In mid-February, some of Wall Street’s most powerful investors and business titans — controlling hundreds of billions in personal wealth and trillions in assets — lined up like teenagers before a rock concert.
The headliner was Donald Trump. In a cramped Miami Beach auditorium, plutocrats and CEOs waited up to three hours for the president’s first in-person address to the business world at a Saudi-backed conference.
The crowd, which included Vista Equity’s Robert Smith, Bridgewater CEO Nir Bar Dea and Apollo co-founder Josh Harris, roared when the US president finally strode onstage, an hour late.
“If you want to build a better future, push boundaries, unleash breakthroughs, transform industries and make a fortune,” the president said. “There is no better place on Earth than the current and future United States of America under a certain president named Donald J Trump.”
The soaring financial markets seemed to bear that out. The “animal spirits” of America’s financial elite were set to be unleashed after four years of feeling scrutinised and needled by the Biden administration.
Few were worried by the edgier elements of Trump’s speech, like his threat to impose reciprocal tariffs on any country he felt treated the US unfairly. “Not a single person mentioned the word recession or depression,” said one attendee connected to Trump at the time. “I think it sends you a very strong signal of the optimism and the realism of business leaders and investors.”
Less than eight weeks later, the tables have turned. Those who witnessed Trump’s speech are now in damage-control mode as the trade war he unleashed on April 2 has destabilised financial markets and caused fears of inflation and a looming recession.
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But even before then, the finance sector was reeling. Corporate takeovers are down the most in about a decade, elite law firms have come under fire from the White House and consulting giants have lost their government contracts. Companies from Delta to Walmart have scrapped their profit outlooks. Many fear the tariffs will now dramatically slow America’s economic engine.
“We didn’t believe him. We assumed that someone in the administration that had an economic background would tell him that global tariffs were a bad idea,” one Wall street executive says. “We are in for a roller-coaster ride.”
It is a recognition that even many of Trump’s most ardent supporters in the business world have misread how determined the 78-year-old president was to radically overhaul US economic policy and reverse decades of globalisation. Countless times on the campaign trail, Trump and his closest advisers had said they would not craft policies to satisfy the country’s wealthiest residents.
JD Vance, his pick for vice-president, made it clear during the Republican convention in July: “President Trump’s vision is so simple and yet so powerful. We’re done, ladies and gentlemen, catering to Wall Street. We’ll commit to the working man.”
Meanwhile, US Treasury secretary Scott Bessent, himself a former hedge fund manager, has also repeatedly echoed that sentiment. In March, he said on CNBC that “Maga doesn’t stand for ‘Make M&A Great Again’”.
The tariff announcement proved to be a critical juncture for Wall Street. Over the course of just two days, the S&P 500 lost more than $5tn in value. In a stark contrast to Trump’s obsession with the stock market during his first term, the president at times shrugged off reporters’ questions, stating he had not checked in on markets as a sea of red washed over Wall Street.
When the stocks of powerful financial institutions such as BlackRock, Apollo and JPMorgan began to fall, the narrative coming from the White House changed. Karoline Leavitt, the White House press secretary, said: “To anyone on Wall Street this morning I would say trust in President Trump.”
It began to dawn on the country’s highest-paid bankers, lawyers and executives that the new administration did not care if the gilded palace of high finance suffered cracks to its foundation from the country’s new trade policy.
Most kept quiet, privately grumbling about not just the high rates but the opaque, erratic way they were calculated. But billionaire hedge fund managers like Bill Ackman, Dan Loeb, and Cliff Asness aired their frustrations on X, while Trump’s former commerce secretary Wilbur Ross told the FT: “It’s a fairly unconventional way of measuring tariffs.”
Some spoke more plainly. “He wants to end the global trading system and weaken the US. He wants to Brexit the United States from the rest of the world,” Anthony Scaramucci, the founder of investment firm SkyBridge Capital who was briefly Trump’s White House communications director during his first term, says. “This is the stupidest economic policy that the United States has ever come up with.”
The business elite initially saw tariffs as the price to pay in order to gain other benefits from a Trump White House, including lax antitrust enforcement and big tax cuts.
Yet Trump’s readiness to rattle Wall Street by escalating a trade war has sown lasting distrust and raised fears that the financial models guiding business can no longer predict what comes next, more than a dozen investors and executives tell the FT.
“Given our state of ignorance and all we don’t know, [investing now] is like betting on the outcome of the Super Bowl when you don’t know which teams are playing or who any of their players are,” Howard Marks, the co-founder of Oaktree Capital, says. “Investing is largely based on the assumption the future will look like the past and that assumption appears to be more tenuous than usual.”
As the son of a real estate developer in New York and a graduate of the prestigious Wharton business school, Trump has long cultivated a personal relationship with Wall Street. But it has often been fraught.
Trump regularly felt sidelined by Wall Street’s uppermost echelons, say those who know him. The financial elite shunned him in the 1980s when he needed their help to finance real estate projects, or mocked him for being a lightweight celebrity, says a person close to the president who is not allowed to speak on the record. “Trump was never going to be Wall Street’s president.”
Yet in his first term, Trump brought the finance sector into the heart of his administration. He appointed Goldman Sachs veterans Steven Mnuchin and Gary Cohn as Treasury secretary and chief economic adviser respectively.
He also convened a group called the Strategic and Policy Forum that included Wall Street titans like JPMorgan’s Jamie Dimon, BlackRock’s Larry Fink, and Blackstone’s Stephen Schwarzman. Trump regularly held court with them, often under the spotlight of TV cameras.
But that relationship soured during his presidency and the Capitol riot on January 6 2021 marked a clean break. Schwarzman, who chaired Trump’s business forum, called the insurrection “appalling”. Other financiers echoed his condemnation, and the industry began to distance itself. In 2022, Schwarzman said it was time for “the Republican party to turn to a new generation of leaders”, signalling he would not back Trump in 2024.
Trump allies noticed the snub. “These guys never took him seriously,” one veteran financier close to Trump says. “Where was most of Wall Street when Trump was getting attacked by judges over the past four years? Who did Wall Street pick during the campaign? Kamala Harris, not Trump. Why should he care about Wall Street now?”
That opposition to Trump only vanished once it appeared he could win in 2024. Schwarzman came back on board in May that year, calling a vote for Trump “a vote for change”. Others followed.
After the 2024 victory, Goldman CEO David Solomon said he was “quite optimistic” about Trump’s pro-growth agenda. Dimon defended the new tariffs as a national security measure, telling CNBC that people should “get over it”.
Private equity firms that had backed Trump’s rivals donated millions to his inauguration fund in the hope of regaining influence.
But few today have the president’s ear. “Trump has surrounded himself with an echo chamber,” says the head of a private investment firm. “Except for Bessent, there are no real people, no opposing views. It’s a far cry from when Gary Cohn brought balance.”
Trump himself has shown he is willing to target those perceived to have shown insufficient loyalty. His instinct for retribution is clearest in his battle with top law firms. The FT estimates that Paul Weiss, Skadden Arps and others have been pressured into providing almost $1bn in pro bono work for causes favoured by the administration, worried that crossing the White House could cripple their businesses.
Top executives are now particularly careful with their words, given an off-the-cuff comment could inspire a rebuke from the White House.
“They’re afraid of him . . . They don’t want to end up with any legal action against their bank or their family. And they’ve been told by their boards: keep your mouth shut,” says Scaramucci. “By the way, we don’t even have law firms that can defend you because every major law firm just got dunked on by the president.”
Michael Cembalest, the chair of market and investment strategy at JPMorgan, hinted at this chilling effect during a presentation to clients this month. “This is the first time I’ve ever had to do a call where I had to think about the things that I was saying, not just in terms of how they reflect our views on markets and economics,” he said at the end of the presentation.
“I had to think about how they might reflect on the firm and some of its colleagues at a time when people are being held accountable for their views and the things that they say in ways that they probably shouldn’t be.”
BlackRock chief executive Larry Fink declined to answer a question last week at an Economic Club of New York event that sought his views on Trump’s use of executive orders to attack law firms, including BlackRock’s go-to legal adviser, Skadden. “Let’s move on,” the head of the world’s largest asset manager said.
The chilling effect has raised the spectre that Trump, a president known for his unpredictability and dealmaking, is impervious to being influenced.
Those who know Trump say the finance sector simply misunderstands what is driving his agenda this time around.
“He wants to do all of that stuff — cut taxes, deregulate, facilitate deals — but he wants to do it to help the people who got him elected, people who live in towns that guys in New York don’t even know exist,” says a second person close to Trump, who is not permitted to speak publicly. “He’s a populist serving the people.”
When Trump decided to backtrack on the tariffs, it was not because Wall Street royalty had pulled his strings.
By sunrise on April 9, global financial markets were in freefall and the president had noticed. Bond markets “were getting a little bit yippy, a little bit afraid”, Trump later said, admitting that he had been closely watching the growing turmoil.
One powerful financier did manage to reach him. That morning, JPMorgan chief Dimon made a gentle but ultimately convincing argument as to why the president should pause his trade war. But Dimon had connected with Trump not in a private conversation at Mar-a-Lago, or the White House. He had gone on Fox Business News.
Market conditions had gone beyond adverse to hostile. “The fact that the bond market was moving in the alarm direction rather than the insurance direction was the big pattern breaker that had everyone on Wall Street at a very different level of worked-up,” says Lawrence Summers, the former Treasury secretary and ex-president of Harvard University.
US government bonds were suddenly trading in a pattern that resembled the debt of an emerging market, he adds. The dollar was weakening at the same time.
The bond market rupture stemmed in part from hedge funds in Japan and the US unwinding risky “basis trades” on Treasury bonds — an obscure, highly leveraged strategy long flagged as a potential trigger in times of panic. Meanwhile, spooked by Trump’s combative stance, foreign investors began pulling money from the US.
Cracks were showing elsewhere. Lending markets typically used by lowly rated companies and private equity firms froze over, and even blue-chip conglomerates got shut out of the bond market — a rarity.
After a week of turmoil, the president hit partial pause on his reciprocal tariffs. “Trump is fine with Wall Street taking a hit, but he doesn’t want the whole house to come down,” a person close to Trump tells the FT.
The fact that it was the markets that forced Trump’s hand underscores that his fate remains closely linked to the fortunes of the financial elite, even if they continue to be sidelined in his administration.
Even as Trump moves to reshape global trade, he faces other landmines in the financial system. The $13tn private capital industry, which controls a rising share of the US economy and employs more than 10mn Americans, is built on debt. Years of leverage have left vast swaths of small and mid-sized companies fragile and highly exposed to shocks.
With growth slowing and inflation rising, private equity firms are likely to respond by slashing costs and jobs, deepening the economic pain. Default rates are climbing and could soon jump, triggering a wave of bankruptcies. Large pension funds, heavily invested in private markets, may also come under stress.
Trump says he’s willing to endure the economic pain to see his plans through. “THIS IS AN ECONOMIC REVOLUTION AND WE WILL WIN,” he posted on social media on April 5.
The White House said in a statement on Monday that “the only interest guiding President Trump’s decision making is the best interest of the American people”.
But markets are already pushing back: bond yields remain elevated, the dollar has tumbled, and his financial footing looks increasingly shaky.
“It’s very clear that reassurance has not been achieved,” says Summers. “The dollar plummeted on [April 10 and 11], yields are at very high levels. People are waiting for more shoes to drop.”
The future, for now, looks volatile. “[‘Liberation day’] was a sort of fundamental hit to Wall Street’s trust and confidence that they could predict at all what the administration would do,” says Joseph Foudy, an economics professor at NYU Stern School of Business. “They now realise that all of it is fundamentally uncertain and unpredictable.”
