Head of US equity and quant strategy at BoA sees too many red flags in stock markets
Savita Subramanian, Bank of America Securities head of U.S. equity and quantitative strategy, is warning about parallels between markets now and in Feb 2020.
- Energy is outperforming and has positive momentum and upward earnings revisions
- Tech and communications are hot but with expensive valuations
- Consumer staples rank dead last in returns
The last one is particularly notable because she says that a setup like this historically has led to big outperformance in staples, including by 73% during the 2000-2002 tech bust.
On CNBC last week she said "I like stocks, I just don't like the index" and today she reiterated a year-end target of 7100 despite the index trading at 7383 now.
The S&P 500, she says, is the most-crowded ticker in the world. The prior worry is that new issuance is a red flag and a secondary one is that the capex surge is eating into free cash flow — which has gutted the buybacks that did so much of the index's heavy lifting previously.
So she's selective: long financials, energy, materials and staples; steering clear of discretionary and utilities.
Her target is -6% from here.
h/t @MikeZaccardi
This article was written by Adam Button at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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