When Bank of America Corp.’s Savita Subramanian raised her outlook for the S&P 500 Index this week, some stock bulls may have seen capitulation by a bear. But as she made clear on Thursday, the market remains vulnerable, particularly to any increase to companies’ cost of capital.
“The S&P 500 has essentially turned into a 36-year, zero-coupon bond,” BofA’s head of U.S. equity and quantitative strategy said in an interview on Bloomberg TV’s Surveillance. “If you look at the duration of the market today, it’s basically longer duration than it’s ever been. This is what scares me.”