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Wall Street Warnings: Hedge Fund Titans Sound the Alarm
Danny Riley
June 02, 2025
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Our View
It’s hard to overlook what some of the top hedge fund owners are saying about the U.S. economy, the dollar, and the Treasury markets. My desk executed S&P and S&P options business for 3 out of 5 of the most influential hedge fund managers in the world.
Ken Griffin, CEO of Citadel, has expressed deep concern about the U.S. economy, warning that President Trump’s aggressive tariff policies are eroding America’s global financial reputation and risking long-term damage. At the Semafor World Economy Summit, he highlighted that tariffs—what he calls a “painfully regressive tax”—threaten economic growth by raising costs for working-class Americans and deterring investment in U.S. manufacturing. Griffin fears a potential recession, noting that the U.S. dollar’s value has declined, making Americans “20% poorer” in just weeks. He criticizes the volatility caused by “bombastic rhetoric” and trade disruptions, which he believes undermine confidence in U.S. Treasuries and the dollar’s brand. Despite supporting Trump’s deregulation efforts as a “godsend,” Griffin urges a more thoughtful approach to preserve economic stability.
David Tepper, founder of Appaloosa Management, maintains a cautiously optimistic view of the U.S. economy, citing its resilience despite global uncertainties. In a September 2024 interview, he noted that easy monetary policies and a relatively strong economy make it risky to bet against U.S. markets, though he finds valuations unattractive. He warns that Federal Reserve rate cuts could inflate asset prices, potentially echoing 1990s bubble risks. Tepper favors selective investments—particularly in technology and AI—but remains wary of overvalued U.S. stocks compared to undervalued Chinese equities. He anticipates market volatility driven by trade policies and fiscal stimulus, advising a balanced, long-term approach.
Stanley Druckenmiller remains wary of the U.S. economy, citing unsustainable fiscal policies and ballooning national debt as major risks. He warns of persistent inflation, driven by excessive government spending, potentially leading to a stagflationary environment reminiscent of the 1970s. Druckenmiller criticizes the Federal Reserve’s loose monetary stance, suggesting it could exacerbate market volatility and delay a necessary correction. He sees limited growth potential for broad U.S. indices like the Dow Jones and advocates for selective investments in technology and AI-driven sectors. Despite short-term resilience, he urges caution, predicting a challenging decade unless structural reforms address the debt crisis.
Paul Tudor Jones, founder of Tudor Investment Corporation, has a bearish outlook on the U.S. economy, warning of significant market and fiscal challenges. In an interview last month, he predicted stock market declines to new lows, even if President Trump reduces China tariffs by half, due to high tariffs and a Federal Reserve unlikely to cut rates soon. He attributes economic strain to a "debt bomb" from unsustainable fiscal deficits, potentially triggering a bond market sell-off and higher interest rates. Jones remains concerned about inflation, favoring commodities, gold, and Bitcoin as hedges against fiscal recklessness. He suggests that without major policy shifts, the U.S. could face a "Minsky moment" of financial instability.
Warren Buffett, the legendary investor, remains cautiously optimistic about the U.S. economy, emphasizing its long-term resilience despite short-term challenges. At the Berkshire Hathaway 2025 shareholder meeting, he stated, “The long-term trend is up,” highlighting America’s unmatched capital-producing machine, though he warned of unpredictable near-term market moves. He expressed concerns about protectionist trade policies, particularly tariffs, which he views as potential “acts of war” that could harm the economy by raising prices and risking trade wars. Buffett predicts a possible stock market bubble in this year, advising investors to focus on stable businesses and broad-based index funds like the S&P 500 to counter volatility. His massive $347 billion cash pile reflects a defensive stance, signaling caution but readiness to seize opportunities in undervalued assets.
My desk actually took David Tepper’s first orders in the S&P futures. A guy at the desk explained that when he called, he had to say “I want to bid 870.00 for 100 lots” when he wanted to buy and use the word “offer” when he wanted to sell. We also did some of Tudor’s orders in the weeks leading up to the ’87 Crash. We did some Citadel orders in the S&P options. I never worked with Druckenmiller, and Buffett’s trading desk didn’t do any futures.
I think the economic and geopolitical situation has changed so much, so fast, it’s very hard to rule out some very tough economic times ahead. Is the S&P going to reverse and make new lows like Paul Tudor Jones thinks?
The top five U.S. banks—JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, and U.S. Bank—forecast a weakening U.S. dollar through late 2025, driven by trade disruptions from Trump’s tariffs. JPMorgan estimates EUR/USD at 1.08 and GBP/USD at 1.32 by Q4. JPMorgan and Bank of America highlight tariff-induced volatility and potential U.S. growth slowdowns (projected at 2%) as key pressures, with the DXY index already down 9% year-to-date by May 2025.
Wells Fargo and U.S. Bank expect continued dollar softening if tariffs (25% on Canada/Mexico, 10% on China) persist, though safe-haven demand may limit declines. These forecasts echo hedge fund leaders like Griffin and Druckenmiller, who warn of tariff-driven dollar declines and stagflation risks, signaling a turbulent dollar trajectory.
Yet U.S. Commerce Secretary Howard Lutnick downplayed the impact of legal uncertainty around U.S. tariffs on negotiations with the European Union during an interview on Sunday, saying talks were ongoing: “You can't listen to silly people making silly comments. All of the countries that are negotiating with us understand the power of Donald Trump and his ability to protect the American worker.”
As a trader, one of the biggest rules is learning to adapt to changing economic and geopolitical environments. If you take all of Trump’s approval polls and add them up (like I did) from April to the end of May, Trump has a 43.6% approval rating and 53.4% disapprove.
It doesn’t matter how old you are, we’ve all heard it a million times, especially during the quantitative easing periods following the 2008 Credit Crisis and the 2020 COVID-19 pandemic: there was never a plan to pay back the deficit. Everyone knew we were just kicking the can down the road, doing nothing about it until it blows up.
Between the U.S. and the Euro area, they account for over 60% of global cross-border debt portfolios. Emerging markets and developing countries represent less than 7%, with many individual countries accounting for only a fraction of a percent.
In conclusion, like I’ve always said—I’m just an old floor guy that’s seen a lot in my time, but I’ve never seen the likes of where we are today. I always write the Opening Print the same day as the trading day and try my best not to change it, but on occasion, I may add some current affairs.
Around 8:00 PM Sunday, headlines hit that a Ukrainian drone attack had destroyed more than 40 Russian planes deep in Russian territory. News reports say that Ukrainian President Volodymyr Zelenskyy personally supervised the attack, which took more than a year and a half to execute. It took place just before a new round of direct peace talks in Istanbul.
The Week Ahead - Week of June 2, 2025
Economic Calendar
Monday (6/2):
• S&P Manufacturing PMI (Final, May) – 10:00 AM EDT
• ISM Manufacturing PMI (May) – 10:00 AM EDT
• Construction Spending (April) – 10:00 AM EDT
Tuesday (6/3):
• Factory Orders (April) – 10:00 AM EDT
• JOLTS Job Openings (April) – 10:00 AM EDT
Wednesday (6/4):
• ADP Employment Report (May) – 8:15 AM EDT
• ISM Services PMI (May) – 10:00 AM EDT
Thursday (6/5):
• Initial Jobless Claims (Week ending 5/31) – 8:30 AM EDT
• Trade Deficit (April) – 8:30 AM EDT
Friday (6/6):
• Employment Situation Report (May) – 8:30 AM EDT
• Consumer Credit (April) – 3:00 PM EDT
Fed Speakers – Monday (6/2):
• Fed Chair Jerome Powell – 1:00 PM EDT (Economic conference, TBD)
• Dallas Fed President Lorie Logan – 10:15 AM EDT (Monetary policy panel)
• Chicago Fed President Austan Goolsbee – 12:45 PM EDT (Virtual Q&A)
Treasury Auctions:
Monday (6/2):
• 13-week T-Bill – 11:30 AM EDT ($70B–$80B)
• 26-week T-Bill – 11:30 AM EDT ($70B–$80B)
Tuesday (6/3):
• 3-year T-Note – 1:00 PM EDT (~$40B)
Wednesday (6/4):
• 17-week T-Bill – 11:30 AM EDT (~$30B)
Our Lean
The ES and NQ have rallied, but the shift out of the U.S. stock market to Europe is stunning. Rather than copy the story, I am providing you with a Bloomberg article titled "Europe Stocks Stage World-Beating Rally as Trade War Backfires"
The U.S. vs. the Stoxx 600 is the widest it’s been since 2023.
Our lean: I think the ES should come in lower, but I don’t think they stay down very long. The concern right now is how Putin will respond to losing 40 planes in the most recent drone attack. If the ES gaps down hard, I will be looking to buy the open or the early weakness. Should the ES open higher, I would be looking to sell the early rallies and buy the dumps, and if it opens flat, I’ll be looking at the Globex low as an initial support level.
According to the Stock Trader’s Almanac, the summer rally in most cases is the weakest rally of all four seasons, and the week after the June Triple Witching day, the Dow has been down 27 of the last 23, but more recently, the S&P has been up 13 / down 8 in 21 occasions. June also ends the best six months for the NASDAQ.
SpotGamma - Guest Post
Market Stuck in Neutral – Yet Again
Despite headline fireworks and month-end flows, the market finds itself circling the same key levels that we've seen on repeat.
This last shortened week and NVDA earnings have yet again left us with a sense of “well, what-now?”
With yet again in mind, let's take a look at exhibits (A) and (B) below.
After an impressive earnings announcement, and strong post-earnings price action, NVDA is basically unchanged to close the week giving us that “yet again” vibe at $135.
NVDA has clearly made a stark recovery since the initial tariff announcements in early April, but it has struggled to find strong support breaking out above $135. Considering the tech behemoth started the month at $112, it’s hard to find fault with the short-term price appreciation of ~20%.
The big question for NVDA is whether June will bring about new positioning to reset this rally-and-consolidation cycle, or if the closing of May positions yet again prolongs this back-and-forth price action that we’ve seen much of this last quarter.
From Wednesday onward this last week, the SPX 5,900 level was mentioned 6 times in SpotGamma's AM Founder's Notes. If you give enough leeway to consider SPX 5,905 basically the same thing, that count goes to 9, as we really isolated end-of-month positioning with TRACE and Friday’s AM note.
SPX 5,900 was the epitome of “yet again” all week.
However, if you were to only look at the close-to-close you would miss several things. In the Friday AM note we touched on how the price swings were greater than one might expect. Within Thursday's AM note we discussed the large negative gamma towards 5,950. That strong rejection back to 5,900 from the open happened before the first hour of market open was even over.
Given the thin negative gamma and downside price pressure, it’s no coincidence that we’d find strong support at the local positive gamma on the map.
As seen from the above screenshot of TRACE, SPX failed to really hold above 5,950 and closed at 5,911. This begs the question as we head into a new week and new month... “Will we see SPX 5,900 – yet again?”
I leave you with a quote from the Friday PM note:
“Ultimately we head into next week with the SPX and IV/VIX both at "fair value" given the big positive gamma at 5,900, and vol sitting just atop 1-month realized levels.”
MiM and Daily Recap
The S&P 500 futures (ES) closed out the month of May with volatile swings, ultimately finishing lower on Friday despite a powerful late-day rally. The Globex session began with a modest drift, reaching a high of 5923.00 at 1:40 AM ET. Pre-NYSE market bounced to 5921.50 at 8:05 AM, then sharply declined, establishing a session low of 5876.50 by 8:10 AM, marking a 45.00-point (-0.76%) drawdown from the prior swing high.
Following that pre-market flush, the ES rebounded into the regular session open, tagging 5912.75 by 9:30 AM, only to reverse swiftly lower again. A second push to new lows occurred at 9:50 AM, printing 5885.00 before buyers returned. The index then staged a solid recovery into 10:35 AM, peaking at 5920.50 with a 35.50-point advance (+0.60%) off the low.
Yet, the back-and-forth continued. Another pullback brought the ES down to 5898.75 by 11:30 AM, followed by a brief rally to 5915.00, also at 11:30 AM. Sellers quickly stepped back in, leading to a deeper afternoon decline, culminating in a session low of 5853.25 at 12:30 PM, the lowest print of the day and a 61.75-point (-1.04%) drop from the previous high.
From there, a persistent and orderly rally took hold. The ES climbed steadily throughout the afternoon, eventually reaching the intraday high of 5932.75 at 3:35 PM. This represented a remarkable 79.50-point (+1.36%) reversal from the midday trough. The market closed the regular session at 5914.75, up 4.25 points from the open (+0.07%), but still down 8.50 points (-0.14%) from the previous day’s cash close. The full session volume came in at 1,547,745 contracts.
Market Tone & Notable Factors
The tone throughout the session was two-sided and reactive, with bears dominating the early and midday stretches, while bulls seized control into the close. Despite the final hour rally, the ES ended lower on a cash-to-cash basis, reflecting lingering caution among investors.
Notably, the Market-on-Close (MOC) imbalance data revealed a strong buy-side presence, with $6.91 billion in total paired off at the close, of which 72.7% was on the buy side. However, the symbol imbalance closed at 59.7%, below the 66% threshold needed to be considered extreme. The late ramp in price likely reflected some anticipatory buying into this sizable closing flow, but not an aggressive enough imbalance to maintain prices above earlier highs.
In summary, the session exhibited classic rotation: heavy early selling, a sharp afternoon bounce, and strong close-related flow. Bulls managed to regain significant ground but fell short of reclaiming the prior day’s highs. With a strong MOC and heavy turnover into month-end, the market sets up for potential follow-through action in June, though overhead resistance near 5932.75 may remain a hurdle.
Technical Edge
Fair Values for June 2, 2025:
SP: 9.74
NQ: 39.38
Dow: 62.75
Daily Breadth Data 📊
For Friday, May 30, 2025
NYSE Breadth: 46% Upside Volume
• Nasdaq Breadth: 36% Upside Volume
• Total Breadth: 38% Upside Volume
• NYSE Advance/Decline: 44% Advance
• Nasdaq Advance/Decline: 40% Advance
• Total Advance/Decline: 42% Advance
• NYSE New Highs/New Lows: 57 / 40
• Nasdaq New Highs/New Lows: 81 / 94
• NYSE TRIN: 0.85
• Nasdaq TRIN: 1.14
Weekly Breadth Data 📈
For the Week Ending May 30, 2025
• NYSE Breadth: 54% Upside Volume
• Nasdaq Breadth: 59% Upside Volume
• Total Breadth: 57% Upside Volume
• NYSE Advance/Decline: 68% Advance
• Nasdaq Advance/Decline: 60% Advance
• Total Advance/Decline: 63% Advance
• NYSE New Highs/New Lows: 153 / 59
• Nasdaq New Highs/New Lows: 278 / 204
• NYSE TRIN: 1.73
• Nasdaq TRIN: 1.02
Calendars
Today’s Economic Calendar
This Week’s Important Economic Events
Today’s Earnings
Recent Earnings
Room Summaries:
Polaris Trading Group Summary Friday, May 30, 2025
Friday was a Cycle Day 2 marked by a quiet opening range and a clear focus on Capital Preservation. PTGDavid guided the room with a conservative, rhythm-based strategy, noting EOM (End of Month) window dressing influences and the likelihood of whip-saw action ahead of the weekend. As expected, there was volatility, but traders stayed aligned with context, executed disciplined trades, and managed risk effectively.
Key Trades & Market Highlights:
Early OPR Trades:
@NQ Short and @CL Long positions were called by PTGDavid right out of the gate (9:36 AM), aligning with quiet range behavior and capital preservation themes.
Emphasis was placed on MATD rhythms and protecting capital heading into month-end.
Data Reaction:
Chicago PMI came in weak (40.5 vs. 45 forecast), reinforcing caution in risk-taking and supporting the day's defensive tone.
Strong Bull Play:
@10:03 AM, slatitude39 took a long at 5901, citing a “bull stacker” at 5903. This trade was well-noted and praised, particularly in context with market structure.
Afternoon Price Target Fulfilled:
At 3:32 PM, PTGDavid confirmed target 5930 hit, fulfilling the bull scenario that called for price to sustain a bid above 5920 and target the 5930–5935 zone.
End-of-Day Surge:
The Power Hour lived up to its name:
Window Dressing effects were noted and visually shared by David.
Massive MOC buy imbalance of $3B added to the bullish finish.
Lessons & Takeaways:
Cycle Day Awareness: Recognizing and respecting Cycle Day context (CD2) helped maintain proper expectations and trading posture.
Discipline Over Aggression: With volatility expected, the focus was wisely placed on rhythm and preservation rather than pressing trades.
Chart Logic & Structure: Several members (notably slatitude39, Barbara Lopez, and John B) emphasized the value of consistently using market structure and logic in trade planning.
Community Engagement: Lively and supportive participation helped reinforce trading confidence and technical clarity.
Closing Thoughts:
The session closed on a positive note with confirmed targets and disciplined risk management. Friday served as a strong example of how experienced traders operate within a structured framework, adapt to macro conditions, and lean into the collective wisdom of the PTG community.
DTG Room Preview – Monday, June 2, 2025
Market Recap & Outlook: The S&P 500 rose over 6% in May, marking its best May in 35 years. Key focus this week is Friday’s May jobs report—investors are watching for early signs of labor market strain from evolving U.S.-China trade tensions.
Trade War Developments: Last week’s tariff volatility added to market uncertainty. Trump announced a doubling of steel tariffs and accused China of breaching trade agreements. In response, China cited new U.S. restrictions on AI chip exports and student visas as violations.
Global Performance: European equities are outperforming—8 of the top 10 global markets are in Europe, led by Germany’s DAX (+30% YTD). The Stoxx 600 is ahead of the S&P 500 by a record 18% in dollar terms.
Earnings Update: Earnings season winds down with CRWD, AVGO, DOCU, and LULU reporting this week. S&P 500 Q1 earnings growth is at 13.3%, with the Mag-7 leading at 27.7%.
Today’s Calendar:
Data: S&P Global Manufacturing PMI (9:45am ET), ISM Manufacturing PMI & Construction Spending (10:00am ET).
Fed Speakers: Logan (10:15am), Goolsbee (12:45pm), Powell (1:00pm).
Earnings: SAIC and WDS premarket.
Technical Levels:
ES remains in a short-term uptrend. Support zones: 5849/52, 5814/17.
Resistance levels: 6078/83.
The ES is hovering around its 200-day MA (5894.50); potential resistance if bears gain momentum.
Other Notes: Volatility ticks higher (ES 5-day ADR at 102 points); no significant overnight whale activity.
