Bank of America Hartnett: The market is expecting Trump to shift towards "reducing tariffs, lowering interest rates, and cutting taxes"

The global stock market staged an astonishing "deep V" rebound in April, with the S&P 500 experiencing nine consecutive days of gains after a sharp decline at the beginning of the month, marking the longest winning streak since November 2004. In this regard, Bank of America Chief Investment Officer Hartnett pointed out in a recent research report that this trend indicates investors expect Trump to shift to a "three lows" policy in his second hundred days, namely lowering tariffs, lowering interest rates, and lowering taxes. At the same time, concerns about a recession in the U.S. economy triggered by "soft" data are also easing. Hartnett noted that the 2-year U.S. Treasury yield has fallen by 70 basis points since Trump took office, oil prices have dropped by 20%, and the dollar has depreciated by 9%, all of which have contributed to looser financial conditions. Additionally, the strong capital expenditure of tech giants in the AI sector, expected to reach $320 billion by 2025, has collectively alleviated concerns about a recession. No Recession Expected in the Second Quarter Looking back at the first hundred days of Trump's administration, the financial market's report card is mixed. Gold has risen 21% year-to-date, marking the best start since President Ford's era. The S&P 500 index has fallen 7%, the worst performance since Ford. The dollar has depreciated by 9%, the worst performance since Nixon. These price movements have been primarily driven by factors such as DeepSeek, DOGE, and tariffs. Previously, U.S. macro data weakened, with GDP shrinking in the first quarter, and the GDP growth forecast for 2026 has been revised down from 2% to 1.5% and continues to decline. Hartnett pointed out that as long as employment data does not collapse (which it has not so far), market sentiment can remain relatively stable. Hartnett also highlighted several key indicators he is watching. The global financial sector ETF (IXG) has broken through the $105 mark, indicating that there will be no recession in the second quarter. Additionally, if bond yields rise in response to poor economic data (similar to the situation in early April), short positions in risk assets will strike back. Although the market seems to believe that a recession has been avoided again, oil prices remain the only asset signaling a comprehensive recession and/or slowdown in growth, while also reflecting geopolitical peace (leading to increased supply from Russia/Iran). Hartnett stated that from a broader perspective, oil prices have fallen by 56% since the Russia-Ukraine conflict in 2022 and have dropped by 17% since April 2. Furthermore, Hartnett suggested "going long in international markets," as once concerns about a global recession dissipate, oil prices will ultimately reverse significantly, benefiting Asian/European oil-importing countries. He also recommended bonds and gold, which together form the "BIG" investment portfolio. Risk Warning and Disclaimer Markets are risky, and investments should be made cautiously. This article does not constitute personal investment advice and does not take into account individual users' specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk