- Investor Danny Moses said the market is underestimating the economic impact of DOGE’s funding cuts.
- Moses warns that investors could be in for a shock when the economic downturn manifests in numbers.
- The S&P 500 is struggling to regain ground after a sharp pullback amid Trump’s tariffs.
Investor Danny Moses, best known for his prescient bet against mortgage-backed securities before the 2008 financial crisis, is sounding the alarm again — this time over the market’s failure to properly account for the economic fallout from aggressive federal spending cuts.
“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 knock-on effects,” Moses, founder of Moses Ventures, told Power Lunch show host Kelly Evans on CNBC on Thursday.
“I think we’re hurting the revenue side of the equation,” he added.
Cost-cutting measures have been spearheaded by the White House DOGE office, with Tesla CEO Elon Musk as its public face. The Trump administration has overseen the firing of at least 25,000 federal probationary workers across 18 agencies within months, though the fate of many of those jobs is still in legal limbo. The upheaval could imperil safety nets like Social Security and Medicare, programs which tens of millions of people rely on.
Musk and Trump have said that much of the federal spending is “wasteful” and “fraudulent,” though there has thus far been no publicly available evidence that anyone in the federal government has committed the crime of fraud.
On top of DOGE cuts, economic uncertainty has followed Trump’s on-again, off-again tariffs, stoking recession fears. The S&P 500 struggled to regain ground after a sharp pullback, and remains at about 8% below its February all-time high.
Moses said that first-quarter earnings reports will likely reveal signs of a market slowdown, with consumer confidence already showing weakness. He added that investors could be in for a potential shock, because the risks of economic downturn haven’t been fully priced into the markets yet.
“When your debt-to-GDP is over 120%, you really can’t afford to make a mistake,” said Moses, referring to America’s government debt-to-GDP ratio. “I think we are being overly optimistic about how this is going to play out.”
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