BofA top equity strategist Savita Subramanian takes most bullish position in at least 10 years
Bank of America Securities’ Savita Subramanian is the most bullish on stocks in at least 10 years. According to the firm’s head of U.S. equity and quantitative strategy, the macro backdrop is reenergizing key groups that have been overshadowed by Big Tech gains and excitement surrounding artificial intelligence. “We’re at a place where old economy companies have learned how to survive without capital and actually look pretty interesting at these levels,” she said on CNBC’s ” Fast Money ” on Tuesday. “Most of the S & P 500 is actually generating free cash flow.” Subramanian believes the market is more rational than it has been in a decade. “We’re finally done with this sort of experiment of zero interest rates. We know what the Fed’s going to do,” she said. “We’re off of a zero bound. We have five percentage points of latitude to ease our way out of the next recession. Real rates are no longer negative.” However, investors may want to manage their expectations. “In terms of [market] returns over the next 10 years, maybe they’re a little bit lower than what we’ve enjoyed. But I think that they’re driven by the right stuff: productivity [and] efficiency,” she said. “Companies are doing all the right things.” Last month, Subramanian hiked her S & P 500 year-end target 7.5% to 4,300, with a range as high as 4,600. On Tuesday, the index closed 0.47% lower, ending the session at 4,388.71. Based on CNBC’s market survey , there are three strategists with higher targets than Subramanian. “There have been better points at which to enter the market,” she said. “Back in 2011, we were really bullish because the market was so dirt cheap. Today, it’s not as cheap. But I think there are parts of the S & P 500 that look incredibly attractive.” She contends that mega-cap stocks are obscuring investment opportunities in the S & P 500 right now. “If you take out the 50 biggest stocks, the p/e of the S & P 500 ex-50 is 15 times trailing earnings, which is actually relatively low,” Subramanian said. “There are value opportunities, but they’re right now being obscured by this sort of AI bubble.” Disclaimer
