Wall Street didn’t catch a break over the weekend. It was a storm of anger, anxiety, frustration, and fear.
The frustration was palpable as President Trump’s sudden tariff announcement sent shockwaves through the market, erasing trillions of dollars in stock market value in just two days. Investors were worried about the state of the private equity industry and mega-funds with global stakes. The elite on Wall Street found themselves suddenly powerless, unable to sway the president and his advisers.
And the looming fear of what lies ahead.
Hedge funds were busy calculating their losses, with some gloating over smaller-than-anticipated dips. Bankers and lawyers, seeing the writing on the wall, scrapped plans for any big deals, knowing full well that few CEOs would venture a major merger or public offering in such uncertainty. Major banks were running through emergency scenarios, trying to predict if any clients might collapse under the strain of an unfolding trade war.
During chats with The New York Times over the weekend, financiers and traders couldn’t shake the eerie reminders of the 2007-8 global financial crisis, a collapse that claimed some of Wall Street’s stalwarts. Even excluding the swift panic at the start of the COVID-19 pandemic, last week’s rapid market decline—stocks plunged 10 percent in just two days—mirrored the chaos of Lehman Brothers’ infamous downfall in 2008.
Much like then, the widespread market downturn—dragging oil, copper, gold, cryptocurrencies, and the dollar down—left major Wall Street firms wondering who among their rivals was caught off guard. Banks began asking trading clients for more funds to maintain their trading ventures, known as margin calls. Though not nearly on the same scale as the last major crisis, these calls are causing some unrest.
Most hedge funds and private investors are tight-lipped about their portfolios, so it may be a while before the true extent of the damage is clear. A venture capitalist, who chose to remain anonymous since he hadn’t informed his investors yet, estimated that his portfolio lost $1.5 billion—assuming those lightly traded investments could sell at all.
“It definitely feels similar to 2008,” remarked Ran Zhou, a hedge fund manager at Electron Capital in New York. He canceled his weekend plans, donned a formal shirt, and hunkered down in his Manhattan office to scour Chinese news for insights into China’s strategies.
This crisis feels different because, instead of relying on the government to pick up the pieces, the finance sector sees little chance of a swift rescue. A system built on global interconnectedness seems to be undone by the White House, leaving America’s central role in this network uncertain.
“The pain is self-inflicted,” said Mike Edwards, an adviser to a private investor. He spent his weekend on calls with other investors, starting late Friday.
“You’re not going to learn anything with a calculator,” Edwards noted in a Saturday interview from his Connecticut home. “It’s more about what your neighbor is doing than what’s the right price.”
Historically, Wall Street has advised leaders of both major parties, and the hope was that Scott Bessent’s appointment as Trump’s Treasury secretary signaled a continuation of that relationship. However, Bessent seemed unfazed by the turmoil. “The market consistently underestimates Donald Trump,” he mentioned on NBC’s “Meet the Press” on Sunday.
Even Trump’s most steadfast Wall Street supporters found themselves lamenting publicly.
Daniel S. Loeb, a billionaire hedge fund manager, took to social media last week, saying, “It was fun while it lasted,” in a post he later deleted.
William A. Ackman, supportive of Trump, expressed his thoughts on the recent tariffs in a lengthy online post. “Why wouldn’t a pause make sense?” he pondered.
“The risk of not doing so could push the economy into a severe recession,” Ackman warned.
Ackman’s recent investment in Nike, which had adjusted its supply chain from China to Vietnam, found itself in the firing line after Trump announced a 46 percent tariff on Vietnamese imports. Vietnam, in response, offered to drop its tariffs on U.S. goods to zero, urging the U.S. to reciprocate.
Despite the market frenzy, there were some encouraging signs. Bank and hedge fund executives noted that trading, post-tariff announcement, surprisingly went on without significant issues—something Bessent also highlighted on Sunday.
“Everything is working very smoothly,” he assured during the NBC interview.
Executives from a major bank mentioned relief after a Friday night call with regional leaders, noting that no specific client seemed at the brink of collapse.
At Citadel, the $66 billion hedge fund eased off from leverage and volatile trades for about a month. Founder Ken Griffin, anticipating turmoil from Trump’s actions, made these preparations. According to unnamed employees, the fund remained stable last week.
Investment bankers reported an influx of client calls seeking guidance, ready to pay large fees for advice. At Lazard, the employees were instructed to be available for clients but were warned against predicting outcomes due to profound uncertainties.
The full impact remains uncertain. Bank of America has estimated a potential one-third drop in S&P 500 company profits if retaliatory tariffs are imposed. But the outlook could improve if countries negotiate tariff reductions with the White House.
Even before the new tariffs surfaced, U.S. deal-making was down 14 percent in the first quarter compared to last year, according to LSEG Data & Analytics. During last week’s market meltdown, some initial public offerings bankers had pinned hopes on, like those from Klarna and StubHub, were either pulled or postponed.
One banking executive plans to shift focus to Europe, where first-quarter deals surpassed those in the U.S.
Two private equity leaders mentioned that the market instability and deteriorating global relations likely complicate fundraising, adding to their existing challenges in a cooling deals market. Tariffs further stressed companies they’ve invested in, impacting returns for investors. Shares of Apollo and KKR plummeted over 20 percent on Thursday and Friday.
A well-known deals lawyer admitted his astonishment, grappling with the sharp drop in his clients’ share prices. A senior Goldman Sachs executive, summing up the sentiment towards Trump, said bluntly: Someone needs to intervene.
Top financial leaders have mostly stayed silent. Jamie Dimon, JPMorgan Chase’s CEO, who advised people after Trump’s inauguration to “get over” tariff concerns citing national security benefits, spent his weekend finalizing his annual shareholder letter rather than commenting, a representative confirmed.
Steve Eisman, known for predicting the 2007-8 housing crash and featured in “The Big Short,” recommended a dose of humility.
“Everyone in the stock market studied Econ 101,” Eisman observed on Saturday, adding that the market’s adverse reaction seems to ignore the possibility that the United States, with its robust economy, might actually thrive despite a trade war.
Few companies have publicly shared their projections since the latest tariffs were announced. Nonetheless, major banks like JPMorgan and Wells Fargo will soon hold investor calls to discuss earnings and future prospects.
The uncertainty was perfectly encapsulated by Loeb, who remarked online, “Sometimes markets bottom when things look most bleak.”
“Not a prediction,” he clarified, “but keeping an open mind.”
