Bank of America Securities has rolled out a series of contrarian trading strategies, betting that some of the market's most entrenched investment narratives are beginning to lose momentum and that these reverse positions could deliver outsized returns. The bank's contrarian framework spans multiple arenas, including bonds, the dollar, artificial intelligence, and the upcoming US midterm elections, with several trades designed to profit from a reversal in prevailing investor positioning.

In its contrarian "ABB" trade, the bank explicitly pushes back against the current market consensus of "Anything But Bonds." Bank of America is bullish on long-duration assets that have fallen out of favor, including real estate investment trusts (REITs), the biotech ETF (XBI), the regional bank ETF (KRE), and small-cap stocks. The bank argues that another significant surge in bond yields would inflict increasing damage on Wall Street and the broader US economy, potentially forcing policymakers to step in with intervention. That scenario, in the bank's view, could create an environment where long-duration assets regain market favor.

The bank also holds a bullish stance on Hong Kong's property sector, arguing that stabilization or recovery in China's real estate market could present an opportunity in a space still deeply avoided by global investors. Meanwhile, the bank's "ABD" trade acknowledges the widespread "Anything But the Dollar" sentiment in the market, but contends that gold remains the purest vehicle for expressing views on sustained dollar depreciation, asset inflation, and potential bond market stress. The bank also points to shifting geopolitical dynamics in the 2020s and the US-Iran "economic war" as factors that could support gold by fueling demand for sanctions havens and safe-haven assets.

In the artificial intelligence space, Bank of America takes a more nuanced contrarian stance. While the long-term consensus on AI stocks remains firmly bullish, the bank advises investors to consider shorting AI-related bonds, arguing that even if the US government can influence or suppress yields, a meaningful decline in capital costs would most likely require deflation or a recession. At the same time, the bank recommends building a barbell strategy around AI stocks—adding exposure to commodities and natural resource companies that would benefit from the enormous energy and materials demand generated by the US-China AI arms race.

The bank is also positioning for the possibility of a more disruptive outcome in November's US midterm elections. Although market consensus does not point to a Democratic sweep, the bank suggests hedging that scenario by shorting financial stocks. Bank of America notes that if Democrats take the Senate while Republicans lose the Texas governor's race, US stocks could fall more than 10%, with the dollar and bond yields also weakening by year-end. The bank cites data showing President Trump's overall approval rating at 39%, with 36% approval on economic issues and just 30% on inflation—all well below pre-war averages of 46%, 42%, and 38% respectively—suggesting that political risk may become increasingly important to markets as the midterms approach.