the impact of collective cuts Danny Moussa said the “short short” investor. He said luck The Ministry of Governmental efficiency discounts were subjected to private contractors, small companies, and the labor market. He said: “It is not so simple,” we believe that there is fraud, let’s cut off the waste, let’s cut the expenses. “

Investor Danny Moussa, whose proof, is famous for the debts backed by mortgage before the 2008 stock market collapsed, warns of the economic red flag.

The founder of Moussa has warned famous projects by the book “The Big Short” that the market has not yet yet been the negative economic impact of collective discounts on jobs carried out by the government efficiency management mentioned in Elon Musk.

“I think we are killed from the effect on the economy of the discounts we are doing in the federal government, and what might mean that [for] Moses said in a CNBC “Power Lunch” interview on Thursday. “We are hurting the aspect of revenues from the equation.”

“I think we are excessively superior [as to] How will he play this. “

The administration of President Donald Trump has launched more than 24,000 federal workers, according to court documents, many of whom expect it to be difficult to find jobs in the private sector due to the privacy of their experience. 75,000 additional employees took the chance of deferred resignation, allowing them to receive wages and benefits until September. Doug’s receipts wall claims that he has canceled $ 115 billion in government spending – although the authenticity of its alleged savings under fire is experts.

Whipsaw planted in management on the tariffs more in the markets, prompting companies to reassess their plans. Meanwhile, Federal Reserve Chairman Jerome Powell left interest rates without touching while operation.

“Unstable cycle”

Moussa argued that investors have already begun to see consumer confidence disturbances – which last month witnessed their sharp decline in four years – and they will continue to hear similar trends in the upcoming profit calls. He said that this slowdown was not priced on the market.

“He does not think that there is fraud, let’s cut off the waste, let’s cut the expenses,” Moussa said. luck. “It is not only about federal workers, and it is not only about expenditures from these programs. It is related to contracts with the private sector.”

Moussa said that the signs full of the weak economy will appear in small companies and “private sector contractors who are making legal work services that are now forced to make decisions on their business.”

The government spent about $ 759 billion on contracts in the fiscal year 2023, an increase of about 33 billion dollars from the previous year, with about $ 171.5 billion to go to small companies, according to the US government accounting office. Musk private companies receive at least $ 20 billion in government contracts.

The collective discounts in Doug have already begun to endanger the main contracts. Julie Sabyan Swit, CEO of Acceneture, told investors on Thursday that federal services, which represent 8 % of global revenues, lost US government contracts as part of Dog’s review. The consulting shares price decreased by 7.3 % after the announcement.

The elimination of both federal jobs and contracts creates what Moses called a “unstable cycle.” Since more federal workers looking for private sector jobs, they may find fewer opportunities due to the contraction of revenue flows in government contracts.

Federal workers’ luck in the labor market

In fact, in addition to clearing government contracts, the economy will also have to confront tens of thousands of federal workers who restore the labor market. Many of these former government employees will face a stable environment, but they have significantly different horizons based on the skills of these newly unemployed people, Korea Stael, an economist for the recruitment laboratory already, luck.

“Can the labor market absorb these workers?” Stall said. “We are not sure if possible.”

Health care jobs are currently abundant-good news for about 16 % of the federal workforce in health areas, according to the PEW Research Center-but many other white collars, especially in technology and data, are rare. Stahle said that since many federal employees who shot their education, they may search for traditional knowledge workers’ jobs are not present at the present time.

One of the reasons why markets may not yet affect the effect of shooting is the delay in government data. While the Statistics Office reported about 10,000 jobs in the federal government in February, the survey period may end for the report before many shootings.

“It seems that employers are really frozen, through uncertainty about what will happen about the definitions, what will happen with the offer of employment and immigration, and it is clear that what will happen with these federal workers,” said Stall. “There is a lot of uncertainty that is currently playing that we are not completely able to determine the amount.”

Kali Cali Cox, the chief market strategy in Ritolz in the field of February Blog, wrote that a basic number of federal workers have failed to find new jobs, it is possible that spending is slow, which is not important for an American economy that constitutes approximately 70 % of consumer spending, and the large market strategy in Ritholtz Wealth Management, in a blog publication in February.

And she said: “The economy is inadvertently consisting of people and their conservatives.” “We disrupt our spending, and growth will decrease, regardless of how much you believe that the cause of the turmoil is.”

This story was originally shown on Fortune.com

2025-03-21 18:17:00