Trump's "Tariff Big Stick" Is About to Fall, and Global Hedge Funds Have Swiftly Fled U.S. Tech Stocks

As Trump's tariff hammer is about to come down this week, according to Goldman Sachs data, global hedge funds, known as the "smart money," sold U.S. tech stocks at the fastest pace in six months last week. Their exposure to U.S. tech stocks is now at the lowest level in five years.

 

The "Smart Money" Flees in a Hurry

 

Since U.S. President Trump's tariff policy is set to take effect this Wednesday (April 2nd), the global market has experienced a sharp decline in recent days. Whether it's Trump's import tariffs themselves, the possible retaliation from U.S. trading partners, or the large-scale spending cuts by the Trump administration, all have triggered concerns that the U.S. economy may slip into a recession.

 

Goldman Sachs stated in a recent client report that hedge funds fled tech stocks last week in a hurry, significantly reducing their long positions, but at the same time, they also exited their short bets on U.S. tech stocks.

 

The report said that tech giant stocks, including the so-called "Magnificent Seven" of U.S. stocks, "were the stocks with the largest net sales on the books last week."

 

On Monday, Eastern Time in the United States, analysts from Edmond de Rothschild Bank issued a report linking the downward trend of many such stocks to Trump's tariffs that are expected to take effect on April 2nd.

 

A report released by Morgan Stanley last Thursday also showed that hedge funds are increasingly shorting stocks, and NVIDIA, AMD, and Tesla were the three most shorted funds last Wednesday.

 

Hedge Funds Are Already Prepared

 

Goldman Sachs said that U.S. tech stocks accounted for about 75% of the selling last week, and the selling spree was mainly concentrated on companies that manufacture hardware related to artificial intelligence technology. Goldman Sachs said that after the selling last week, the total exposure of hedge funds to U.S. tech stocks is now at a five-year low.

 

Another set of data from JPMorgan Chase shows that hedge funds bought tech stocks in mid-March but sold them in large quantities last week. A report sent by JPMorgan Chase to clients last Friday said that strong retail buying may also have affected the positions of hedge funds.

 

The JPMorgan Chase report said: "As the news of tariffs approaches, interestingly, the flow and positions of hedge funds may indicate that they are already prepared – at least in the key areas they focus on."