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Your Guide to Washington and the World’s 2024 US Election Means
Donald Trump’s tariff regime has hampered Wall Street’s most powerful investment group. Many had expected the president’s policies to fuel a golden age of economic growth and trading just a few months ago.
Several shares in the world’s largest private capital group, including Apollo Global Management and KKR, fell more than 12% on Thursday, while Blackstone fell nearly 10%. Credit Company, including ARES Management and Blue Owl, has said that investors have suffered as they have marked growth expectations, and some traders say that default rates for undervalued loans could continue to rise.
US financiers believed the president would lead a business-friendly period with no regulatory hurdles. The financial group’s stock price swelled in the preliminary stages of Trump’s election, but has stumbled since December as the reality of the new administration’s tariff plans sink.
“This is a huge step towards globalization,” said Robert Koenigsberger, founder of Gramercy Funds Management, an investment company focusing on emerging markets. “It will substantially increase the risk of a recession and substantially increase the risk of stags.”
Trump’s latest tariffs include a 10% universal tax on imports in all countries, including the UK, and a 20% EU tax rate. The White House also targeted certain countries such as China and Vietnam, and received much higher fees.
“The market had false comfort as he could become a certain amount of brave and exaggerated man, so he didn’t believe he was ultimately offensive,” said Stephen Selig, vice-chairman of the Bank of America’s Global Investment Bank, under his former US secretary. “We are entering a world where we probably have more uncertainty than we’ve seen since the end of World War II.”
At least one investor eliminated it unharmedly on Bloodbath on Thursday, billionaire Warren Buffett. Stocks of his vast industrial conglomerate Berkshire Hathaway remained little different. Investors dramatically reduced their exposure to publicly traded US stocks, including Apple last year, and instead invested in short-term Treasury bills.
Others were not blessed.
Bill Ackman, founder of hedge fund Persing Square billionaire, declared Trump was the most “growth” and “pro-pro-” administration in recent memory, and expressed bullishness in the markets when the president took office.
Ackman’s portfolio, which now earns more than 10% by mid-February, has now turned negative as some of his biggest holdings, including sportswear maker Nike’s call options, plunged into value. The company’s shares took over 14% of the taxes on Southeast Asia’s manufacturing countries, including Vietnam, where the main production hubs are located, and tariffs were more than 14% to collide with final profits.
As of Monday, Pershing Square lost 1.2% per year based on the company’s public disclosures. No hedge positions have been reported. Pershing Square did not respond to requests for comment.
The surge in stocks across Wall Street and Corporate America reflects a sour atmosphere in private-capital space as executives from top industry warned of a major slowdown in trading, informing some people are preparing recessional contingency plans that will clash with portfolio companies.
The level of uncertainty that many people have predicted will cause buyers and sellers to leave the transaction. It reaches the profits of private equity groups. Private equity groups have struggled to sell their investments and return profits to investors. Top industry executives, including Blackstone president Jonathan Gray and Carlisle CEO Harvey Schwartz, joined the optimistic deal, with the initial release allowing cash back in 2025, but that rebound did not come true.
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“This is just a feature that will make you worry about the 2025 realisation worse than expected,” said Jim Tierney, who focuses on US growth at Alliancebernstein. “It usually has a meaningful revenue impact.”
Some industry executives also warned that recent market slumps have created new risks of surges in private assets, as part of a percentage of the overall portfolio of large pensions, resulting in a surge in private assets, reducing private exposure to rebalance. Last year, private equity funding slid 23%.
Meanwhile, bank stocks also suffered. Goldman Sachs fell nearly 9%, while JPMorgan Chase’s shares fell more than 7%.
Selig said: “What we know now is that when Trump says tariffs are the best word in the dictionary, he really believes it.”
