Sell U.S. stock rallies and buy the dip on everything else, BofA's Hartnett says
Don't be fooled by this week's bounce in the S & P 500 . Selling in U.S. stocks is not over, and investors should stay defensive as trade worries persist, according to Bank of America's Michael Hartnett. "We remain [first half] buyers of dips in bonds, international & gold, sellers of SPX/US$ rallies," Hartnett, the bank's chief investment strategist, said in his latest "Flow Show" note. Hartnett's comments come as U.S. stocks are about to wrap up a rare positive week. The S & P 500 is ahead 3.8% heading into Friday's open, while the Nasdaq and Dow Jones Industrial Average have gained 5.4% and 2.4%, respectively, this week. Gold , which recently soared to record highs, is down slightly for the week, while the U.S. 10-year Treasury note yield is about flat over that that time (yields move inversely to prices). The U.S. dollar is on track for a small weekly advance. Investors have been shunning U.S. stocks and the dollar and moving into gold lately as uncertainty around global trade increases and the outlook for stagflation in the U.S. grows. China said Thursday that no tariff talks have been held yet with the U.S., despite the White House appearing to soften its stance on U.S.-China trade. "here's been a "remarkable flip from 'U.S. exceptionalism' hubris to 'U.S. repudiation' … In contrast, Spanish stocks +25% YTD ($-terms), highest since Euro debt crisis humiliation, as reallocation of global capital from U.S. begins (e.g. Latin American capital now heading to Madrid not Miami)," wrote Hartnett. The "weaker U.S. dollar will play out either slowly with lower yields or quickly with higher yields, it's brutally flagged by soaring gold price, and while 'reports of the death of the Magnificent 7 have been greatly exaggerated' (they remain central to AI theme), weak U.S. dollar theme favors increased global asset allocation to commodities," he added. Elsewhere Friday morning on Wall Street, Goldman Sachs upgraded Charles Schwab to buy from neutral. "In an environment that remains highly uncertain, SCHW offers one of the best EPS growth outlooks in our space," the bank said in a note to clients. "While many pieces of the SCHW bull case have been in place for a while, we think the stock's recent results create enough evidence to underwrite much faster EPS growth." Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You'll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
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