Bank of America Strategist Hartnett: Sell on Rallies Before Trade War Eases; S&P 500 Drop to 4800 Points Signals Re-Entry Opportunity

According to Bloomberg reports, Bank of America (BofA) strategist Michael Hartnett believes that investors should sell during any rebound in the S&P 500 index before the U.S. Federal Reserve intervenes and the U.S.-China trade war eases.

Hartnett stated that U.S. President Donald Trump’s tariff policies and the resulting market turmoil are shifting the narrative from “U.S. Exceptionalism” to “U.S. repudiation.” He advised shorting stocks—until the S&P 500 index reaches 4,800 points—and going long on two-year U.S. Treasuries.

In a report, Hartnett noted that rising bond yields, falling stock prices, and a weakening dollar are “driving a global asset liquidation, likely forcing policymakers to take action,” but investors should “sell risk assets on rallies.”

Hartnett mentioned that he would continue to short until the Federal Reserve “significantly” cuts interest rates to break this liquidation cycle and both the U.S. and China pause the trade war.

He suggested that it might be a good time to buy when the S&P 500 index approaches 4,800 points, “if policy panic makes the recession brief/mild.” However, he also pointed out that many investors are “extremely resistant” to this view, as they expect downward revisions in corporate profit forecasts to bring the index down to 4,000 points.

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