Photographer: Jim Lo Scalzo/EPA/Bloomberg
(Bloomberg) — US trade policies are creating a “new world order” as investors swap the dollar and American equities for international assets, according to Bank of America Corp.’s Michael Hartnett.
The Trump administration’s “run it hot policy means new ‘anything but dollar’ trades” where US exceptionalism is turning into global rebalancing, the strategist wrote in a note.
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Hartnett said that will boost international stocks, with commodity producers in emerging markets poised to benefit from higher demand for artificial intelligence. Investors are also underexposed to China and India, he noted.
Money flows are backing up Hartnett’s views. Stock funds in Europe, Japan and other international developed markets have drawn a combined $104 billion this year, dwarfing the $25 billion that’s flowed into US funds, according to the BofA note citing EPFR Global.
US assets have been roiled since President Donald Trump’s historic tariffs announcement in April, which raised worries about the end of America’s dominance in global economic and financial markets.
While Trump has since rolled back many of the levies, the S&P 500 Index remains a laggard compared with international peers, while a gauge of the dollar has dropped 10% since year-end 2024.
Hartnett has maintained a preference for international equities since late 2024, a call that proved prescient as the S&P 500’s 15% gain over that time has trailed a 39% surge in the MSCI ACWI ex-US Index.
–With assistance from Sagarika Jaisinghani and Michael Msika.
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