Steve Eisman, the investor who called and profited from the subprime mortgage crisis, said Monday that the stock market could continue to march higher if there’s no signs of a recession. “So far, there’s no evidence of a recession. So as long as there’s no evidence of recession, and I think the market will probably continue to melt up; people are chasing,” Eisman, senior portfolio manager at Neuberger Berman, said on CNBC’s ” Squawk Box.” The Dow Jones Industrial Average just pulled off its 10th straight positive day Friday, notching its longest rally since 2017. The S & P 500 has rallied more than 18% this year, after scoring its best first half since 2019. The latest leg of the rally was triggered by softer-than-expected inflation reading, which could give the Federal Reserve some breathing room in its tightening cycle. “We came into the year where most people were predicting the most anticipated recession that’s never happened,” Eisman said. “A lot of people were very conservatively positioned and they’re trailing. So they’re trying to keep up.” The investor of “The Big Short” fame said he is staying “fully invested” and would rather holding onto his winning positions instead of taking profits because of high capital gains taxes. “Today, the tax implications are onerous. So if you sell something that you have a big gain in and you pay a 35% tax … we’d rather stick with positions and just hold them,” Eisman said. Eisman shot to fame by betting against subprime mortgage loans before the 2008 financial crisis, as chronicled in Michael Lewis’ “The Big Short,” and the subsequent Oscar-winning movie based on the book. The widely followed investor said he does have concerns about rate hikes’ impact on the economy, which hasn’t been visible in the economic data. “The one thing I worry about is that the Fed has raised rates a lot. It’s certainly possible that will have a very negative impact on the economy and we’re very worried about that. But there’s no data to support it at this time,” Eisman said.
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