The hedge fund cut positions at the fastest pace in years as soft economic growth tariffs and signs sent stocks on a roller coaster. Professional money managers who make both long and short bets sell stocks on Friday and Monday, reducing risk exposure by dramatically covering their shorts. Data from Goldman Sachs’ Prime Brokerage unit shows that the so-called degrowth activity was the largest two-day movement in four years. Hedge funds were retreating when the macroeconomic environment was suddenly growing. President Trump’s aggressive tariff claims and sudden changes in policy on imports into the US have stimulated Wall Street volatility, robbing fears of a decline in consumer spending, slowing economic growth, declining profits and even a recession. The .SPX YTD Mountain S&P 500 S&P 500 has dropped by around 9% from its recent peak, approaching an amendment before Wednesday’s soft inflation report triggered a small relief rally. Brad Gerstner, founder and CEO of Altimeter Capital, said hedge funds’ net pure exposure was exposed to the bottom of the company’s usual risk exposure. “We have high economic uncertainty, high political uncertainty, high technology uncertainty. Only one thing can happen,” Gerstner said in CNBC’s “Squawk Box.” “The discount rate needs to rise. The risk premium needs to rise. So, for us, saying, ‘go on the sidelines to wait for this’, there was a risk-off flow on Friday and Monday, and according to Goldman data, we experienced record flows. Goldman’s chief US equity strategist David Costin moved his year-end S&P 500 from 6,500 to 6,200 on Wednesday.
