Global Courant
Savita Subramanian of Bank of America Securities said she is the most bullish on stocks in at least a decade. According to the company’s head of U.S. equity and quant strategy, the macro backdrop is energizing key groups that have been overshadowed by Big Tech gains and excitement around artificial intelligence. “We’re in a place where old economy companies have learned how to survive without capital and they actually look pretty interesting at these levels,” she said on CNBC’s “Fast Money” on Tuesday. “Most of the S&P 500 actually generates free cash flow.” Subramanian said the market is more rational than it has been in a decade. “We are finally done with this kind of zero interest rate experimentation. We know what the Fed is going to do,” she said. “We are away from zero. We have five percentage points of leeway to work 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 decade, they might be a little bit lower than what we’ve been enjoying. But I think they’re driven by all the right things: productivity (and) efficiency,” she said. “Companies are doing the right things.” Last month, Subramanian raised its S&P 500 year-end target by 7.5% to 4,300 — with a range to 4,600. On Tuesday, the index closed lower by 0.47% to end the session at 4,388.71. Based on CNBC’s market research, there are three strategists with higher goals than Subramanian. “There have been better points to enter the market,” she said. “In 2011 we were very bullish because the market was so cheap. Today it’s not that cheap. But I think there are parts of the S&P 500 that look incredibly attractive.” She argued that mega-cap stocks are currently obscuring investment opportunities in the S&P 500. “If you take out the top 50 stocks, the S&P 500 ex-50’s PE is 15 times trailing earnings, which is actually relatively low,” Subramanian said. is obscured by this kind of AI bubble.” Disclaimer
