There may be more than one unexpected thing Trump has!

According to US media reports, the huge pressure brought by the Trump administration to American universities is turning into a huge selling in the US stock market. Yale is currently seeking to sell its private equity portfolio on a large scale, with transactions that may reach $6 billion, or 15% of its $41.4 billion endowment, the first time Yale sells in the secondary market.

Some analysts said that if the tax-free status is cancelled, Harvard University will also start selling liquid assets such as stocks, and may issue more debts. This move may trigger a domino effect and shake the stability of the entire financial system.

The US dollar index plummeted again today. Tony Pasquariello, head of Goldman Sachs hedge fund business, recently released a report stating that the US dollar is currently overestimated by 20%, and this overestimation is the result of American exceptionalism. Tariffs are undermining the core pillar of the strong dollar, and this time it is the United States' confrontation with the world, so it is more like "Brexit" than the first trade conflict. So far, mainly euro zone investors have sold U.S. stocks, while foreign investors have not sold U.S. Treasury bonds on a large scale.

A large-scale sale of universities is coming

The confrontation between the Ivy League schools in the United States and the Trump administration is pushing Wall Street into an unprecedented liquidity storm.

According to U.S. media reports, in the face of pressure from the Trump administration and threats to tax exemption qualifications, Yale is seeking to sell its private equity portfolio on a large scale, with the transaction size of a possible $6 billion, equivalent to 15% of its $41.4 billion endowment fund, the first time Yale sells in the secondary market.

As an important participant in the global private equity field, Yale ranks 27th in the world in terms of investment portfolio size. The school's trends are regarded as an industry vane, and the chain reaction between Harvard and Yale may trigger other top universities to follow suit.

Some analysts say that if the tax-free status is cancelled, Harvard University will start selling liquid assets (such as stocks, etc.) and may issue more debts. This move may trigger a domino effect and shake the stability of the entire financial system. The U.S. Department of Homeland Security announced last Wednesday that it would terminate the $2.7 million grant to Harvard University, after the school rejected the government's management reform request. This political game directly impacted Harvard's financial operations, with its endowment fund reaching US$52 billion, of which nearly 40% were allocated to private equity, and liquidity was already limited. Faced with fiscal pressure, Harvard chose to issue $750 million in taxable bonds, a rare financing move that exposed its cash flow crisis. Market news pointed out that Harvard may have initiated a stock sell-off, and the school's private equity portfolio may face forced liquidation once the tax-free status is cancelled.

Since the beginning of this year, universities such as Princeton have successively issued bonds, indicating that the entire American education endowment system is facing liquidity pressure. The core of this crisis is to subvert the "Ivy Investment Model" that has been maintained for decades. Since Harvard adjusted its asset allocation ratio in the 1950s, top universities have gradually formed a unique model with private equity as the core, highly dependent on tax incentives and long-term holdings.

The Yale model pushes the allocation ratio of alternative assets to more than 70%, and obtains excess compensation through specialized illiquid investments. However, the model is based on the three pillars of permanent capital, tax exemption and political neutrality. The Trump administration's tax threat directly destroyed the third pillar, forcing universities to make a choice between political risks and market risks.

Valuation system faces reconstruction

At present, the private equity industry is deeply trapped in liquidity quagmire. The stock prices of private equity giants such as Blackstone and Apollo have fallen by more than 20% this year, and closed-end fund trading is in a freezing state. The forced sale of Harvard and Yale may trigger a vicious cycle.

During today's Asian trading session, U.S. stock index futures fell again across the board, which may indicate a bad start to Wall Street this week. People remain concerned about Trump’s tariffs, and concerns about the Fed’s independence after Trump made harsh remarks last week against Fed Chairman Powell.

Analysts believe that when the market finds that top institutions are selling high-quality assets at a discount, the valuation system will face reconstruction. In response to this, the new debt king Ganglak warned that the crisis is comparable to the subprime mortgage crisis in 2008, but the risks are hidden in a more secret corner. During the 2022 UK pension crisis, the liquidity crisis caused the collapse of the gold-edged bond market, and now the private equity market may repeat a similar script.

What is even more worrying is the transmission path of the chain reaction. When the endowment fund sells stocks in response to liquidity pressure, it may trigger the suspension of the hedge fund. Intensified discounts in the secondary market of private equity will affect VC/PE financing capabilities, while technology incubators and early-stage funds supported by educational institutions may face the risk of capital withdrawal. This may not only be a simple asset sell-off, but also a shattering of myths. When government intervention intrudes into portfolios, legal entities must reassess geopolitical premiums that have never been considered in the risk model.

The impact on the psychological level of the market cannot be ignored. The asset sell-off behavior of Harvard and Yale has a strong signal effect, which may trigger institutional investors to enter a defensive mode. Data shows that university endowments across the United States hold a total of approximately $500 billion in private equity assets, of which 40% are allocated to low-liquid assets. If Trump's pressure continues, these "sleeping assets" may be forced to wake up and cause storms in the market.

The global impact of this storm is emerging. The European Private Equity Association has warned that the North American educational fund sell-off may impact the prices of emerging market assets. Asian sovereign wealth funds have also recently strengthened their review of the risk areas of North American private equity assets. Against the backdrop of the Fed's continued balance sheet shrink, this liquidity crisis triggered by educational institutions may become the last straw that crushes the market.

"Special statement: The content of the above works (including videos, pictures or audio) is uploaded and published by users of the "Dafenghao" self-media platform under Phoenix.com. This platform only provides information storage space services.

Notice: The content above (including the videos, pictures and audios if any) is uploaded and posted by the user of Dafeng Hao, which is a social media platform and merely provide information storage space services."

[Editor in charge: Song Jingcheng PF214]