A historic divergence is unfolding across asset classes, with gold surging to its best presidential-term start since Gerald Ford while U.S. stocks post their worst performance since the same era, and Bank of America’s chief strategist Michael Hartnett says investors are increasingly betting on policy shifts to rescue the market from soft macroeconomic headwinds.
In a note shared Friday, Hartnett outlined how the “second 100 days” of Donald Trump’s 2025 presidency could bring a pivot toward lower tariffs, lower rates and lower taxes — a bullish trifecta for risk assets.
That shift, he said, could revive appetite for equities, even as recession signals persist in the economic data.
Just a week ago, Hartnett said a sustainable bull market would need three things: lower Treasury yields under 4%, consistent earnings growth above 5%, and a meaningful U.S.-China tariff rollback. His strategy remained: “Stay BIG, sell rips” — favoring bonds, international stocks and gold while fading rallies in U.S. equities.
Best Start For Gold In Nearly 50 Years
Gold is the standout performer year to date, up 22%, marking its best opening 100 days since the Ford administration.
In contrast, the S&P 500 is down 0.3%, its worst kickoff since the 1970s, while the U.S. dollar has tumbled 7.6%, logging its steepest slide since the Nixon era.
Notably, gold – as tracked by the SPDR Gold Trust GLD – logged its fifth straight month of outperformance versus stocks in April, notching both the longest streak since 2009 and the strongest since 2011.
Read more: Gold Leaves S&P 500 In The Dust With Biggest Outperformance In 14 Years
Hartnett attributed the initial market moves to headline-grabbing developments like artificial intelligence excitement, crypto speculation, NATO tensions and “Liberation Day” trades.
Yet, these trades are now “unwinding significantly,” he said, as attention shifts to potential Trump-era economic policies in the pipeline.
Lower Yields, Weaker Dollar Cushion ‘Soft’ Macro Data
Treasury yields are reflecting expectations of easier monetary policy. The 2-year Treasury yield has fallen 70 basis points since Trump’s Inauguration Day, oil is down 20%, and the U.S. dollar is weakening.
These moves, combined with strong capital expenditures in AI — tracking at $320 billion for 2025 — are helping to cushion the blow from deteriorating economic indicators.
Soft macro data is still troubling: GDP forecasts for 2026 have dropped to 1.5% from 2%, oil has plunged 56% since the Russia-Ukraine shock and 17% since “Liberation Day,” and consumer sentiment remains weak.
Yet, Hartnett said as long as the U.S. labor market holds up — with no significant cracks in payrolls — recession fears may be premature.
April employment growth soared by 177,000, according to official statistics released Friday, topping estimates of 130,000.
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