A sharp divide is emerging on Wall Street. Bank of America’s strategist Michael Hartnett says that President Donald Trump‘s economic policies are lifting capital-rich tech giants rather than domestically focused small caps.
“It’s like the ’80s deregulation boom and the ’90s tech boom all at the same time,” the expert said.
Wall Street’s New Divide: “Bro Billionaires” Vs. The Trump’s “Base”
In his latest “The Flow Show,” Hartnett introduced what he calls the “bro billionaire” stock basket, an equal-weighted group including Nvidia Corp. NVDA, Meta Platforms Inc. META, Tesla Inc. TSLA, Palantir Technologies Inc. PLTR, Interactive Brokers Group Inc. IBKR, Bitcoin BTC/USD, ARK Innovation ETF ARKK, Coinbase Global Inc. COIN and Apollo Global Management Inc. APO.
Since the 2024 U.S. election, this basket is up 45%.
By contrast, the Russell 2000 index — which Hartnett associates with Trump’s electoral “base” — has fallen 7% over the same period.
“Tariffs, tax cuts, reshoring, deregulation, but no bid for the little guys,” Hartnett said.
Dollar Drops Despite 5% Yields
The U.S. dollar continues to slide, down 8.9% year to date, even as 30-year Treasury yields remain near 5%. Hartnett sees this as the product of fiscal disarray, not monetary misstep.
Hartnett indicated that Trump’s approach combines aggressive tax cuts with high spending, a mix that resembles both Republican and Democratic fiscal strategies.
“U.S. dollar breaking down despite 5% Treasury yields as DOGE replaced by deficits & tax cuts,” he said.
“DOGE was a bust, tariffs are a bust, so only way he gets the deficit down to 3% of GDP is via max pumping GDP and hoping Bessent can sweet talk the [bond] vigilantes,” he added.
According to Hartnett a weaker dollar is bullish for gold, emerging markets, and international equities.
Hartnett continues to back his BIG allocation—bonds, International, and Gold—a theme he’s been pushing since early spring.
“Profits and policy keep us long weak dollar plays, gold, EM, international,” Hartnett stated.
Hartnett noted that gold-related funds have attracted $75 billion in inflows year-to-date, marking the largest influx on record.
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