Do They Know Something We Don’t? Hedge Funds Betting On Market Crash
By Michael Snyder/Economic Collapse Blog February 03, 2025
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Do they know something that we do not? All of a sudden, hedge funds are betting billions of dollars that the stock market is going to crash. If they are wrong, they will lose a ton of money, but if they are correct they will make absolutely enormous profits.
So why are they feeling so confident that a stock market collapse is in our future?
Without a doubt, the real economy has been moving in the wrong direction for quite some time, but for years there have been relentless efforts to keep the financial markets propped up. Could it be possible that there is a scenario in which the financial markets will simply be allowed to fail at some point?
What we are witnessing at this moment is truly strange. We are being told that hedge funds are "making a multi-billion-dollar gamble" that there will be a "massive market crash"...
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.
The big hedge funds consistently make money because they are right most of the time.
So the fact that they are anticipating some sort of a crash is extremely alarming.
According to Goldman Sachs, the amount of money being poured into short bets is absolutely staggering...
Data from Goldman Sachs show there has been a surge in "short" bets against US stocks, meaning traders will make money when they fall in value, in a sign of growing concerns about the market.
In January, investors have placed 10 times more bets on US stocks falling than equivalent bets that shares in leading American companies would rise, the investment bank said.
As I noted earlier, if the hedge funds are wrong they stand to lose big.
But if they are right, the are poised to "make hundreds of millions from a stock market collapse"...
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.
It certainly won't take much to push the financial markets over the edge.
Those that are propping up simply need to stand aside.
So why would they do such a thing?
Perhaps the goal would be to send a message to President Trump that they don't like the tariffs that he is imposing...
President Trump on Saturday signed an executive order that imposes 25% tariffs on imports from Canada and Mexico, while adding an additional 10% levy on goods from China. Canada responded hours later with retaliatory tariffs of its own, while Mexico said it was also planning to issue tariffs on the U.S. as well.
China's commerce secretary said that China would challenge the tariffs through the World Trade Organization, according to Reuters, claiming that the move "seriously violates" WTO rules.
In an ominous post on Twitter, Harvard Professor Jason Furman suggested that Trump would soon be forced to back off because of what will happen to the financial markets...
Less than 2 weeks in and 25% tariffs our close allies + 10% on China.
Plus a (credible) promise that they will go even higher when there is (inevitable) retaliation.
It's hard to decide if this is worse economic policy or foreign policy.
We'll see if Trump caves to the market.
Does Furman know something?
It is certainly true that these tariffs will be disruptive.
At this stage, even President Trump is admitting that these tariffs could cause "some pain"...
President Donald Trump warned there could be "some pain" after signing executive orders that imposed stark tariffs on imports from Canada and Mexico and a 10% duty on imports from China, targeting three of America's key trade partners.
"THIS WILL BE THE GOLDEN AGE OF AMERICA! WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!)" Trump wrote in an all-caps post on Truth Social Sunday morning defending the tariffs. "BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID."
In response to the tariffs that we have slapped them with, the Canadians have decided to impose high tariffs on many of our goods...
Outgoing Canadian Prime Minister Justin Trudeau said late on Saturday that Canada will respond by placing 25% counter-tariffs on C$155 billion ($107 billion) worth of American-made products, with items including beer, wine, bourbon, fruits, fruit juices, vegetables, clothes, perfume, household appliances, plastic, and lumber subject to tariffs. Canada is going especially hard after alcohol produced in Republican states...
If this trade war goes on for an extended period of time, there will be very serious consequences all over North America.
But Mexico and Canada will feel more pain than we do...
As the first North American trade war begins, some analysts say Mexico and Canada stand to lose more than the United States. The impact on those economies of a three-way tariff conflict could be several times larger than in the United States, which is much less dependent on trade, according to an analysis by S&P Global Ratings.
Mexican manufacturers in the auto and electrical equipment sectors could see significant output declines once tariffs take hold, according to a S&P Global Ratings analysis.
In Canada, the biggest losers are likely to be makers of paper products, rubber and plastics.
If you live in Mexico or Canada, brace yourself, because economic conditions are about to change very rapidly.
Interestingly, all of this economic uncertainty has caused the price of gold to spike, and it has also created "a lucrative arbitrage opportunity" for the big banks...
Fears of imminent tariffs on imports following the election of US President Donald Trump have caused prices for gold futures on Comex to surge over spot prices in London. Spot prices shot to record highs this week, but the additional premium on Comex has created a lucrative arbitrage opportunity for the handful of banks that can quickly fly bullion between key trading hubs.
One of the big banks that is taking advantage of this "lucrative arbitrage opportunity" is JPMorgan...
JPMorgan Chase & Co. will deliver gold bullion valued at more than $4 billion against futures contracts in New York in February, at a time when surging prices and the threat of import tariffs are fueling a worldwide dash to ship metal to the US.
We were warned that economic chaos would be coming, and now it is here.
And the large hedge funds are lining up to profit from it.
It has been said that if you want to know what is really going on, just follow the money.
In this case, it is telling us that enormous turmoil is on the horizon.
Originally published at The Economic Collapse Blog
