BofA says one 'monster' trend shows no one really believes Trump's tariffs will spark recession or a bear market
Getty Images; Jenny Chang-Rodriguez/BI
- "Monster" equity inflows show that investors are undeterred by tariff fears, Bank of America says.
- US equities saw the biggest weekly inflow of the year, the bank's Michael Hartnett wrote.
- "Global investors are not anywhere close to short US or global equities," he said.
If stock investors say they're panicked about an impending downturn, they're not putting their money where their mouth is.
In the week through this Wednesday, US stocks notched the biggest weekly inflow of 2025, attracting $34.1 billion, Bank of America strategist Michael Hartnett said.
The "monster equity inflows" suggest that investors aren't convinced by recessionary and bear market fears that have been mounting recently, he wrote on Friday. Concerns have grown amid the Trump administration's tariff policies, which have spurred fears of higher inflation and economic weakness.
Though these same concerns have emerged in Bank of America's monthly Fund Manager Survey, Hartnett emphasized that investors' actions point to a different reality.
Aside from the record weekly inflows, he also cited a heavy two-week surge of stock buying among the bank's clients.
"Global investors are not anywhere close to short US or global equities," he said.
That much might not be obvious when glancing at major US indexes. Last week, the S&P 500 plunged into correction territory, having fallen 10% since hitting a record on February 19. The sell-off occurred amid rising tariff threats pushed by the White House against Canada and Mexico.
While strong inflows might mean that these fears have been overblown, Hartnett noted that the market is showing sensitivity as it approaches April 2, which is the deadline for the next round of tariff announcements. Tactically, he cited that bonds and gold offer more security against the "tariff pandemic."
In the first quarter, two developments have likely has a bigger influence on stock investors, Hartnett said: the Department of Government Efficiency and China's DeepSeek AI.
The first is a White House effort to reduce federal spending, which may be important to investors who have grown weary of Washington's high debt and deficit levels. But many have questioned DOGE's actions, with the department slashing down on US agencies and employees at a rapid pace.
Meanwhile, the emergence of China's DeepSeek AI tool was an eye-opener for US tech investors, as it indicated that competitive AI could be developed more cost-effectively. Its emergence caused American mega-caps to capsize in January, and top AI names such as Nvidia continue to struggle amid higher competition from China.