Major Wall Street MARGIN CALLS & Panic | Trump Tariffs

There is so much freaking out going on

that Vanguard literally just sent this

email. You can't make this up. Look at

this. Stay the course. We'll be right

there with you. With the White House

announcing new tariffs, markets have

become volatile, testing the resolve of

even the most disciplined investors

during uncertain times. Resist the urge

to deviate from your financial plan. The

best and worst performing days of the

stock market often occur in close

succession. Blah blah blah blah blah. In

other words, asset managers are freaking

out across the world so badly at the

idea that they could lose assets under

management to gain fees from and hurt

their revenues or worse get margin

called. Yikes. Hey, so there's a lot of

drama about why Donald Trump hasn't made

an announcement yet on tariffs that it's

been 36 hours over the weekend Donald

Trump's been golfing. And why the hell

hasn't there been some form of tariff

deal yet? Oh my gosh, what's happening?

Well, this panic might potentially be

driven by the fact that margin calls

were hitting some of the largest hedge

funds in a wave that we haven't seen

since early 2020, which is at this point

5 years ago. crazy to think it's already

been five years, but there's potentially

this idea that hedge funds are getting

destroyed and so they're vocalizing

their opposition to tariffs more loudly

than usual, leading some to wonder, wait

a minute, what are Donald Trump's actual

plans here and what does this mean for

us? Well, that's what we're going to

talk about in this video. Not only am I

going to give you some updates in terms

of who's being oddly silent and who's

being oddly vocal right now, but what

we're going to do is we're going to try

to understand the flip side to tariffs,

you know, outside of just the bad of

tariffs. Let's try to see maybe what

Donald Trump is seeing in these tariffs.

Uh, and maybe that could give us a bit

of a road map for where the stock market

might go in the future. And has the

downside already been priced in? You

know, regardless of what happens over

the next few days, what we really have

to evaluate is what is the market going

to do over the next 6 to 12 months or

dare I say 6 to 36 months as frankly we

have seen three-year recessions take

hold in America. Now, first I'd like to

mention who's being vocal right now and

that's Bill Hackman. Now, Bill Hackman,

you know, he runs a hedge fund and he's

sort of famous for in the middle of

COVID going on CNBC complaining about

how we needed to shut down the entire

economy for 30 days to stop the spread

of COVID. And little did we know, but uh

we later found out he had a bunch of

very short-term put options that turned

millions of dollars into many billions

of dollars for his fund as he spread

emotion on mainstream news media and led

markets to collapse further. He did

something similar with the bond market

where he was all of a sudden shorting

the bond market, suggesting that

Treasury yields would skyrocket well

over 5% on the 10-year. And then as soon

as Treasury yields got to about

4.99%, he flipped strategies, covered

his shorts, and ended up buying

treasuries that he said were untouchable

because they were going to skyrocket

past 5%. And ended up going long on them

right at 4.99%.

So when this person speaks, I think you

have to just consider that he likely has

ulterior motives. He has trades going on

in the background uh more often than we

can even possibly imagine. And so I

think it's very fascinating and people

are justified in questioning Bill Aman's

posts here because he's just been

exposed as somebody who's more in

self-interested than he is globally

interested. But Bill Aman here writes,

uh, you know, hey, we need more time to

negotiate tariffs. you know, Trump's

phone's going to be ringing off the hook

here, and I would therefore not be

surprised to wake up on Monday with an

announcement from the president that

he's postponing the implementation of

tariffs. The problem is, you know, you

you can't resolve tariffs in a matter of

days. We need time to be able to

negotiate these tariffs. A lot of people

are suggesting that Bill Aman might

actually be so leveraged that he's

absolutely getting destroyed by this

market crash that came so rapidly after

the tariff announcement. Mind you,

nobody expected that that cardboard to

be put up. In fact, markets were

rallying when liberation day started.

When Donald Trump came out, started

talking about 25% levies on Mexico,

which we already familiar with. Markets

were actually up 1 to one and a half%

because people are like, "Ah, we're

going nowhere here. This is great news."

When the board came up, markets straight

up tanked. And so, it's likely that

institutions thought most of the bad

news was priced in and then they went

leveraged long. And then all of a sudden

when we saw what the reality was, the

institutions got absolutely hosed and

margin called Thursday and Friday. Bill

Aman could be part of that group. It's

entirely possible that Bill Aman is

facing some of the largest losses ever

and he's panicking, begging for a delay.

Now, that's just speculation. So, we

don't know. All we could do is align

what we know about Bill Aman's past with

what he's tweeting now. But what's also

interesting is it's not just Bill Aman

who are doing odd things on social

media, but people like David Saxs who

rarely goes I mean even a few hours

without posting on X hasn't posted on X

for 4 days. He's the White House

cryptozar. Is this a sign that he's

super anti-tariffs? Elon Musk has also

been very quiet on tariffs except for

tweeting over at Doge that if tariffs

don't work, why do 170 other countries

use them? which is basically what every

single, you know, right-wing proponent

has been spreading on X without actually

going into the details of the mechanics

of this. Now, we've already discussed

those, so this isn't really the video or

place to start breaking down why this

allegation doesn't hold a candle. But

what we'll do instead is we'll just talk

about what Donald Trump's actual plans

here might be. Keep in mind, Uber bulls,

who are bullish every day, promising you

face ripping rallies and a big V-shaped

recovery like Tom Lee, haven't posted on

X in 3 days. also very rare. Dan Ives

Uber Tesla bull just cut his Tesla price

target

43%. So you do have some interesting

dynamics happening on social, but

Academy Securities puts this together

very nicely. They suggest you have to

remember that Donald Trump doesn't

necessarily want deals. In order to

understand Trump, you have to understand

the potential upside to tariffs. I know.

I I can't believe I'm actually saying

the words upside to tariffs because

personally I'm I'm opposed to very large

tariffs. I'm opposed to most tariffs,

even those that other countries impose

on us. Even though the average trade

weighted tariffs against us are really

between 1 to, you know, maybe 6% on some

of the high levels. Some of the tariffs

we're imposing now were pretty dang

severe. But let's focus for a moment on

the potential upsides. Academy

Securities suggests that Donald Trump

doesn't care about the stock market

right now because he parrots what ch

people like Chamas say who's also close

to the administration that the top 10%

of households own 88% of equities.

Therefore, it doesn't matter that the

stock market falls. Forget about your

401k. Forget about your grandparents

wealth. Forget about your wealth or your

savings or your buy the dipping. It's

all going down because the means are

worth the end. And the Academy of

Security suggests that the end is that

you use tariffs to buy and spend on US

manufacturing, US jobs and building

infrastructure. See, in their ideal

case, companies end up taking in the

margin, the price of tariffs. Whether

it's the exporter or the importer, they

end up taking in the margin, the cost of

tariffs. Another reason the stock market

would go down. This however would leave

the buyer's price, your price for say an

iPhone or whatever the same or close to

the same. Certainly not up 40% like some

of the tariff levels that we've seen

otherwise people just wouldn't buy the

devices anymore. But anyway, the idea

would be that the price for consumers

would remain the same and the price that

is basically earned by companies goes

down and the difference in the middle

here is money that the United States can

raise in the form of tax revenue to then

fiscally spend on things like

manufacturers, jobs, incentives for

manufacturing in America, tax credits,

tax cuts, whatever. That's the goal or

sort of the vision. Now, the reality of

that happening if we actually create a

terrible 10-year recession, maybe not

that long, but 3 to 10 year recession is

obviously to be determined. But Academy

Securities makes it very clear here that

Donald Trump is doing a quote phenomenal

job of pushing the world away from

us. Now, that's somewhat dangerous. See,

the Wall Street Journal suggests that

this has been happening longer than

we've even been paying attention to it.

At the beginning of this Trump

administration in January, China tried

to pre-negotiate tariff resolutions with

the United States before we got to an

all-on trade war. But according to the

Wall Street Journal, China quote found

only closed doors. There's a suggestion

that China had previously worked with

Jared Kushner through channels to

connect to Donald Trump to work out

deals uh in in private essentially

before publicly engaging in trade wars.

This time they've tried to do it through

Elon Musk because of its exposure to

Giga Shanghai, but so far nothing has

worked to get Beijing a channel to

negotiate with China. This suggests that

the door is pretty damn well closed.

Now, why would that be? If it truly is

that Donald Trump wants to negotiate

with these other countries, why is the

door to negotiate closed? Is this just

part of chaos theory? Or is it because

if Donald Trump actually negotiates free

trade deals, we won't end up getting the

jobs or the manufacturing in America

that Donald Trump is hoping for? Now,

Steve Bessant suggests that don't worry,

we're not going to go into a recession.

But then there are also rumors now

circulating on Capitol Hill that Steve

Ness might actually step down as

Treasury Secretary because he doesn't

believe in the tariffs that we're seeing

now as much as the Trump administration

does or people like Howard Lutnik do.

Howard Lutnik just this morning

suggested that we're not pulling back

tariffs. We're sticking it out with

tariffs and we're not making any

adjustments or delays. Now, we've seen

discordinated commentary from people

like Nutnik and Trump before, but what

we should really evaluate here is if

tariffs are here to stay, then there's

probably quite a bit of room for

valuations to get even cheaper. In fact,

those aren't my words. Those are the

words of TS Lombard, who has actually

been quite bullish in this market, as

well as the words of Morgan Stanley.

See, Morgan Stanley suggests we would

argue that at current levels, credit

markets are pricing in just a 15 to 25%

chance of recession, lower than where

our economists would estimate the real

world probabilities to be. In other

words, we think there are ample there's

ample room for valuations to get even

cheaper with the big moves we've had in

the last trading sessions. Risk outflows

and weaker liquidity mean that the next

leg of repricing can happen fairly

quickly. TS Lombard suggests that these

right now are market pricings of

recession over here on the right or

future growth this 2.2 level whereas

usually when we have a recession this

bright green level goes all the way down

to about 0.4 or certainly under one in

terms of where markets are uh either

during or immediately post a recession.

We're well above that in terms of growth

expectations. On top of that, the credit

conditions index signaled a decline last

month due to a decline in risk appetite.

But in April, all categories have been

plummeting. And if you look closely

here, I know this this looks like a big

etch a sketch and it looks really

stupid, but it basically just plots

variables on a chart and then takes time

and puts a line together. That way you

can kind of see where you are right now

and then see where the line goes. You

can see right now it's in the downturn

quadrant pretty solidly in the downturn

quadrant. In fact, it came from the

downturn quadrant. It came from the

downturn quadrant which came from the

downturn quadrant which came from

expansion. That's why they put these

little crazy lines that look like some

child drew them. Uh but anyway, this

suggestion over here that you know

current indicators leading indicators

are suggesting that we are facing not a

slowdown, not a recovery, not expansion

but rather a downturn or something that

markets have to price in. Uh, and this

is why people are likely flocking to

cash and bonds. And at least what we're

seeing over at House Hack is that people

are diversifying to real estate exposure

as well. Now, personally, we're not

going to buy the dip in real estate at

House Hack until the third and fourth

quarter because then we'll know, are

these tariffs just negotiating? Are

these temporary issues? Are these longer

term issues? But we think this winter

when nobody likes buying real estate,

there could be some really incredible

opportunities to buy real estate and buy

the dip in markets, whether it's Texas

or Arizona or Florida where markets have

been under a lot more pressure than

underbuilt markets. Anyway, if you want

exposure to Houseack, go to house

hack.com, open it on accredited

investors. Uh we're offering a 5% yield,

all of the upside in the stock and

downside protection. Now, read the

paperwork on this, but it's pretty

amazing because if our stock valuation

goes up, you get all of it and you get

paid 5% on a monthly basis. So, every

month you get a check and you get all of

the upside uh that we can generate over

at Houseack. So, it's pretty incredible

and it's a nice way to diversify. I

think it's one of the reasons we've

raised over $3 million already and we've

only kind of quietly been fundraising

for about a week and a half now, which

is remarkable and it's growing. It's

adding to the cash pile that we have now

over $10 million and it's adding to the

cash pile that we have to deploy into

real estate. But anyway, uh something

else to keep in mind right now is

there's a chart showing investment grade

spreads versus uh you know basically

history when there is a recession. And

this is a quite interesting chart

because if you look closely at this uh

you could see that valuations are quote

nowhere close to prior recessionary

peaks. This would be your investment

grade spread here. The higher the number

goes, the more risk is priced into the

market. And the same is true for your

lower credit quality, your high yield

spreads over here, like your triple B's.

Ignore those titles. They're a little

confusing. But what you should look at

is right here, April 2025, investment

grade yields are at 102. Well, in 2016,

we were twice that. In 2008, we were six

times that. In the dotcom bubble, we

were twice that. You get the idea. And

in high yield credits, uh, we were twice

that in 2016. We were sevenish times

that in 2008. We were also about two

times that in 2001. So you can see where

really valuations are quote nowhere

close to prior recessionary peaks. Now,

in fairness, corporate balance sheets

remain very, you know, stable, very

strong, which is good because it

actually suggests that companies maybe

do have the ability to take it in the

margin, so to speak, uh, in terms of

some of these new tariffs. However, just

keep in mind once the S&P 500 goes into

a bare market, it's relatively rare for

you not to have a recession. It has

happened in the past. It happened with a

black Monday in 1987. It happened in 22.

It happened in ' 66, but it usually

doesn't. When the stock markets go into

bare market like in 29, 37, 46, 57,61,

73, 80, 2000, 2007, and 2020, you

usually end up into a recession. A

nonrecessionary bare market could be an

S&P 500 drop of 22 to 34%. A

recessionary bare market could be

declines of 40 to 50%. Which means the

declines we've seen so far could just be

the beginning of the declines. Now, who

knows? I mean, again, it doesn't matter

really what happens over the next few

days. What matters is what is the direct

direction of where we go over the next

months. And so far, it seems like Donald

Trump is purposefully at a golf

tournament this weekend to signal that

he's not really interested in

negotiating. He's actually interested in

truly rebuilding America's manufacturing

via tariffs. Now, we have had some

enthusiasming, you

know, let's see, enthusiasm building uh

updates such as that from Vietnam, but

they make up a fraction of our trade,

you know, less than 1%. Uh, and Taiwan,

which also makes up a small portion of

our trade, but a little bit more. So, we

import about 116.3 billion from them.

They only import about 42.3 billion from

us. uh in terms of you know an an import

basis of what we import that represents

116 divided by about 4.3 trillion of

imports represents about 2.7%. So still

a fraction of the trade, you know, big

portion of trade we've got to talk about

would be China. But these countries have

had suggestions that they're open to no

tariffs and a sort of free trade

negotiation. Well, we haven't heard of

any deals announced with them probably

because Donald Trump doesn't actually

want free trade with these countries and

they're not really giving up that much.

They don't import that much of our

product to where the tariffs make sense

for them. They have a lot more to lose

against our big tariffs compared to just

giving us free trade. It's not a big

deal. Taiwan, in fairness, has had

tariffs of about 4 uh 4.13% on our

industrial goods and 15% on our

agricultural goods. So, they haven't had

free trade with us. Now, if you wait

that out, it works out to 6%, which is

obviously a far cry from the 30, 40, 50%

we're imposing on Asian countries now.

But it shows you there are tariffs

nowhere near the magnitude of what we're

imposing. This idea that we're doing

reciprocal tariffs, we already know it's

just it's really just a marketing

gimmick at this point because they're

not

reciprocal. They are reciprocal in that

they have tariffs and now we have big

tariffs. Uh but that's about where that

reciprocity stops. Now, uh Morgan

Stanley also suggests that uh a US

recession is not their base case, but it

is definitely a real possibility.

Consider this comment right here. Our

economists highlight that if announced

tariffs remain in place for a

non-trivial period, you know, more than

obviously a few weeks, like if they last

for many months, the risks to growth

skew meaningfully to the downside and

risks to inflation to the upside. In

other words, don't expect Jerome Powell

to bail you out. You know, there's still

talk almost every single day about, you

know, this would be a great time for

Jerome Powell to bail out markets. This

is not like other crashes where in 2008

the Federal Reserve was able to support

bailing us out. Or in 2020, they were

able to bail us out because we were

facing low inflation in 2020. Or in

1987, when the Fed put became a

standard, the idea that the Fed will

always come bail you out. These cases

were situations where the Fed was able

to do so. But what we're facing right

now is stagflation, which puts the

Federal Reserve into the worst case

scenario, and they really can't act

until unemployment falters, which this

is last unemployment report we got,

makes it even less likely the Fed's

going to cut at all, despite the fact

that markets are pricing in for rate

cuts this year. That's probably because

markets think we're going to get a dirty

recession between now and the end of the

year, which should be unfortunate.

You'll also likely see that with oil,

mind you. A lot of folks are looking at

oil, suggesting that oil demand usually

falls to zero uh in a recession, at

least oil demand growth. And frankly,

the longer these tariffs stay, the more

oil demand problems we end up facing.

This could be why oil is selling off.

Some people also suggest that gold is a

safe haven asset, but when you go into a

recession, gold does usually fall. And

that may be because valuations fall so

much in other assets that people use

gold to sort of cover. But take a look

at this. I find this interesting too.

This just shows you a chart in blue of

the reciprocal tariffs that we have

imposed relative to some of the other

tariffs that we've imposed in the past.

And you can just see how much larger

they are compared to previous tariff

announcements like the 2018 trade war

with China over here in pink. Nothing

compared to what we've seen since. Uh so

anyway, this gives you a little bit of a

catchup on what's going on. It gives you

an update on, you know, Bessant

suggesting, hey, we're not going to see

a recession and Lutnik suggesting, hey,

everything's fine. We're not going to

negotiate. But it also shows you that

some people who are usually Uber bulls

are going oddly quiet. Uh some people

who are usually uber Trump supporters

are oddly quiet. And some people like

hedge fund managers seem to be freaking

out. But then again, if Donald Trump's

goal is to bring jobs to America,

negotiating isn't in his best interest.

And unfortunately, that means there's a

greater chance of more downturn going

forward. And this is something really

important to pay attention to. Anyway,

if you found this video helpful, please

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Check out househack.com if you want to

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Any questions you have, email us at

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email us at houseack.com. We'll get you

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live stream so you can ask your

question. Thanks so much for watching.

We'll see you in the next one. Goodbye

and good luck. Why not advertise these

things that you told us here? I feel

like nobody else knows about this. We'll

we'll try a little advertising and see

how it goes. Congratulations, man. You

have done so much. People love you.

People look up to you. Kevin Pra there,

financial analyst and YouTuber. Meet

Kevin. Always great to get your take.