‘The Big Short’ investor warns despite economy’s stronghold against ‘thoughtless,’ ‘unprecedented’ tariffs so far, stagflation is coming

Economy·Tariffs and trade‘The Big Short’ investor warns despite economy’s stronghold against ‘thoughtless,’ ‘unprecedented’ tariffs so far, stagflation is comingBy Sasha RogelbergBy Sasha RogelbergReporterSasha RogelbergReporterSasha Rogelberg is a reporter and former editorial fellow on the news desk at Fortune, covering retail and the intersection of and culture.SEE FULL BIO President Donald Trump announced on Friday a new sweeping round of tariffs.Christopher Furlong—Getty ImagesPresident Donald Trump’s announcement of a new sweeping round of tariffs has renewed investor concerns an economic downturn

Investor Danny Moses, made famous by the book-turned-movie The Big Short, told Fortune that despite continued noise, the market is going through a stagflationary period. ing the round of tariffs, it’s only a matter of time before the other economic shoe drops, according to one investor who predicted the 2008 stock market crash

Danny Moses, the founder of Moses Ventures who was made famous by the book-turned-movie The Big Short, warned that despite some strong economic indicators in the face of tariff uncertainty, signs of stagflation are already upon us. “There’s just so many moving parts right now that it’s really hard to decipher where you’re going to pinpoint,” Moses told Fortune. “Anyone can find a data point that says it’s inflationary, and someone can find a data point that says it’s not

So it’s just difficult

But bottom line … Is the [economy] going through a stagflationary period? It appears to me, it is.” President Donald Trump announced on Friday a new round of sweeping tariffs, including a 39% tax on Swiss exports and a 35% tax on some Canadian exports to the U.S

The administration is extending the trade-deal deadline to other countries including Mexico, America’s largest trade partner, which is getting an extra 90 days

The logic behind the tariffs differs slightly from previous rounds, where Trump has argued for levies as a means to eliminate trade deficits

The U.S., for example, has had a trade surplus with Brazil for a decade

Instead, Trump has imposed steep tariffs on Brazil for political reasons, such as the secution of ally and former Brazilian President Jair Bolsonaro, who was accused of plotting a coup ing his loss of the presidential election. dipped after the announcement—as well as a weaker-than-expected jobs report— ing a weeklong rally of strong earnings and fading trade-war fears

But Moses said the round of tariffs have once again stirred anxiety over the economy’s future, making investors “a little bit more concerned the unpredictability of what’s coming out.” “Nobody knows how this is going to pan out, because this type of thoughtless tariff is unprecedented,” Moses said

Where’s the stagflation? Fears of stagflation, or the stagnation of economic growth coinciding with inflation, have been easing, particularly ing the Wednesday GDP data showing a rebound in U.S. economic growth in the second quarter of the year

This ed a negative first-quarter GDP estimate that was largely a result of the timing of trade chaos forcing companies to stockpile goods before pricing in consumers purchasing that inventory

Ultimately, the second-quarter growth undid the first quarter’s contraction, though economic growth slowed in the first half of the year

White House spokesperson Kush Desai told Fortune in a statement that recovering growth and “cooling inflation … suggest stagflation is simply the buzzword for panican [sic] paranoia.” Moses said the economy has not yet seen the full impact of the tariffs

Fed Chair Jerome Powell held interest rates steady this week and said more information is needed to der a rate cut. “Higher tariffs have begun to show through more ly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen,” Powell told reporters ing the Fed meeting on Wednesday. “A reasonable base case is that the effects on inflation could be short-d—reflecting a one-time shift in the price level

But it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed.” Not only will inflation ly increase as it has already begun to do, albeit modestly, Moses said, but companies will continue to confront the impact of tariffs

As companies continue to reckon with the impact of tariffs, they will ly choose to both eat margins and commise growth, as well as raise prices on goods, according to Moses, with stagflation being the most bable outcome. “Pick your poison,” Moses said. “It’s either going to hit corporate margins, and earnings will go down, which means the market’s expensive, or it’ll be passed on to the consumers and be inflationary

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