Market Bubble Trigger: 'Immediate Recession' Once This Happens Says Big Short's Steve Eisman

**Steve Eisman** (0:00)
If tomorrow, OpenAI failed, the US economy, I think, would go into an immediate recession, and the market would have a massive correction. I think it's a little nerve-racking that the entire US economy is dependent upon two companies that lose billions. I think the whole tech space sells off.

**David Lin** (0:16)
Our next guest is Steve Eisman, host of his own show on YouTube called The Real Eisman Playbook. Check it out, it's a great show featuring great interviews with financial experts. Steve was made famous by Michael Lewis's book, Big Short and subsequently the Hollywood blockbuster of the same name, where Steve Carell played Steve Eisman's character in the book and in the movie. They changed the name to Mark Baum. You'll recall that Mark Baum or Steve Eisman ran Frontpoint Partners back during the financial crisis. They're on the right side of the subprime mortgage crisis. Frontpoint Partners' position doubled from $700 million to $1.5 billion from being right during the financial crisis of 2008 Now, Steve is going to tell us about the number one risk he's watching in markets today. Hint, it's in the tech sector.
Right now, there's a trade on Kalshi for which of the following firms OpenAI or Anthropic will IPO first. There's a 93 percent chance that it's going to be Anthropic.
Once these companies IPO, there's going to be some very key financial data that we're going to be watching for, for indicators of where this tech bubble is headed. That's according to Steve. This is a very, very important episode for anybody exposed to the tech sector, which is all of us if we're in the S&P 500 This video is brought to you by Kalshi and sponsored by Kalshi, and it's the largest prediction market in the United States. Unlike a sportsbook, you're trading peer-to-peer on real-world events from economic data to political outcomes, and the price moves based on public opinion, not a house. Go to the link in the description down below, or scan the QR code here, and use my code LIN to get this special offer, which is that new traders who use my code can get $25 when you trade $25. Kalshi is CFTC approved and available in all 50 states, including California and Texas, and on the OpenAI versus Anthropic trade. If you believe that OpenAI will actually IPO first, and you put $50 down on that particular trade, your payout could be $316 if you're actually right. Well, Steve's going to give us his opinion. Welcome to the show, Steve.
It's a great honor to host you. I followed your work for quite some time. Thanks for being here.

**Steve Eisman** (2:33)
Thank you for having me.

**David Lin** (2:35)
I know you've been asked this a million times, but it's your first time here. Before we talk about markets, I have to ask you when the movie, The Big Short, The Hollywood Blockbuster was based on the book. They changed the name to Mark Baum, but it was really your character was in there.
You were in there featured. What was your initial impression seeing you being portrayed by Steve Carell? Did he do a good job, do you think?

**Steve Eisman** (3:00)
I thought he, I mean, this is shocking in that we only met once. We met for breakfast at a diner near my home called Three Guys.
He wore a Boston Red Sox hat so that nobody would know who he was. We spoke for about an hour. I took him home then to meet my family. That was really the last time I had a substantive conversation with Steve Carell, and yet somehow his portrayal of me was quite accurate.

**David Lin** (3:31)
Wow.
If you had to, let's say, testify to Congress right now, they were to ask you about the current financial conditions and whether or not there is some hidden crisis that is looming. What would you say today if you had to?

**Steve Eisman** (3:49)
Well, I don't think it's hidden.
If you look at US GDP growth this year, it's going to be up around 2 percent. Half of it is from AI CapEx. That's public information. I'm not, it's not like I discovered the Rosetta Stone. That is simply public information. And, you know, NVIDIA just reported, as you mentioned, revenue was up more than 100 percent. However, 70 percent of its accounts receivable was from five companies. Which of those companies? We don't know who they are, but we could all pretty much guess a bunch of them. The way I sort of see the entire AI story is that NVIDIA sells chips to hyperscalers.
Seventy percent of hyperscaler AI revenue is from Anthropic and OpenAI. And that equates to about 25 to 35 percent of their cloud revenue. If you look at just Oracle, 50 percent of its $600 billion backlog is just from OpenAI. So, in a sense, the way I think about this is the entire AI ecosystem food chain is dependent upon the future health and success of Anthropic and OpenAI.