Wall Street’s rally is looking fragile to some of its biggest beneficiaries. Bill Harnisch - whose Peconic Partners has surged 580% since 2020 and is up 52% in 2025, roughly triple the S&P 500’s gain - says the market feels one shock away from a hard break.
With $2.7 billion under management, he’s bracing for a deeper drawdown if a negative catalyst lands.
That anxiety flared Friday after President Donald Trump floated “massive” 100% tariffs on Chinese imports. High-multiple trades sold off, Treasury yields slipped toward 4.05% on the 10-year, and both the S&P 500 and Nasdaq 100 logged their worst day since April, finishing the week down more than 2%. The backdrop is messy: a government shutdown that both clouds and crimps growth, credit jitters after the First Brands blow-up, and a swirl of doubts about whether AI profits can catch up to prices – or how the biggest players are financing the boom.
Safe-haven flows reflected the nerves. Gold punched above $4,000/oz this week and still added about 3% even as the dollar index rose roughly 1% – a tandem move that undercuts simple “debasement” narratives and instead points to a broad hunt for shelter.
Warnings are getting louder. The IMF has drawn echoes to the dot-com era; the Bank of England has flagged stretched valuations and correction risk; and Ray Dalio says markets “feel frothy.” Micro signals rhyme: Oracle – up nearly 100% since April on AI enthusiasm – slid as much as 7% Tuesday on softer-than-hoped cloud margins.
Positioning isn’t at a blow-off, at least by hedge-fund leverage that sits near the middle of its five-year range, but it’s not defensive either. Harnisch has dialed Peconic’s leverage below its norm this year, shorting consumer names such as Sprouts Farmers Market and McDonald’s, while sticking with cash-rich infrastructure winners like Quanta Services and Dycom Industries – names he thinks can hold up even if growth stumbles.
Veterans caution that in bull markets the last leg can be the strongest – and the most perilous to fight. Earnings have carried the tape so far, and retail euphoria hasn’t fully displaced professional capital. But the list of potential breakers is growing: tariffs, shutdown drag, credit accidents, sticky inflation that slows Fed easing, and an AI payoff that arrives later than the price implies. As Harnisch puts it, this time the fear is less about what is happening – and more about what could.
Source: Bloomberg
