Core Viewpoint - The article discusses the skepticism of Michael Hartnett, a prominent strategist at Bank of America, regarding the sustainability of the stock market rebound despite ongoing trade negotiations. He emphasizes the importance of macroeconomic factors and potential risks associated with asset price de-leveraging [1][2][4]. Group 1: Key Trading Strategies - Hartnett suggests three key trading strategies: buying the expectation and selling the fact post-trade agreement, maintaining a short position on the dollar until the Federal Reserve is forced to cut rates, and going long on 5-year U.S. Treasuries until the Republican budget confirms future tax cuts/extensions [2][7]. - He believes that the market's upward momentum will likely be driven by three macro factors: the China deal, global rate cuts, and strong consumer demand [3][8]. Group 2: Market Risks - The primary risk for a bear market stems from the de-leveraging effect on asset prices, particularly if the combination of Trump and Powell leads to a loss of control over long-term interest rates. This could result in rising rates and increased pressure on debt chains [4][9]. - Hartnett warns that if investors stop buying long-term Treasuries, it could lead to a significant market correction, especially given that global debt reached a record high of $324 trillion in the first quarter of this year [4]. Group 3: Long-term Investment Outlook - Hartnett's long-term investment outlook includes a preference for bonds over stocks, international stocks over U.S. stocks, and gold over the dollar, based on the conflict between excessive positioning in the U.S. exceptionalism narrative and new populist policies [6]. - He anticipates a structural shift in asset allocation from the traditional 60/40 stock-bond mix to a more diversified approach involving cash, gold, stocks, and bonds [10][17]. Group 4: Economic and Political Context - The article highlights that the 2020s are witnessing a macro shift characterized by the end of excessive monetary and fiscal expansion, a reversal of globalization, and rising populist pressures, which could impact capital and labor dynamics [11]. - Historical parallels are drawn to significant economic events, suggesting that the current environment may lead to similar structural transformations [12]. Group 5: Artificial Intelligence Outlook - Despite a generally cold economic environment, Hartnett remains optimistic about artificial intelligence, viewing it as a transformative force that could support earnings through productivity gains [15]. - However, he notes potential risks associated with AI, including the possibility of increased unemployment or pressure for wealth taxes if productivity gains do not translate into job security [16].