Why Young Americans Feel Locked Out with the Lemonade Stand Podcast

CoreWeave

Across the shows: 61 speakers in other episodes, 16 bullish and 59 bearish calls, past 30 days

• Steve Eisman · The Real Eisman PlaybookBearish

  CoreWeave's debt now yields about 15%, making new data center financing uneconomic.

  Eisman says CoreWeave raised debt earlier this year at a 9% coupon, but the bonds have fallen so far that their yield is now about 15%. Any new borrowing would cost about 15%. At that rate, building data centers doesn't pencil out. He describes neoclouds as companies that lose money with large commitments that depend on debt markets functioning, so they are exposed to a credit squeeze.

  “Or another way to put it is CoreWeave, when they actually raised debt earlier this year, the interest rate was 9%. But the price of that debt has gone down so much that the yield currently is 15%. ... And you ain't building no data center with 15% debt.”at 22:25

Nebius Group

Across the shows: 1 speaker in other episodes, 0 bullish and 1 bearish calls, past 30 days

• Steve Eisman · The Real Eisman PlaybookBearish

  Nebius, like CoreWeave, loses money on big commitments and depends on functioning debt markets.

  Eisman groups Nebius with CoreWeave as neocloud operators that don't make money, lose money and have massive commitments. They need debt markets to keep working to fund them. He contrasts this with hyperscalers like Google, which can raise capital and cut costs. If debt markets seize up, the neoclouds are the weak hands that get hurt.

  “The guys like Coreweave and Nebius, they don't make money. They lose money. ... and they need the debt markets to behave, to function.”at 23:42

The Charles Schwab

Across the shows: 2 speakers in other episodes, 1 bullish and 3 bearish calls, past 30 days

• Steve Eisman · The Real Eisman PlaybookBearish

  Schwab's biggest revenue item is cash sweep, which agentic AI could erode.

  Eisman says Schwab no longer charges commissions. Its biggest revenue item is now sweeping client cash into short-term Treasuries, earning about 4.5% while paying clients 20 basis points. Agentic AI could move idle cash into money market funds automatically, so clients keep the yield and Schwab loses the spread. For Schwab, he says, that is almost its entire business. He says Schwab's customers, including his own family, face the same automated option.

  “Today, they don't charge a commission. Their biggest revenue item is that sweeping of cash.”at 32:16

Adobe

Across the shows: 1 speaker in other episodes, past 30 days

• Aiden McCaig · Lemonade StandBearish

  Free AI clones of Adobe tools are good enough for most users, threatening Adobe's software.

  Adobe stock is down about 60% from its peak, and people fear AI will destroy the company. Aidan tried a free AI clone of Adobe Premiere and used it for YouTube thumbnails. He admits he is not a deep user, but says most people are not either, so a free tool that is good enough covers about 95% of users. Eisman adds that he could not tell the clone apart from the original. The argument is that AI-built substitutes for creative software can capture most of the market, which is bearish for Adobe.

  “I don't know how good it is, but free is free... I use it for my thumbnails on YouTube. Okay. So that's something good enough for 95% of people.”at 41:29

Netflix

Across the shows: 20 speakers in other episodes, 11 bullish and 17 bearish calls, past 30 days

• Aiden McCaig · Lemonade StandBearish

  YouTube's TV share is outpacing Netflix; Netflix can't match YouTube's speed in delivering content.

  Netflix stock is weak after a large layoff. Netflix reportedly said YouTube now accounts for 14% of TV viewing while Netflix has 7%. YouTube spends almost nothing on content because creators make it and upload it. Netflix cannot compete on speed, since anyone can make something some audience wants and do it faster. Aidan sees this as the direction the business is heading, which implies pressure on Netflix's position in viewing.

  “YouTube is now 14% of TV watching. They're only seven. And YouTube spends nothing on content. It's all people creating it.”at 56:13

US housing

• Steve Eisman · The Real Eisman Playbook

  Housing is no longer a wealth creator, and national house prices are more likely to fall next.

  Eisman argues the era of buying a house, living in it for years and trading up on appreciation is over 'for a very long time.' He says the next move in national housing prices is probably down. He cites a roughly 50% rise in the cost of buying a house over five years, driven by insurance, utilities and property taxes on top of mortgage rates. He admits he doesn't know how far prices will fall, saying they 'could' fall but not necessarily by much, and that people with jobs and low fixed-rate mortgages won't be forced to sell.

  “of buying a house under the assumption that that will be a creator of wealth are done for a very long time. In fact, [I] think probably the next move in housing prices nationally is down.”at 7:09

• Steve Eisman · The Real Eisman Playbook

  Locked-in housing supply will loosen over ten years as older owners die and heirs sell.

  Eisman says the housing market is locked because most owners refinanced into 3-3.5% mortgages, while buyers face 7-7.5% rates. The only real release valve is supply from older baby boomers dying. He expects a large wave of houses to reach the market over roughly the next ten years, with heirs selling wherever they can to pay estate taxes. He implies those forced sales could come at whatever price is available.

  “So probably over the next ten years, a lot of houses will come for sale, and they'll sell at whatever price because the people who were living in the house will be”at 10:55

• Brandon Ewing · Lemonade Stand

  US cities should loosen zoning like Tokyo, where national rules keep housing more affordable.

  Ewink argues US housing costs are rising because high-demand cities like Los Angeles, which has a metro area of about 12 million people, have too little supply and restrictive zoning. He cites Tokyo as a city that has stayed relatively affordable because its zoning is set at the national level. That bypasses local councils that resist new building. He asks whether state or federal change could do the same in the US, and Eisman calls it a local problem with close to zero chance of happening.

  “And Tokyo, in Japan, their zoning laws are dictated at the national level instead of allowing a city or a city council who obviously has a vested interest in no more building happening in their neighborhood.”at 13:03

Private equity

• Steve Eisman · The Real Eisman Playbook

  PE bought and levered software when rates were near zero, and holding periods have stretched from 3-4 years to 7.

  Eisman says private equity bought a lot of companies, including software, when rates were near zero and levered them up. Historically, PE funds ran companies for three or four years, then sold them and returned capital with profit. That has now stretched to about seven years, so investors don't get their money back as quickly and the returns look worse. He calls this the first major problem.

  “The first problem is private equity bought a ton of stuff. ... when rates were nothing. And then they levered the little puppy up. ... So now three to four years has become seven.”at 36:10

• Steve Eisman · The Real Eisman Playbook

  Software buyouts from 2018-2022 are impaired; equity is wiped out, so PE portfolios will be awful.

  Most software buyouts from 2018 to 2022 were financed half equity and half debt. Many software companies are down about 50%, and Adobe is down 60% from its peak. Because debt is senior, the debt stays whole until equity reaches zero. Eisman's example: a company with $500M of debt and $500M of equity that is now worth $500M has zero equity while the debt is still fully covered. Refinancing starts next year. Lenders will demand new equity to refinance, and PE sponsors will walk away from equity they see as worthless. He concludes these PE portfolios are going to be awful, and Brandon agrees that the vintage is terrible.

  “most of these software buyouts were done between like 2018, 2022, and they did half equity, half debt.”at 40:46

• Steve Eisman · The Real Eisman Playbook

  PE and private credit buying insurers and lending policyholder money to related parties is a serious risk.

  Private equity and private credit firms pair long-dated insurance funding with long-tail loans, which Eisman sees as a reasonable concept, citing Apollo's purchase of Athene. The problem is operators who abuse it. Eisman describes an insurer owner who lent policyholder money to an entity he controlled, which bought the LA Dodgers and Lakers. Related-party transactions were about 30 times the permitted level and undisclosed, with only three disclosed when the true count was about 40. The owner was forced to sell the Lakers to cut the ratio and is under investigation by the Southern District of New York. Insurance regulation is split across states, and regulators can be elected officials with little financial expertise, which weakens oversight. Eisman believes there are likely others like this.

  “I think the problem is you get people like Mark Walter. So what he did was he took policyholder money, he lent it to an entity that he controlled.”at 48:55

US stock market outlook

• Steve Eisman · The Real Eisman Playbook

  A standard 60/40 S&P index portfolio is effectively an AI bet, not diversified.

  Eisman says about 40% of the S&P 500 is technology. Adding hyperscalers classified outside tech, such as Google and Amazon, brings it to about 50%. Adding utilities that supply power, investment banks and alternative asset managers that lend to AI builders, and industrial companies building data centers and power equipment brings it to about 65%. His conclusion is that owning an index is basically owning AI, so investors who think a diversified 60/40 portfolio protects them are mistaken.

  “40% of the S and P is tech... you're at 65% of the S and P. So you own an index, it's basically AI.”at 18:31

• Steve Eisman · The Real Eisman Playbook

  US economy is the most dynamic globally, so buy-and-hold S&P 500 investing works long term despite AI worries.

  Setting aside AI concerns and whether AI is a bubble, Eisman argues the US economy is the most dynamic in the world. He asks where someone would rather live, here or France. For a young investor with a long horizon of about 30 to 50 years, he recommends saving monthly and buying the S&P 500 without trying to time it. He says he tells people this all the time. The argument rests on US economic dynamism over the long run, not on near-term market calls.

  “Leaving aside all the problems with AI and is it a bubble or not, The US economy is the most dynamic economy in the world. Period.”at 44:06

Private credit

• Steve Eisman · The Real Eisman Playbook

  Private credit is incestuous: it lends to buyouts while private equity owns many of its funds.

  Eisman describes private credit as the lender that finances private equity buyouts. He says the structure is incestuous because many private credit funds are owned by private equity firms. As an example, he cites B Cred, which he says is the largest private credit fund at about $80 billion and is owned by Blackstone, the largest private equity firm in the country. The conflict of interest is the problem he highlights.

  “What makes it incestuous is that a lot of private credit funds are owned by private equity. ... B Cred is owned by Blackstone.”at 35:40

• Steve Eisman · The Real Eisman Playbook

  Private credit funds facing redemptions above gates will have to sell loans at losses or add leverage.

  Retail private credit funds allow redemptions of only 5% per quarter, while some investors want 10-15% of fund value. The fund must find cash, so it either sells loans or levers up from about 1.5x toward 1.6x. Selling loans in a higher-rate environment, with much of the book in software, likely means realising losses the fund has not yet marked. Brandon's friend, a PhD student studying private credit, makes the parallel point that funds are borrowing to pay holders while not disclosing that underlying asset values are falling, since private funds need not report them. Eisman's view is that marks lag reality, so the liquidity squeeze and the software exposure together are a serious risk.

  “chances are, given that rates are higher and maybe it's software, that we would take a loss and we haven't marked the thing down.”at 39:05

Credit markets

• Steve Eisman · The Real Eisman Playbook

  AI-related borrowing now makes up a large share of investment-grade bonds and issuance, so bonds aren't diversifying.

  Eisman argues the bond half of a 60/40 portfolio is also concentrated in AI. He cites about 15% of investment-grade bonds as AI-related and about 50% of this year's issuance as AI-related. From this he concludes that if something bad happens to AI, a portfolio of stocks plus bonds will not be okay.

  “the problem with bonds is 15% of investment grade bonds are AI related. And 50% of all issuance this year is AI related.”at 19:22

Banks

• Steve Eisman · The Real Eisman Playbook

  Big banks can't afford to lose deposits to agentic AI, so they'll block outside agents.

  Eisman says deposits are banks' cheapest and most stable funding, and agentic AI could move them into money market funds. JPMorgan recently said it would not allow outside agentic AI into its accounts. He argues big banks like JPMorgan, Citi and Wells Fargo have hundreds of billions in deposits and cannot afford to destroy the franchise. Newcomers can build from scratch, but incumbents will defend their deposits.

  “you're Citi, you're Wells Fargo. I mean, you have hundreds of billions in deposits. You don't have the luxury of destroying your franchise.”at 34:38

US growth & recession risk

• Steve Eisman · The Real Eisman Playbook

  A US recession over the next year is a good possibility, though not certain.

  Asked what will happen to the market over the next year, Eisman says there is a good possibility of a recession. He hedges, saying he would not stake his life on it but thinks it is clearly possible. The view is that recession risk is real over the next year, separate from his long-term optimism about the US economy.

  “if you're asking me what's going to happen to the market over the next year, I say there's a good possibility we have a recession.”at 44:37

Media, music & entertainment

• Brandon Ewing · Lemonade Stand

  Newer, low-cost media companies will take share from incumbents; this is already starting to happen.

  Brandon describes a K-shaped media industry. Institutional money still pays six-figure budgets for small shoots, but a commercial shoot with about 30 people and heavy equipment cost far more than a small team producing comparable content. A new generation is building competitive media companies that he expects to eat incumbents' lunch. As evidence, he cites a 25-year-old marketing firm that has run for only a year, competes on price, and gets better online results than rivals at about a tenth of the cost. Digital tools and a generation that grew up with them make this possible.

  “there's this aggressive newer generation of people building competitive media companies that I think are going to eat those guys' lunch, and it's starting to happen.”at 54:31

Venture capital & startups

• Steve Eisman · The Real Eisman Playbook

  Falling costs of doing business may spark a wave of young entrepreneurs, especially if jobs are scarce.

  Eisman says the cost of doing almost anything is far lower than it used to be. Businesses that made no sense years ago now cost about a tenth as much and can support a real living. He suggests we may be entering an age of the young entrepreneur, especially if young people cannot find jobs and strike out on their own. He hedges with 'possible' and 'I don't think that's crazy,' so this is a plausible scenario he argues for, not a firm forecast.

  “the cost of doing pretty much anything is so much lower than it once was. I mean, it's possible we may be entering like an age of like the young entrepreneur.”at 55:18