What we’re reading (4/4)
“Hedge Funds Hit With Steepest Margin Calls Since 2020 Covid Crisis” (Financial Times). “Hedge funds have been hit with the biggest margin calls since Covid shut down huge parts of the global economy in 2020, after Donald Trump’s tariffs triggered a powerful rout in global financial markets. Wall Street banks have asked their hedge fund clients to stump up more money as security for their loans because the value of their holdings had tumbled, according to three people familiar with the matter. Several big banks have issued the largest margin calls to their clients since the beginning of the pandemic in early 2020.”
“Wall Street Blew It” (The Atlantic). “After Thursday’s stock-market sell-off provoked by Donald Trump’s announcement that the United States would be imposing new tariffs on almost every country in the world, the one thing we can say for sure is that Wall Street blew it. In the three trading days leading up to Trump’s much-anticipated ‘Liberation Day’ speech, the market rose steadily as investors apparently convinced themselves that Trump would not do anything too crazy. Surely moderation would prevail. It did not[.]”
“The Big Losers In Trump’s Tariff Chaos—And A Couple Of Survivors” (Wall Street Journal). “Few areas were spared in the stock market’s huge selloff this week, with all 11 of its sectors ending in the red after President Trump unveiled his dramatic tariff plans. Banks and private-equity firms were among the biggest losers. Investors fear Wall Street firms would be hit hard by a recession, with companies and individuals pulling back on borrowing and dealmaking drying up. The consumer staples sector, meanwhile, was relatively unscathed, finishing with the smallest weekly decline. Those companies are seen as havens in a downturn since people still need essentials like groceries.”
“Your Life Will Never Be The Same After These Tariffs” (Justin Wolfers, New York Times). “These tariffs are going to hurt. A lot. By my calculations, this round of tariffs may be 50 times as painful as the ones Donald Trump instituted in his first term. That means they are going to reshape your life in much more fundamental ways.”
“The White House Cited These Economists To Justify Its Tariffs. They Aren’t Thrilled.” (Yahoo! Finance). “In a blog post complete with a bibliography and footnotes, the US Trade Representative said it had calculated ‘reciprocal’ tariffs at rates that would eliminate the US trade deficit with each country, using a formula that was in fact more sophisticated than met the eye and took into account factors like how much imports would fall as duties rose and how much prices would increase for consumers. It just so happened that some of the key variables canceled each other out, leaving behind the simple long-division exercise that had been widely mocked.”
