Michael Hartnett of Bank of America has officially withdrawn his “sell” signal for U.S. equities, citing a surge in fund manager cash allocations—from 3.5% to 4.1%—as a sign that the worst of the recent correction may be over. That move follows a rapid 10% decline in the S&P 500, a sharp 14% drop in the Nasdaq, and a broader pullback in mega-cap stocks. While he doesn’t believe a full bear market is underway, Hartnett warns that another potential shock looms: Trump’s anticipated tariff announcement on April 2.
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Despite cautious signals in sentiment surveys—such as record-low U.S. equity allocations—Hartnett points to contradictory behavior in fund flows. Recent data show the largest weekly inflow into equity funds so far this year and a steady accumulation of U.S. stocks by private clients. According to Hartnett, investors are nervous but not fleeing risk en masse.
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Hartnett’s forward-looking stance favors bonds, international stocks, and gold, reflecting a view that U.S. markets are more exposed to policy shocks. While fiscal tightening may dominate in the U.S., he expects continued stimulus-driven inflation abroad—especially in China, Japan, and Europe. As the market braces for April 2, Hartnett notes that uncertainty is intensifying. In his words, the tone on Wall Street may hinge less on macro forecasts—and more on who’s influencing Trump the day before tariffs go live.

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