Last year, Bank of America's Hartnett, who was bearish on US stocks from the start, said it's time to buy when everyone else is bearish. He is optimistic about China's stock market expanding from technology to consumption.

In recent months, Michael Hartnett, Chief Investment Officer of Bank of America, has been warning that US stocks are currently overvalued compared to non-US stocks, primarily due to a large artificial intelligence bubble. However, his views have not been taken seriously, as retail traders are immersed in an unprecedented surge. Just a week after the stock market hit a historic high, US stocks experienced their fastest five-day decline since the outbreak of the pandemic. Risk management has once again become a hot topic, drawing attention to Hartnett's latest report. Hartnett believes that when the market is overwhelmingly bearish, it is actually a good time to buy US stocks, focusing on key support levels in the market. At the same time, he is optimistic about the potential of the Chinese stock market and believes that if Chinese retail sales accelerate, the momentum of stock market gains may shift from the technology sector to the consumer sector. The "Trump Put" begins to show, the focus is on key market support levels, and "Minister Ma" cannot be ignored In his latest report, Hartnett points out that market sentiment has shifted from extremely optimistic to cautious. He believes that the key to determining when to buy US stocks lies in when the market no longer views the current decline as a "healthy pullback." Hartnett mentions that while Powell, who controls short-term interest rates, still plays a crucial role when it comes to the long-term economic and inflation outlook in the US, Musk, who leads DOGE, has a more profound impact on the market: Although Powell still controls short-term rates, Musk now controls the long end of the yield curve. Focusing on the present, Hartnett believes that to prevent nervous "new bulls" from selling off, the post-election volume-weighted average price (VWAP) is a key level to watch, with META at $639, PLTR at $80, QQQ at $519, and SPY at $597. The VWAP for Bitcoin since the election is $97,600, failing to stay above this level, which is the first sign of a bubble burst (Tesla's VWAP is $371). ( Note: Volume-weighted average price (VWAP) refers to the average price of a security calculated by weighting the prices by the volume traded during a specific period. It is an indicator of market trading activity used to determine if a security is undervalued or overvalued.) It is worth noting that the S&P 500 closed at 5,783 on election day. Hartnett stated: "This is the first strike price of the 'Trump Put,' once it falls below this price, the news headlines of 'Stock Market Drop under Trump Leadership' will start to appear. After falling below this price, investors holding risk assets will greatly anticipate and need policymakers to provide verbal support to the market." The S&P 500 closed at 5,954 last Friday. Another indicator worth watching is IJR (US small-cap stock ETF). Hartnett believes that unless it breaks through the high point of $120 in 2021, in the context of "Make America Great Again" (MAGA), factors including tariffs, foreign direct investment (FDI) inflows, tax cuts, deregulation, and interest rate cuts by the Fed may lead bonds to outperform stocks. Global investor sentiment shifts, potential in the Chinese market emerges The report also summarizes recent feedback from Bank of America's clients in Dubai and London, indicating that investors are skeptical of the S&P 500, viewing the European market as "renting" rather than "owning," while showing strong interest in long-term bonds, similar to the past decade. However, the speed of investor sentiment and narrative changes far exceeds that of position adjustments: Bank of America's Global Fund Manager Survey in February showed a cash level of 3.5%, the lowest level since 2010, indicating that investors lean towards risk, but have limited ammunition for "buying on dips"; Investors mostly prefer credit bonds over government bonds; Although shorts on European stocks were reduced by European banks, asset allocators are still structurally bearish. Since the Russia-Ukraine conflict began in February 2022, for every $100 outflows from the European stock market, only $3 have flowed back in the past three weeks. Hartnett also notes that the significant decline in government trust has led to a major bull market in gold. Since January 2024, out of 33 global elections, 27 have seen the ruling party step down, with mainstream parties in the UK, Germany, and France receiving historically low votes. Hartnett believes that US tech stocks are overvalued and over-owned compared to Chinese tech stocks. He predicts a major rotation in the market from the $16 trillion market value of the US "Big Seven" to the $1 trillion market value of Chinese BATX (Baidu, Alibaba, Tencent, Xiaomi). He also points out: "When Chinese retail sales accelerate, the upward momentum of the Chinese stock market will expand from the technology sector to a broader field." This article is reprinted from "Wall Street News," author: Huang Wenwen, GMTEight Editor: Xu Wenqiang.