Hedge funds loaded up on a record number of short bets against stocks as President Donald Trump’s steeper-than-expected tariffs wreaked havoc on Wall Street, according to Goldman Sachs’ prime brokerage data. Fast-money professional traders made their largest-ever, one-day net sales of global equities last week through Thursday, the day after Trump rolled out his sweeping levies, said Goldman, which has been collecting the data since 2010. “Liberation Day was a knock-down, drag-out affair — there was a harshness that surprised even the most hawkish people I know,” Tony Pasquariello, head of hedge fund client coverage at Goldman said in a note to clients. Hedge funds rapidly added protection as fears grew that Trump had set off a global trade war that will lead to a recession. Trump’s policy could effectively raise the U.S. tariffs rate from 2.5% to well past 20%, the highest level since 1910 — higher even than the devastating Smoot-Hawley tariffs of 1930 that many economists see as contributing to the Great Depression. The Dow Jones Industrial Average suffered back-to-back 1,500-point losses last Thursday and Friday for the first time ever in its 129-year history. The S & P 500 plunged 10% in those two days. .DJI 5D mountain Dow Jones Industrial Average Billionaire investor Stanley Druckenmiller made a rare comment over the weekend, reiterating his opposition to tariffs above 10%. Leon Cooperman , another billionaire investor, said the bottom is not in yet and stocks are set to continue their downward spiral. The chair and CEO of the Omega Family Office believes Trump’s tariffs are a “mistake” and will tip the U.S. economy into a recession. Nine of 11 investment sectors in the S & P 500 were net sold last week, led by financials, technology and consumer discretionary stocks, Goldman said. The selling in financials came at the fastest pace since January 2021 and the second fastest pace on record, the Wall Street investment bank said. “Lower prices drew out huge selling from many corners of our franchise; as one of the great traders of all time put it: ‘people are just getting into self-protection mode,'” Pasquariello said. Pasquariello noted the increased probability of “indiscriminate, short-cycle rips” higher in prices that can happen when there is a massive number of short positions. That was evidenced Monday , when stocks seesawed dramatically in reaction to headlines covering the Trump administration’s shifting trade policy.
Steve Eisman of “The Big Short” fame has a message for investors: Don’t be a hero because there’s more market downside ahead. Eisman, who’s known for successfully betting against the housing market ahead of the 2008 financial crisis, warns Wall Street isn’t done discounting worst-case scenarios tied to President Donald Trump’s tariffs. “The issue is that everybody of our social class took Econ 101, and we were all taught the same thing: Trade good, tariffs bad, trade war terrible,” the former Neuberger Berman senior portfolio manager told CNBC’s “Fast Money ” on Monday. “Now, you have a president of the United States who doesn’t seem to accept that paradigm, and people find that extremely jarring.” But Eisman, who launched the “The Eisman Playbook” podcast this month, doubts the current trade situation will turn into ” tariff Armageddon .” “If countries are rational, Canada and Mexico would come to the United States and basically beg, ‘We’ll do what you want.’… Those two countries hold no cards. Now, Europe is not much better,” he said. “If reasonable heads prevail, Trump will get pretty much what he wants.” On Monday, the Dow saw its largest intraday swing on record — swinging 2,595 points. At the day’s low, it was off 1,703 points. The Dow ultimately lost 349 points and the Nasdaq Composite squeezed out a 0.1% gain. Meanwhile, the S & P 500 fell 0.2%. ‘I’m long only. I’ve lost plenty.’ “There’s the people in the markets who are upset that they have lost money,” said Eisman. “I’m not going to kid you. I’m one of those people. I’m long only. I’ve lost plenty.” He prefers to look at the bigger picture — particularly those who have gotten hurt by free trade. “GDP is not just a number. It’s people. If you’ve traveled parts of this country like I have and you go through the Midwest and parts of the South, it doesn’t look so good.” noted Eisman. “[President] Clinton ushered in with [North American Free Trade Agreement] and the [World Trade Organization] a massive bull market that everybody around this table including me has benefited enormously from. But not everybody in the country has benefited, and what is being proposed here is to benefit those people.” Eisman thinks Wall Street should have seen President Trump’s tariff policy coming. “He has told you that he was going to do this for years, and now he has gone and done it,” Eisman added. “Everybody is shocked that he fulfilled his promise. They didn’t take him seriously.” The wildcard, according to Eisman, is politics. “Are politicians going to be rational or not,” he said. ” In a trade war , everybody will suffer. The U.S. will suffer the least.” Disclaimer
Check out the companies making headlines in after-hours trading: Health-care stocks — Shares of Humana , CVS Health and UnitedHealth jumped after The Wall Street Journal reported that the Trump administration will raise payment rates for Medicare insurers next year to 5.06%, higher than the 2.23% increase the Biden administration had proposed. Humana gained more than 13%, while CVS Health and UnitedHealth advanced more than 7% and about 6%, respectively. Levi Strauss — The clothing stock rose more than 1% after the company reported its first-quarter results . Levi Strauss reported adjusted earnings of 38 cents per share, a 52% jump compared to the prior-year period. Revenue of $1.53 billion for the period also marked a 3% jump compared to last year. Greenbrier — Shares of the railcar manufacturer fell 4% on the back of the company dialing back its revenue guidance for the full year. Greenbrier now sees revenue ranging from $3.15 billion to $3.35 billion, compared to previous guidance of $3.35 billion to $3.65 billion. Dave & Buster’s — Shares of the owner and operator of entertainment and dining venues climbed nearly 2% on the heels of its fourth-quarter adjusted earnings, which came in at 69 cents per share. That is above the 67 cents per share that analysts polled by FactSet were expecting. Revenue, however, came in weaker than anticipated, with the company posting $534.5 million for the quarter versus the consensus estimate of $544.7 million. Broadcom — The semiconductor stock moved more than 2% higher following the company’s authorization of a new $10 billion share repurchase program , effective through Dec. 31.
An exterior view of a CVS pharmacy in Danville, Pennsylvania.
Paul Weaver | Lightrocket | Getty Images
Check out the companies making headlines in after-hours trading:
Health-care stocks — Shares of Humana, CVS Health and UnitedHealth jumped after The Wall Street Journal reported that the Trump administration will raise payment rates for Medicare insurers next year to 5.06%, higher than the 2.23% increase the Biden administration had proposed. Humana gained more than 13%, while CVS Health and UnitedHealth advanced more than 7% and about 6%, respectively.
Levi Strauss — The clothing stock rose more than 1% after the company reported its first-quarter results. Levi Strauss reported adjusted earnings of 38 cents per share, a 52% jump compared to the prior-year period. Revenue of $1.53 billion for the period also marked a 3% jump compared to last year.
Greenbrier — Shares of the railcar manufacturer fell 4% on the back of the company dialing back its revenue guidance for the full year. Greenbrier now sees revenue ranging from $3.15 billion to $3.35 billion, compared to previous guidance of $3.35 billion to $3.65 billion.
Dave & Buster’s — Shares of the owner and operator of entertainment and dining venues climbed nearly 2% on the heels of its fourth-quarter adjusted earnings, which came in at 69 cents per share. That is above the 67 cents per share that analysts polled by FactSet were expecting. Revenue, however, came in weaker than anticipated, with the company posting $534.5 million for the quarter versus the consensus estimate of $544.7 million.
Check out the companies making headlines in midday trading: U.S. Steel — Shares advanced nearly 9% after President Donald Trump ordered the review of Japan’s Nippon Steel’s proposed takeover of U.S. Steel. The president instructed the Committee on Foreign Investment in the United States to aid in “in determining whether further action in this matter may be appropriate.” Automakers — Shares of automakers continued to fall as investors worried about the lack of any deals tied to President Trump’s tariff policy. Stellantis pulled back more than 6%, while Ford Motor fell 5%. General Motors slipped 3% following a Bernstein downgrade of the stock to underperform from market perform. Tesla — Stock in Elon Musk’s electric vehicle company slipped 5%. Devout Tesla bull Dan Ives slashed his price target on the EV firm, citing concern over Musk’s political ties to the White House. Machinery stocks — U.S. machinery companies fell Monday after UBS downgraded key stocks, saying a trade war from President Trump’s tariffs could bring about machinery demand destruction due to higher prices. Caterpillar , Terex and Paccar , all of which were downgraded to sell , tumbled more than 3%. Dollar Tree — The discount retailer rose 6% in a sea of red following an upgrade to buy from neutral at Citi. Analyst Paul Lejuez called the company a “dark horse winner” amid the mounting global trade war. Major banks — Shares of major banks continued to fall amid concerns over a possible recession. Morgan Stanley and Citi slipped more than 1%. Goldman Sachs , which was downgraded to equal weight from overweight by Morgan Stanley, lost about 3% Apple — The iPhone maker fell more than 5%. Apple manufactures its devices in China, and has seen its stock under immense pressure in recent days as Trump’s tariffs take aim at Beijing. The president on Monday threatened a new 50% tariff on China if its own retaliatory duties are not lifted. Chinese ADRs — U.S.-listed shares of Chinese companies tumbled as investors feared higher tariffs slapped on the country could hamper its businesses. Alibaba dropped more than 11%, while JD.com slid about 8%. Bilibili dropped 7% and PDD pulled back 6%. Bitcoin stocks — Stocks tied to bitcoin were continuing to struggle on Monday as the largest cryptocurrency by market capitalization pulled back more than 2%. Trading platform Coinbase lost 5%, while Strategy — formerly MicroStrategy — declined more than 11%. Miners MARA Holdings and Riot Platforms fell roughly 1% each. Trump Media & Technology Group — Shares of the Truth Social parent company dropped 2% on Monday. The stock is on track for its eighth losing session in the past nine trading days. RH — The maker of luxury home furnishings soared 15% in a relief bounce. RH shares saw hard selling last Thursday, tanking 40%, and dropped another 2.5% on Friday. A fourth-quarter miss on the top and bottom lines, as well as soft guidance, dragged shares lower last week. — CNBC’s Sean Conlon, Lisa Kailai Han, Alex Harring, Michelle Fox and Jesse Pound contributed reporting. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!