The investor said the market is failing to discount the negative effect from federal spending cuts spearheaded by Elon Musk's DOGE

March 20, 2025 | 03:35pm

Danny Moses of 'The Big Short' says the market is underestimating DOGE's negative impact on the economy

The investor said the market is failing to discount the negative effect from federal spending cuts spearheaded by Elon Musk's DOGE

Investor Danny Moses, who made a killing betting against mortgage-backed debt before the 2008 crash, said Thursday the market is mistakenly failing to discount the negative effect from federal spending cuts spearheaded by the Department of Government Efficiency. "I think we are underestimating the impact to the economy of the cuts we're making at the federal government, and what that might mean [in terms of] the knock on effects into the economy," Moses, Moses Ventures founder, said on CNBC's " The Exchange. " DOGE's cost-cutting moves led by Tesla CEO Elon Musk , could create a negative shock in the system with layoffs eroding corporate revenue growth in the near term. The billionaire tech entrepreneur, with Trump's blessing, has reduced federal headcount by more than 60,000 , spanning 17 agencies, according to an estimate from Challenger, Gray & Christmas. "I think we're hurting the revenue side of the equation. When your debt to GDP is over 120% you really can't make a mistake," Moses said. "I think we are being overly optimistic [as to] how this is going to play out.... we're going to start to hear, when first quarter earnings are reported, that there is a market slowdown potentially, and a hit to consumer confidence, which you've already seen, which I don't think [is] priced into the markets." President Donald Trump 's protectionist trade policy stoked fears of an economic slowdown, causing a month-long pullback in the S & P 500 that last week dragged it into a correction. The S & P 500 has recovered some of the losses, and today sits about 8% below its February all-time high. Moses shot to fame thanks to Michael Lewis' book " The Big Short " and the subsequent Oscar-winning movie of the same name. The investor revealed that he's still bullish on gold even after the bullion climbed above the $3,000 record milestone lately. Moses said he also likes online gambling stocks, naming Genius Sports as his favorite. He noted that the industry is insulated from Trump's aggressive tariffs and the companies are early adopters of artificial intelligence.

This story originally appeared on: CNBC - Author:Yun Li