Hedge funds are making a multi-billion-dollar gamble against the US economy, betting Donald Trump’s presidency will result in a massive market crash that could devastate 401(k)s, pensions, and household savings across America.
Data from Goldman Sachs has sent shockwaves through financial circles, revealing a dramatic surge in ‘short’ positions against US stocks – a move that signals a belief the market is headed for a precipitous crash.
Throughout January, investors placed 10 times more bets on American stocks falling than on their continued rise, a staggering shift that reflects growing unease over Wall Street’s future under Trump’s leadership.
The timing of such financial revolt is no coincidence and comes just as the world witnessed a $600 billion wipeout in major US tech stocks earlier this week, driven by fears over Chinese AI rival DeepSeek, which disrupted the once-unshakable dominance of America’s technology sector.
The Magnificent Seven – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla— all suffered massive losses, leaving investors scrambling for answers.
The latest hedge fund moves mark a staggering reversal from just two months ago when Wall Street billionaires were pouring money into so-called ‘Trump trades.’
Following his election victory, hedge funds rushed to capitalize on what they predicted would be a golden era for corporate America – buoyed by Trump’s aggressive tax cuts, tariffs, and deregulation policies.
The optimism led to an unprecedented influx of capital, pushing hedge fund assets to a record $4.5 trillion.
Fund managers were riding high, convinced Trump’s return to power would usher in a stock market boom.
But now in a shocking twist, those same hedge funds are now betting against the very economy they once championed.
And while hedge fund billionaires stand to make hundreds of millions from a stock market collapse, the real victims of this financial gamble could be everyday American investors.
Millions of workers rely on their 401(k)s and pension funds to secure their futures. Yet, as hedge funds place enormous bets on a Wall Street wipeout, these savings accounts could be the next to suffer.
The rapid shift in sentiment has raised red flags among financial analysts and sent alarm bells ringing on Capitol Hill.
‘The increase in short bets against U.S. stocks likely reflects concerns about macroeconomic uncertainty,’ warned Bruno Schneller, managing partner at Erlen Capital Management to the Daily Telegraph.
UBS analysts echoed the unease, with Karim Cherif, head of alternative investments, stating: ‘As the new year unfolds, uncertainties persist regarding Trump’s policies, the global economic trajectory, and central bank actions.’
Even Elliott Management, one of the world’s most influential hedge funds with over $70 billion in assets, has sounded the alarm.
According to the Financial Times, Elliott executives believe Trump’s policies are fueling speculative bubbles that could ‘wreak havoc’ if markets crash.
The message from Wall Street is clear: the market is on the edge of a precipice, and the fallout could be catastrophic.
Trump’s presidency has been bolstered by a small but powerful group of hedge fund titans who previously saw him as a key to unlocking corporate America’s full potential.
If a stock market collapse materializes, the very Americans who backed Trump’s economic promises could find themselves on the losing end of a financial catastrophe.
One major catalyst behind this hedge fund-driven market panic is the rise of Chinese AI powerhouse DeepSeek.
The company’s groundbreaking new chatbot, which launched last month, has shaken Silicon Valley to its core, sparking a massive sell-off in U.S. tech stocks.
DeepSeek’s parent company, High Flyer, is a Chinese hedge fund that uses sophisticated algorithmic trading to place massive bets on market trends.
Liang Wenfeng, High Flyer’s CEO and DeepSeek’s mastermind, is at the center of this financial storm.
His firm’s strategic bets, often placed at the exact right moment before U.S. markets suffer major losses, have raised suspicions of manipulation, insider influence, and geopolitical strategy at play.
If Wall Street’s most powerful investors see more promise in a weakening U.S. economy than a thriving one, the consequences for American workers and retirees could be catastrophic.
Furthermore, if there’s one thing Donald Trump has never tolerated, it’s disloyalty – and hedge funds turning against his presidency could put them squarely in his crosshairs.
Trump’s allies have already been warning of a crackdown on Wall Street excesses, and the latest short-selling frenzy may push him to take action against the financial elite who appear to be rooting for America’s economic downfall.