After a blowout week, Wall Street decision-makers brace for more chaos

There was little rest on Wall Street this weekend. There was plenty of anger, anxiety, frustration and fear.

Anger at President Donald Trump for a brash and chaotic rollout of tariffs that erased trillions of dollars in value from the stock market in two days. Anxiety about the state of the private equity industry and other colossal funds with global investments. Frustration among Wall Street's elite at their sudden inability to influence the president and his advisers.And fear of what may come next.

Hedge funds tallied up their losses and bragged if they only lost a little. Bankers and lawyers tore up already sparse calendars for deal-making, reasoning that no chief executive would risk a big merger or public offering soon. Major banks played out emergency scenarios to guess whether one client or another would fail in the cascading effects of an international trade war.

In conversations with The New York Times over the weekend, bankers, executives and traders said they felt flashbacks to the 2007-08 global financial crisis, one that took down a number of Wall Street's giants. Leaving out the brutal, but relatively short-lived, market panic that erupted at the start of the coronavirus pandemic, the velocity of last week's market decline -- stocks fell 10% over just two days -- was topped only by the waves of selling that came as Lehman Brothers collapsed in 2008.

Like then, the breadth of the sudden downdraft -- with oil, copper, gold, cryptocurrencies and even the dollar caught up in the sell-off -- has Wall Street's biggest players wondering which of their competitors and counterparties was caught off guard. Banks have asked trading clients to post additional funds if they want to continue borrowing money to trade -- so-called margin calls that haven't nearly reached the level of a generation earlier but are nonetheless causing unease.

Most hedge funds and other private investors don't share details of their portfolios daily or weekly, so it will take more than a weekend for the potential damage to be known. One venture capitalist, speaking on condition of anonymity because he had not formally notified his investors, estimated that his portfolio had lost $1.5 billion. That's if his thinly traded investments could be sold at all.

"It definitely feels similar to 2008," said Ran Zhou, a New York hedge fund manager at Electron Capital, who canceled weekend plans and put on a button-up shirt to sit in his Manhattan office and read Chinese news sources to get the jump on China's plans.

What is unique about this crisis is that rather than counting on the government to help pick up the pieces, the financial sector sees little hope of an immediate rescue. A world order built on interconnectedness has been ripped up by the White House itself, and the United States' position at the epicenter of that network is in doubt.

"The pain is self-inflicted" by Trump, said Mike Edwards, an adviser for a private investor, who spent the weekend on calls with other investors, starting late Friday.

"You're not going to learn anything with a calculator," he said in an interview Saturday from his home in Connecticut. "It's more about what your neighbor is doing than what's the right price."

For generations, Wall Street enjoyed a role advising the leaders of both major political parties, and there was hope that the appointment of Scott Bessent, a hedge fund manager and onetime Democrat, as Trump's Treasury secretary, meant the industry had a friend near the Oval Office.

Bessent, however, has shrugged off the tumult. "The market consistently underestimates Donald Trump," he said Sunday on NBC program "Meet the Press."

That has left even some of Trump's bigger Wall Street defenders with little to do but gripe publicly.

"It was fun while it lasted," Daniel S. Loeb, a billionaire hedge fund manager, wrote on the social platform X last week in a post he later deleted.

Bill Ackman, a hedge fund manager who is outspoken in his support of Trump, had a long post Saturday afternoon on about the start of the newest tariffs. "Why wouldn't a pause make sense?" he wrote.

"The risk of not doing so," Ackman added, "is that the massive increase in uncertainty drives the economy into a recession, potentially a severe one."

Among Ackman's recent bets was Nike, the apparel giant that shifted its supply chain to Vietnam from China, only to get caught in the crossfire after Trump announced a tariff of 46% on imports from Vietnam. (Vietnam has since offered to drop its tariffs on U.S. goods to zero, urging the United States to do the same.)

There were some bright spots. Several bank and hedge fund executives pointed out that, despite the frenzied selling, trading in the wake of the tariff announcement had so far proceeded without any unexpected glitches, a point that Bessent also made Sunday.

"Everything is working very smoothly," he said during the NBC interview.

A senior executive at one major bank also said there was relief after a call Friday night with the bank's regional heads and top executives that nobody could point to a specific client in danger of immediate implosion.

Traders at $66 billion hedge fund Citadel, had, for roughly a month, been reducing the use of leverage and other volatile trading instruments as the fund's founder, Ken Griffin, became increasingly convinced that Trump would cause tumult, said two employees not permitted to be named discussing the fund's machinations. The hedge fund, which approached the brink of collapse in 2008, was roughly flat last week, they said.

In interviews, investment bankers said they had been flooded with calls from big companies willing to pay hefty fees for advice on how to proceed. At the bank Lazard, the message to employees was to be available for clients but not to offer conviction about what would happen next, given the immense uncertainty of the moment.

Indeed, the true depth of the impact is yet to be determined. Bank of America estimates that profits for companies in the S&P 500 may fall by one-third if retaliatory levies are enacted by the countries subject to Trump's tariffs. But the dire assessments could change, if countries begin to strike agreements with the White House that will lower the tariffs.

Even before the latest tariffs were announced, U.S. deal-making in the first quarter fell 14% compared with last year, according to LSEG Data & Analytics. And in the middle of last week's meltdown, some of the highly anticipated public offerings that bankers had hoped would set the stage for other listings were pulled or paused, including offerings by payments giant Klarna and StubHub, the online ticketing business.

One bank executive said he planned to spend more time in Europe, where deals in the first quarter outpaced those in the United States.

Two private equity executives said they expected that market turmoil and souring global relations would make it more difficult for private firms like theirs to raise money, adding to the challenges they are already facing as a dwindling deals market has made it harder to return cash to their investors. Pressures on those firms will only increase as the businesses they invest in begin to feel the impact of tariffs, these executives said. Shares of Apollo and KKR fell more than 20% Thursday and Friday.

One prominent deals lawyer described himself as "flabbergasted" as he grappled with how far the share prices of his clients had fallen. A top Goldman Sachs executive summed up the frustration with Trump succinctly: Someone has to stop him.

The financial world's top leaders have stayed silent. JPMorgan Chase CEO Jamie Dimon, who two days after Trump's inauguration said that people should "get over" the threat of tariffs because they were good for national security, was spending the weekend putting the finishing touches on his annual shareholder letter that will be released Monday, after speaking to a group of Chase tellers in Nashville, Tennessee. He declined through a spokesperson to be interviewed.

Steve Eisman, the investor made famous in "The Big Short" for having foreseen the 2007-08 housing market collapse, said some humility was in order.

"Everybody in the stock market went to college, and everyone who went to college took Econ 101 and had it drummed into their heads that trade wars are bad," Eisman said Saturday. He suggested that investors were ignoring the potential that the United States, thanks to its economic strength, may be the best positioned of any nation to prosper in such scenarios.

Few companies have discussed their outlooks publicly since last week's tariff announcements, but major banks including JPMorgan and Wells Fargo will begin holding investor calls to address their earnings (and prospects) Friday.

The uncertainty was neatly exemplified by Loeb, who Saturday wrote on X: "Sometimes market bottom when things look most bleak."

"Not a prediction," he added, "but keeping an open mind."