Even though February kicked off on a strong note, BofA Securities’ Savita Subramanian tells CNBC’s “Fast Money” investors should proceed with caution.
"Between today and year end, we're going to hit that target multiple times, and we're going to see some big swing from the market," she said."We need to get used to the idea that asset inflation may be behind us, and we're now heading for real inflation," she noted.. Subramanian anticipates the moves will create acute pain for popular areas of the market.
"I don't think the market is pricing that in," said Subramanian."What gets hurt are some of these longer duration growth stocks in an environment where discount rates are rising. And, that's where I think the S&P might be in trouble because that's a bigger weight in the benchmark." Subramanian's advice to investors: Avoid Big Cap Tech and growth names which thrived during the era of free capital and no earnings. Instead, look for high quality stocks trading at lower prices.
"The good news is that corporations and consumers are holding a lot more cash than they were back in 2008 [and] 2009," said Subramanian."This could actually be a better environment for some of the cash-rich corporates.""It still offers much higher free cash flow than say or other proxies for inflation protection." she said."It's still one of the most underweighted sectors by long only managers."
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