US Hedge funds are getting hit with ‘Lehman-style’ margin calls. Banks demand collateral from HFs since 10% global #TrumpTariffs stocks sharply 📉🩸

[ReasonableMatic]

Hedge funds are facing Lehman-style margin calls as a market crash triggered by President Donald Trump's tariffs raises fears of a looming 'Black Monday.'

The market's sharp downturn has forced hedge funds to sell off assets, with major Wall Street banks demanding collateral after the value of holdings sharply declined, according to sources familiar with the situation.

Many now fear a repeat of the devastating 'Black Monday' from October 19, 1987, when the Dow Jones Industrial Average plummeted by 22.6 percent, the largest one-day percentage drop in history.

It comes as a 10 percent global 'baseline' tariff came into place late last night, hitting all US imports except goods from Mexico and Canada. Come April 9, around 60 trading partners - including the European Union, Japan and China - are set to face even higher rates tailored to each economy.

Following Trump's tariff chaos, several major banks issued the largest margin calls to their clients since the onset of the COVID-19 pandemic in early 2020.

The scale of the calls - across multiple sectors including tech and consumer stocks - has sparked concern that the steep sell-off will continue into Monday.

When margin calls are issued, they can create a vicious feedback loop as selling stocks to meet the call can push prices down more.

Gold fell more than 3 percent Friday, erasing gains from earlier in the week, as investors were forced to shed bullion to cover their losses.

Traders work on the floor of the New York Stock Exchange (NYSE) at the opening bell in New York City, on April 3, 2025

Pictured: President Donald Trump holds up a chart while speaking during a 'Make America Wealthy Again' trade announcement event in the White House on April 2, 2025

'Rates, equities, and oil were all down significantly… it was the broad market movements that caused the scale of the margin calls,' one prime brokerage executive told the Financial Times.

While, another prime brokerage executive noted: 'We are proactively reaching out to clients to assess [risk] across their entire portfolios.'

Prime brokerage teams on Wall Street, which lend money to hedge funds, held 'all hands on deck' meetings on Friday to prepare for the increasing volume of margin calls, sources told the Financial Times.

Thursday marked the worst performance for US-based long/short equity funds since tracking began in 2016, with the average fund suffering a 2.6 percent loss, according to a new report from Morgan Stanley's prime brokerage division.

The magnitude of the selling across equities on Thursday was in line with the largest on record.

The report also pointed to equity positions resembling those seen during the US regional bank crisis in 2023 and the COVID-19 market sell-off in 2020.

The broader market downturn, particularly in technology and high-end consumer goods sectors, has worsened the situation.

The heavy selling led US long/short equity fund net leverage - how much hedge funds borrow to magnify their investments - to drop to an 18-month low of about 42 percent, Morgan Stanley reported.

However, experts believe the damage could have been worse if hedge funds hadn't already started scaling back stock positions and cutting leverage in response to the ongoing trade war threats from the Trump administration.

In another indication of stress within the hedge fund sector, gold - the precious metal typically seen as a safe haven for investors - fell 2.9 percent on Friday, despite the pervasive market pessimism.

Now, Trump's 'baseline' tariff which came into place past midnight invoked emergency economic powers to address perceived problems with the country's trade deficits.

The trade gaps, said the White House, were driven by an 'absence of reciprocity' in relationships and other policies like 'exorbitant value-added taxes.'

Come April 9, around 60 trading partners - including the European Union, Japan and China - are set to face even higher rates tailored to each economy.

Hedge funds hit by Lehman-style MARGIN CALLS sparking doom loop fears

President Trump's widest-ranging tariffs to date took effect on Saturday, as hedge funds continue to grapple with massive margin calls.

www.dailymail.co.uk

Just imagine the BLOODBATH on Monday

 

[bnew]

When margin calls are issued, they can create a vicious feedback loop as selling stocks to meet the call can push prices down more.


theres a lot of short-sellers and and companies using stock as collateral that this could go on for weeks at a higher rate than usual.

 

[Khadafi1982]

If you are an investor with a long term view, 5 to 10 years, this is a good moment to buy stocks. If you would have done your homework and you stashed some funds for this day, it is the best time to go invest. Everything is on stale. Even better just buy an S&P 500 index fund or its ETF equivalent.

I am not American and I don’t like a lot of things in America but when it comes to business dynamism and scale it worldwide, USA is the best. To put things in perspective, the last new company to join de German DAX was SAP IPO in 1988.

There nothing like the American stock market to make money and supplement you work income.

 

[bnew]

Spoiler: thread continued

Spoiler: full text & large images

1/11
@Barchart
Long/Short Hedge Fund Leverage on track for its largest monthly decline since data began being recorded

2/11
@Barchart
Source: Goldman Sachs
H/T: ZeroHedge



3/11
@StratsLabs
We, too, are diverging from traditional long/short equity trading strategies in our trading community lately. They won't work in a high-volatility environment.

We are exploring alternate trades in /search?q=#options

Capital preservation first, profits later



4/11
@TradureApp
Well we know what the “smart money” is thinking



5/11
@nyengerazvidzai
Net short, yikes



6/11
@duudestellar
what pumps are made of



7/11
@BitDecoder
The shorts are dominating!



8/11
@Retiree_Trader
Not enough ...I want extreme down



9/11
@InvestiBrew
This doesn't necessarily point to something bearish or negative, simply reiterating the fact that real rates are rising now

When real rates rise, so does the cost of leverage to severely compress profitability

Not to mention take liquidity out the market for higher /search?q=#VIX regimes

You already see it in quarterly ATR increases for /search?q=#ES /search?q=#SPX /search?q=#NQ /search?q=#QQQ equities

This will now be a trader's market, and an investor's hell (lost decade) ️



10/11
@stckpkr7000
Bullish



11/11
@drinkmilkshake0
We are so fukked




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Spoiler: thread continued

Spoiler: full text & large images

1/11
@unusual_whales
BREAKING: Hedge funds sold global equities in the largest 1-day amount since 2010, according to Goldman Sachs, /search?q=#GS.

Meanwhile, retail investors bought $4.7 billion in stocks on yesterday, the largest level over the past decade, per JPMorgan, /search?q=#JPM



2/11
@unusual_whales
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3/11
@AlvaApp
Hedge funds unloading equities at record pace since 2010 signals bearish vibes. Institutions showing caution due to economic and geopolitical jitters—prepping for a downturn?

Meanwhile, retail investors pumping $4.7B into stocks, betting on a rebound. This clash could spike volatility: institutional exits vs. retail optimism. If hedge fund fears play out, bearish winds could blow, unless retail resilience holds the line. Stay sharp out there!

For deeper insights: New Chat | Alva



4/11
@jeditrinupab
Smart money isn’t always wearing suits



5/11
@TroyRubert
Congrats to all the buys



6/11
@crusade_enjoyer
I have puts, keep going.



7/11
@ctsanford
We are at peak pod.



8/11
@futurenomics
Weird way to find out I’m retail

9/11
@mattragudo
Holy smokes. Retail got sold a huge bag yesterday.



10/11
@realMinus0
long live the retail investors!



11/11
@Yoshi_3000
They prepared retail for this, they said “buy the dip” and they knew we would.




To post tweets in this format, more info here: https://www.thecoli.com/threads/tips-and-tricks-for-posting-the-coli-megathread.984734/post-52211196

 

[lib123]

If you are an investor with a long term view, 5 to 10 years, this is a good moment to buy stocks. If you would have done your homework and you stashed some funds for this day, it is the best time to go invest. Everything is on stale. Even better just buy an S&P 500 index fund or its ETF equivalent.

I am not American and I don’t like a lot of things in America but when it comes to business dynamism and scale it worldwide, USA is the best. To put things in perspective, the last new company to join de German DAX was SAP IPO in 1988.

There nothing like the American stock market to make money and supplement you work income.

People keep saying that but it’s not necessarily true. After the markets peaked in March 2000, they didn’t bottom out until ‘03 and then stayed flat for most of the 2000s.

 

[Diunx]

 

[Remote]

They used a photo of Jeremy Irons from the movie Margin Call instead of any photo of an executive from the actual Lehman Bros company.

Alright.

 

[Khadafi1982]

People keep saying that but it’s not necessarily true. After the markets peaked in March 2000, they didn’t bottom out until ‘03 and then stayed flat for most of the 2000s.

I agree with you! I wanted to give a more realistic range for beginners without pulling tons of stats. I am a long term investor and my view is 10 to 15 years. I still own 4 stocks I bought in 2012 that did spectacularly. That is why I am very careful on my picks. Since I am getting older and with children, I now buy index funds and add a few 1-3 solid companies that you have studied and understand their businesses(ex Visa, Cotsco)

I saw a stat a while back where USA companies retained 56% of global profits produced by all the top global from all continents. That is incredible.

Based on the knowledge I got on investing, nothing beats the American public market.