BofA’s Hartnett names his five best trades for Q2 By Investing.com

This is a late-cycle reflation call dressed up as a geopolitical one. The cleaner expression is not simply “buy commodities,” but own assets with pricing power against a policy regime that is likely to favor domestic industrial capacity, strategic materials, and financial repression over pure duration. If that regime shift gains traction, the second-order winners are upstream producers, select industrial cyclicals tied to capex in power/chips/minerals, and banks/insurers that benefit from a steeper front-end-to-long-end curve.

The crowded part of the market is the growth-at-any-price and long-duration complex, which is vulnerable if nominal growth rotates from “multiple expansion” to “cash flow underwrite.” A curve steepener is the most elegant macro expression because it monetizes a policy mix of sticky supply-side inflation and eventual easing on growth concerns; the risk is that a hard growth scare or a disorderly risk-off episode steepens for the wrong reason and crushes cyclicals before the curve trade pays.

The flows backdrop matters: money is still chasing equities and credit, but the more important signal is what is not getting funded—long-only positioning appears underexposed to real assets relative to the year-to-date momentum in commodities and gold. That creates a reflexive setup where any additional geopolitical shock, tariff headlines, or industrial policy announcement forces systematic re-risking into the same narrow basket, amplifying returns in the short run. The flip side is that if trade détente headlines arrive sooner than expected, the “scarcity premium” in commodities and chips can unwind quickly, especially where positioning is already crowded.

For BAC specifically, the message is mixed but manageable: the curve trade is supportive if long rates back up faster than funding costs, but the bigger upside comes from capital markets activity and improved loan sentiment rather than pure NII. The main risk is that the market is pricing a clean, linear “nominal boom” when the actual path is more stop-start and policy-driven; in that case, relative value and options will likely outperform outright beta.