This weekend was hardly restful for Wall Street. Emotions ran high with plenty of anger, anxiety, frustration, and fear.
Anger directed towards President Trump for a hasty and disorganized implementation of tariffs that wiped out trillions in stock market value in mere days. Anxiety over the state of the private equity sector and massive funds with international investments. Frustration among Wall Street’s elite as they found themselves unable to sway the president and his counselors.
And a deep fear of what might be on the horizon.
Hedge funds reviewed their losses proudly declaring if they had managed to minimize damage. Bankers and attorneys tossed aside their already sparse schedules for deal-making, reasoning that no CEO would risk a significant merger or public offering anytime soon. Major banks simulated emergency scenarios to predict which clients might falter amid the repercussions of an escalating trade war.
During discussions with The New York Times over the weekend, bankers, executives, and traders reflected on flashbacks to the 2007-08 global financial crisis that toppled a number of Wall Street giants. Setting aside the severe but brief market turmoil at the onset of the COVID-19 pandemic, the steepness of last week’s market drop — with stocks plummeting 10 percent in just two days — was second only to the selloff triggered by Lehman Brothers’ collapse in 2008.
Similar to that time, the widespread nature of the sudden downturn — involving oil, copper, gold, cryptocurrencies, and even the dollar in the sell-off — has left Wall Street’s biggest players questioning which of their rivals or counterparties were caught off guard. Banks are demanding additional funds from trading clients if they wish to continue borrowing for trades — issuing margin calls that, while not at the level seen a generation ago, are still causing discomfort.
Most hedge funds and other private investors don’t disclose their portfolio details on a daily or weekly basis, so it will take longer than a weekend to fully assess the potential damage. One venture capitalist, speaking anonymously as he had not informed his investors, estimated that his portfolio had suffered a $1.5 billion loss — if his thinly traded investments could even be sold.
“It certainly feels reminiscent of 2008,” remarked Ran Zhou, a New York hedge fund manager at Electron Capital, who canceled weekend plans to don a formal shirt in his Manhattan office and keep an eye on Chinese news sources for insights into China’s strategies.
What distinguishes this crisis is the apparent lack of reliance on government support for recovery; the financial sector sees minimal hope for immediate assistance. A world order based on cooperation has been dismantled by the White House, and the United States’ role at the heart of that structure is now uncertain.
“The suffering is self-inflicted,” stated Mike Edwards, an advisor for a private investor, who spent the weekend engaged in discussions with fellow investors starting late Friday.
“You won’t discover anything with a calculator,” he noted in an interview on Saturday from his Connecticut home. “It’s more about observing what your neighbor is up to than determining the right price.”
For decades, Wall Street advised leaders of both major political parties, and there was optimism that the appointment of Scott Bessent, a hedge fund manager and former Democrat, as Mr. Trump’s Treasury secretary indicated the industry had a supporter in the Oval Office.
However, Mr. Bessent has taken the upheaval in stride. “The market consistently underestimates Donald Trump,” he commented on NBC’s “Meet the Press” on Sunday.
This reality has left even some of Mr. Trump’s Wall Street advocates with little recourse but to voice discontent publicly.
“It was enjoyable while it lasted,” billionaire hedge fund manager Daniel S. Loeb expressed in a now-deleted post on X last week.
William A. Ackman, a hedge fund manager known for his strong support of Mr. Trump, took to X on Saturday afternoon expressing his thoughts on the initiation of the new tariffs. “Why wouldn’t it be sensible to pause?” he asked.
“The risk of not doing so,” Mr. Ackman continued, “is that the significant rise in uncertainty could push the economy into recession, possibly a severe one.”
Among Mr. Ackman’s recent investments was in Nike, the apparel giant that transitioned its supply chain to Vietnam from China, only to find itself caught in the crossfire after Mr. Trump announced a tariff of 46 percent on Vietnamese imports. (Vietnam has since proposed eliminating its tariffs on U.S. goods to zero, hoping the U.S. will reciprocate.)
Nevertheless, there were glimmers of hope. Several bank and hedge fund executives noted that, despite the chaotic selling, trading immediately following the tariff announcement had thus far unfolded without any unforeseen issues, a sentiment echoed by Mr. Bessent on Sunday.
“Everything is running seamlessly,” he said during the NBC interview.
A senior executive at one prominent bank expressed relief after a discussion on Friday night with the bank’s regional heads and top leadership, where nobody could identify a specific client in immediate jeopardy of collapse.
Traders at the $66 billion hedge fund Citadel had, for about a month, been cutting back on leverage and other high-risk trading tools as the fund’s founder, Ken Griffin, grew increasingly wary of potential upheaval from Trump’s actions, according to two employees who spoke anonymously. They reported that the hedge fund, which neared collapse in 2008, remained steady last week.
In interviews, investment bankers shared that they had received a surge of calls from major companies eager to pay high fees for guidance on how to navigate the situation. At Lazard, employees were instructed to be available for clients but advised against making firm predictions about upcoming events due to the considerable uncertainty.
In fact, the full extent of the impact remains to be seen. Bank of America estimates that profits for companies in the S&P 500 could decline by a third if retaliatory tariffs are imposed by nations hit by Mr. Trump’s tariffs. However, these grim predictions might change if countries reach agreements with the White House that lower the tariffs.
Prior to the latest tariff imposition, U.S. deal-making in the first quarter had already dropped 14 percent compared to the previous year, according to LSEG Data & Analytics. Amid last week’s market turmoil, several anticipated public offerings that bankers hoped would pave the way for other listings were canceled or postponed, including offerings from payments giant Klarna and ticketing platform StubHub.
One bank executive indicated he would allocate more time to Europe, where deals in the first quarter exceeded those in the U.S.
Two private equity executives mentioned that they anticipated that the market volatility and deteriorating global relations would complicate fundraising for their firms, compounding the difficulties they already face as a declining market for deals has made it harder to return funds to their investors. The pressures on these firms will only mount as the companies they invest in begin to feel the effects of tariffs, they said. Shares of Apollo and KKR plummeted by more than 20 percent on Thursday and Friday.
An experienced deals attorney expressed his astonishment at the drastic declines in the share prices of his clients. A senior Goldman Sachs executive succinctly summed up the frustration directed at Mr. Trump: Someone needs to intervene.
The leading figures in finance have largely remained silent. Jamie Dimon, CEO of JPMorgan Chase, who suggested shortly after Mr. Trump’s inauguration that people should “get over” the perceived threat of tariffs due to their benefits for national security, was focused on finalizing his annual shareholder letter over the weekend, having just spoken to a group of Chase tellers in Nashville. He declined comment through a spokesman.
Steve Eisman, the investor known for accurately predicting the 2007-08 housing market crash, suggested a degree of humility was in order.
“Everyone in the stock market has gone to college, and they all learned in Econ 101 that trade wars are detrimental,” Mr. Eisman remarked on Saturday. He posited that investors might be overlooking the possibility that the United States, due to its economic robustness, could be the best-positioned nation to thrive under such circumstances.
Few companies have shared their forecasts publicly since last week’s announcement of tariffs, but major banks like JPMorgan and Wells Fargo are slated to hold investor calls on Friday to discuss their earnings (and future prospects).
The uncertainty was aptly illustrated by Mr. Loeb, who wrote on X on Saturday: “Markets sometimes hit bottom when the outlook seems the most dire.”
“Not a prediction,” he clarified, “but I’m keeping an open mind.”
