Tariffs hit Wall Street — hard

One scoop to start: Activist hedge fund Elliott Management is increasing the pressure on oil refiner Phillips 66, kick-starting a proxy battle calling for “sweeping changes” at the US energy conglomerate.

Another scoop to start: President Donald Trump has suggested he could cut tariffs on Chinese goods if Beijing allows ByteDance, the Chinese owner of TikTok, to divest the hugely popular video sharing app to avoid a ban in the US.

In today’s newsletter: 

• Wall Street’s big tariff pain

• Market turmoil derails Vista deal

• Plaid’s valuation takes a hit

Trump’s tariffs rattle Wall Street

In early 2025, Bill Ackman converted a stock position of over $1.4bn in footwear giant Nike into call options.

The billionaire investor had proclaimed President Donald Trump’s return to the White House as the most “pro-business” and “pro-growth” administration in decades.

But the Pershing Square founder nonetheless used the trade to take money off the table on a footwear brand that was exposed to Trump’s planned tariffs.

US markets on Thursday plunged after the president unveiled the largest tariffs in about a century. Stocks fell the most since the early days of the coronavirus pandemic when the global economy was shuttered.

Ackman had not hedged his $16bn portfolio ahead of Trump’s announcement unlike in the early stages of the pandemic. He is now among legions of Trump supporting Wall Street luminaries who have seen their portfolios pummeled due to the tariffs announcement.

Thursday’s market sell-off was a long way from how attendees of the World Economic Forum’s conference at Davos anticipated this year would unfold.

Scores of billionaire investors and corporate titans predicted at the Swiss winter resort that the world would soon be subsumed by American exceptionalism. But they were wrong. 

Trump’s promise to unleash economically destructive tariffs has done just that. The tariffs announcement, branded “liberation day” by the White House, has caused deep pain across Wall Street.

Shares in some of the world’s biggest private capital groups were hammered. Apollo Global Management fell nearly 13 per cent while KKR plummeted more than 15 per cent. Blackstone’s stock fell nearly 10 per cent. 

The risks of inflation, a recession and freezing deal markets threaten to cause the private equity machine to stall anew after years of lacklustre activity and performance. 

Meanwhile, groups that had boomed during the private credit wave — like Ares Management and Blue Owl — also suffered as investors recalibrated growth expectations. Some dealmakers said rising loan defaults were on the horizon. 

The trading day was a painful reversal for the legions of financiers who had hyped up Trump’s second term in the White House as a business-friendly era that would turbocharge economic growth.

Some now think the economic picture looks positively dire.

Robert Koenigsberger, founder of emerging market-focused investment firm Gramercy Funds Management said the deluge of tariffs “increases the risk of a recession and materially increases the risk of stagflation”.

Yet there are some investors out there who have de-risked enough that they’ve made some money — or at least haven’t lost a ton. One of them is the Oracle of Omaha.

Warren Buffett’s Berkshire Hathaway barely traded down, slipping just over 1 per cent. 

He spent the past year dramatically cutting his exposure to equities such as Apple, and shifting into short-term Treasury bills. Apple shares fell more than 9 per cent on Thursday.

A jumbo private credit refinancing gets spiked

Vista Equity Partners was able to celebrate earlier this year when it refinanced some high-cost private credit debt on a portfolio company.

The leveraged buyout shop was hoping to catch lightning twice. But turbulence in financial markets as Trump ratcheted up his trade war has snarled Vista’s latest attempt.

The private equity group has shelved plans to refinance or pay off nearly $6bn of debt and preferred equity of portfolio company Finastra, the highly leveraged financial data company it owns.

The deal would have allowed Vista to refinance a $4.8bn private credit loan — which at the end of 2024 carried an 11.7 per cent interest rate — and recoup $1bn of its own money that it was forced to pump into Finastra in 2023 to obtain that private credit loan.

Finastra’s private credit loan is one of the largest outstanding and Vista’s push to secure the debt in 2024 became a flashpoint in markets. Lenders were only willing to extend credit if Vista invested its own money into the business.

Vista was forced to borrow against the value of one of its flagship funds to raise the cash, turning to a so-called net asset value loan. It was a novel financial manoeuvre and captivated the industry.

That’s why when markets rallied earlier this year, Vista dialled up its bankers at Morgan Stanley to try to rework the deal. The bank was successful in raising $2.5bn in the loan markets to refinance private credit debt for another Vista-backed company, known as Avalara.

But their efforts misfired for Finastra. 

Bankers initially pitched a $5.1bn senior loan with an interest rate just 3.75 percentage points above the floating rate benchmark, which would have yielded more than 8 per cent. 

They were willing to offer larger discounts and coupon payments on a $1bn junior loan, which Vista planned to use to redeem its preferred equity. 

As market volatility jumped, would-be buyers shied away and sources told DD’s Eric Platt and the FT’s Will Schmitt that the bank went pencils down. 

One banker who followed the Finastra deal said​ that after the balance of power favoured syndicated markets for the past half year​, “we’re going to see a pendulum swing back towards the private credit market​.”

Plaid’s valuation halves on new funding round

Rewind just a few years to 2021: interest rates were at rock bottom and in the era of easy money, investors threw cash at start-ups without a second thought.

Fintech founders thrived in this environment, building flashy tech outfits in the previously staid business of banking. Valuation multiples soared, and money poured in. 

At its peak in 2021, fintechs received more than $121bn from venture capital funds. Last year, that figure was just $29.5bn. 

But the mood music has now changed. Investors have withdrawn their wallets as interest rates have risen and fintech valuations are taking a hiding.

US-based Plaid is the latest victim of the high rate environment. 

The fintech, which helps consumers link their bank accounts to other websites and apps, announced on Thursday that it had its valuation slashed in half in its most recent funding round. 

Investors including BlackRock, Fidelity and Franklin Templeton put $575mn into the business, valuing Plaid at $6.1bn — less than half the $13bn it was worth when it last raised funds in 2021.

Plaid’s chief executive Zach Perret was candid when speaking to the FT. He said the company’s last fundraising round coincided with “the peak of the market” and added that since then, “tech multiples have massively compressed”.

Even still, some of the largest fintechs have increased their valuations recently. Revolut became Europe’s most valuable start-up last year with a $45bn valuation. 

It signals companies in the lossmaking open banking sector — which relies on data-sharing technology — haven’t picked up in the same way. 

Job moves

• Klaus Schwab, the founder of the World Economic Forum, will “start the process” of stepping down as chair of its board of trustees, weeks after the organisation promised an overhaul after an investigation into workplace discrimination.

• Goldman Sachs has named Heiko Weber and Trent Wilkins as co-heads of the bank’s real estate group in Emea. Weber previously focused on various real estate markets throughout Europe, while Wilkins was co-head of corporate investment grade origination in Emea.

• Morgan Stanley has hired Jon Swope and Mark Filenbaum as managing directors for the bank’s healthcare investment banking group, Bloomberg reports. Swope previously worked for Barclays, while Filenbaum previously worked at UBS.

• Kirkland & Ellis has hired Susan Burkhardt as a partner in the firm’s investment funds practice, where she’ll focus on credit funds. She previously worked for Clifford Chance. 

Smart reads

Bling, bags, booze US consumers are likely to be hit by the price rises across sectors from aviation to cars, the FT reports. Find out which goods will be hit first — and the hardest.

Reverse course Meet the lawyer who helped Trump’s in-laws, the Kushners, crack down on poor tenants, and who now helps renters fight big landlords, ProPublica writes. 

Cost analysis Is college still worth it economically? Yes, Bloomberg writes — but who it benefits the most shifts constantly. 

News round-up

Apple loses more than $300bn in market value from Trump tariff hit (FT)

Donald Trump’s sweeping tariffs ignite $2.5tn rout on Wall Street (FT)

Fitch downgrades China’s sovereign debt over spending and tariffs (FT)

Deloitte seeks to avoid liability over US nuclear fiasco (FT)

Oil slides as Opec+ lifts output and tariffs spark global growth fears (FT)