Bank of America's chief strategist: Trade war not going out, any rebound in U.S. stocks is a selling point.

American Bank's chief investment strategist Michael Hartnett said that investors should sell the S&P 500 index on any rebound before the intervention by the Federal Reserve and the easing of trade tensions between the US and China. The strategist stated that Trump's tariff policy and the market turmoil it has caused are turning the "American exceptionalism" into "American denial". He suggested maintaining short positions in stocks until the S&P 500 drops to 4800 points, while also recommending going long on two-year US Treasury bonds. Hartnett wrote in a report that rising bond yields, stock market declines, and a weakening dollar are "triggering a global asset sell-off, which may force policymakers to take action". However, investors should still "sell high on risk assets" at this stage. Due to the unpredictable nature of Trump's tariff policy, the S&P 500 index has fallen by more than 10% this year. After the US government announced a comprehensive increase in tariffs last week, global stock markets plunged and concerns about an economic recession escalated. This week, Trump announced a partial suspension of tariffs for 90 days, but after China announced retaliatory measures, the US immediately raised tariffs on Chinese goods to 145%. On Friday, China announced an increase in tariffs on US goods to 125% in response. The news of the tariff suspension initially pushed the S&P 500 to its largest single-day gain since 2008, but the resumption of the decline on Thursday showed a lack of confidence in the rebound. Hartnett stated that unless the Federal Reserve "significantly" cuts interest rates to stop the vicious cycle of asset sell-offs and the US and China suspend their trade war, he will continue to maintain a short position. He suggested that if policy panic shows short-term/shallow recession characteristics, one could bottom-fish when the S&P 500 drops to around 4800 points (a further 9% drop from Thursday's close), but he noted that many investors strongly oppose this view as they expect profit forecast downgrades to push the index below 4000 points.