Recently, the U.S. stock market has experienced a reversal of fate. On one hand, Trump's tariffs have triggered a reassessment of the value of U.S. assets.On the other hand, Bank of America strategist Michael Hartnett stated in a report on the 17th that this is merely a natural evolution of events over the past five years: The 2020s are a decade of &#34;great transformation,&#34; marking the end of Wall Street's bullish view on &#34;globalization&#34;:<blockquote>The conservative 25/25/25/25 cash/bonds/gold/stocks &#34;permanent portfolio&#34; has risen 4.7% year-to-date (mainly due to gold and bonds), while the traditional 60/40 portfolio has fallen 5.4%.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/aa054e12-6296-4098-84e4-7ee45bdc12ea.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/aa054e12-6296-4098-84e4-7ee45bdc12ea.png"/></blockquote>Hartnett further believes that in the second quarter, U.S. stocks may face downward pressure due to various uncertainties. Investors should sell U.S. stocks on rallies in the second quarter until the Federal Reserve begins to cut interest rates and Trump reduces tariffs:<blockquote>If a policy panic is expected to arrive, one can slightly test at 5400 points on the S&amp;P 500 and increase holdings at 5100 points; if a short-term shallow recession is anticipated, one can wait to buy heavily at 4800 points.</blockquote><h2>U.S. Stock Market Faces Dilemmas: Tariffs, Federal Reserve, and Politics</h2>Hartnett believes that the Federal Reserve is being weighed down by tariff policies. The market expects an 11% chance of a rate cut at the Federal Open Market Committee meeting on May 7, a 60% chance at the June 18 meeting, and a 141% chance at the July 30 meeting.This impending dovish shift has been most evident in the recent surge in gold prices, which have soared to unprecedented historical highs.Data shows that gold inflows reached a record $8 billion, even surpassing the $7.9 billion inflow into stocks, while cryptocurrencies saw an outflow of $300 million, bonds saw an outflow of $20.1 billion, and cash saw an outflow of $72.4 billion (the largest since January 2025).<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/84210c04-567b-4321-8ff7-877f66323c25.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/84210c04-567b-4321-8ff7-877f66323c25.png"/>Notably, although private clients reduced their stock allocation from 63% to 60.9%, this was primarily driven by price declines (-11%) rather than changes in the number of shares held (-1%).Hartnett pointed out that although investors are extremely &#34;emotionally&#34; pessimistic, they are not extremely &#34;physically&#34; pessimistic, meaning that institutions and private clients have not strongly sold off. Private clients are increasing their holdings in utilities, low volatility, and high dividend ETFs, while reducing their positions in bank loans, high-yield bonds, and financial ETFs.<h2>Hartnett: Suggests Selling U.S. Stocks on Rallies in Q2</h2>Looking ahead to the second quarter of 2025, Hartnett's short-term strategy is to recommend reducing holdings on rallies before the Federal Reserve cuts interest rates, U.S. tariff reductions, and a clear shift towards tax reduction policies:<blockquote>If a policy panic is expected to arrive soon, one can slightly test at 5400 points on the S&amp;P 500 index and increase holdings at 5100 points; if a short-term mild recession is anticipated, one can wait to buy heavily at 4800 points.</blockquote>For the overall year of 2025, Hartnett suggests a long position in the BIG strategy:<blockquote><ul><li>Long bonds: Hedge against economic recession risks and stock market adjustment risks</li><li>Long international stocks: Position for the peak of American exceptionalism, the transformation of the &#34;seven major tech stocks&#34; into the &#34;lagging seven,&#34; and large-scale monetary and fiscal easing in the Eurasian region</li><li>Long gold: Hedge against a bear market in the dollar and various policy risks (U.S. tariffs, Federal Reserve policies, Trump-Powell confrontations, etc.)</li></ul></blockquote>It is noteworthy that Hartnett has been strongly advocating his concept of &#34;going long BIG&#34;—bonds, gold, and international stocks—and so far this year, gold has risen by 25%, government bonds have increased by 6%, and the MSCI World ex US index has risen by 5.5%.Meanwhile, the U.S. stock market has fallen by more than 10%, oil prices have dropped by 9.8%, and cryptocurrencies are the biggest losers this year, down 34%. But the most surprising is the dollar, which has fallen by 8.4% since 2025.Finally, he quoted the late Charlie Munger:<blockquote>“If all you do is buy high-quality stocks on the 200-week moving average, you will significantly outperform the S&amp;P 500 in the long run.”</blockquote>For Hartnett, this means:<blockquote>“The 200-week moving average of the S&amp;P 500 is currently 4685, and the 50-week moving average is 5685—this is the range.”</blockquote>

Michael Hartnett insists on his "go long BIG" concept—bonds, gold, and international stocks. He believes that investors should sell U.S. stocks on rallies in the second quarter until the Federal Reserve starts cutting interest rates and Trump reduces tariffs

- The U.S. stock market is experiencing a reversal, influenced by Trump's tariffs and a report by Bank of America strategist Michael Hartnett, who views this as a natural evolution of past events.  
- Hartnett suggests that investors should sell U.S. stocks at highs in Q2 until the Federal Reserve cuts rates and tariffs are reduced, with specific buy points identified for the S&P 500 index.  
- He advocates a long-term strategy of holding bonds, international stocks, and gold to hedge against economic downturns and policy risks, noting significant gains in these assets compared to a decline in U.S. equities.

Bank of America Hartnett: Sell U.S. stocks on rallies in Q2 until the Federal Reserve cuts interest rates and Trump reduces tariffs