Bloomberg Television Sep 17, 2026
With Savita Subramanian, who leads equity strategy at Bank of America
A drop of 5% or more normally arrives about three times a year. The market has gone more than six months without one, and Savita Subramanian said that stretch is the reason to expect a pullback rather than a reason to relax.
Her firm nudged its year-end target up this year, not down. She still does not think the next twelve months look strong.
"And pullbacks of 5% or more typically happen three times a year, so it just feels like things are moving kind of a little bit too well, and there's a reason."
Subramanian leads equity strategy at Bank of America and wrote the note the anchor opened the segment by quoting back to her.
The full segment is covered here so you can skip it.
Here are the 3 calls that matter.
Key Takeaways
Equity allocations rose through price, not through buying, which is a weaker foundation than it looks
September and October are seasonally weak, and the market has run six months without a 5% drop
The firm raised its target to 7,400 and is still below the market, which Subramanian treats as a statement about the next year
She expects one or two percentage points of gain over twelve months, not a robust market
Fed tightening helps on inflation and slows the economy at the same time
1. Six Months Without a Dip
Asked to explain the call, Subramanian gave three reasons and put positioning first. Investors are not at the extreme where portfolios are almost entirely in stocks, she said, but equity weightings have climbed because share prices climbed, not because anyone decided to add. That is a distinction about how the exposure was built.
She then added the calendar, while saying she does not weight it heavily on its own.
"One, if you look at positioning, we're at a point where it's not necessarily — you know, we're not in euphoria where everybody is 99% equities — but we are at a point where equity allocations have grown largely through performance of stocks." — Savita Subramanian
"I don't put a lot of stock in the seasonal trends, but I do think it's interesting that we're entering September, October, and haven't had a pullback for about over six months now." — Savita Subramanian
2. The 7,400 Target
The anchor asked whether she is looking for multiple compression, meaning a fall in what investors will pay for a dollar of earnings. Subramanian said that already happened. Her thesis for the year was that multiples would contract in particular parts of the market, and they did. What she did not forecast was how far earnings would beat.
The raise in the target came out of the earnings surprise, and she was direct about how little the new number claims. At 7,400 the house forecast still sits under where the index was trading, which is why she said people asked her why she bothered moving it at all.
"So at some level, you know, one could argue that the multiple compression we had this year was really what we were expecting to see, and the surprise was earnings." — Savita Subramanian
"We're at 7,400 on our target, which, you know, everybody that I talked to was like, why bother moving from 71 to 74? You're still below where the market is." — Savita Subramanian
3. What Worries Her
Subramanian described the present as a rough patch and set a low bar for the year ahead. She named four things surfacing together: technology, artificial intelligence, the degree to which the companies involved are financially tied to one another, and borrowing. On top of those she put the central bank. Tighter policy is working on inflation, she said, and the same tightening slows spending and growth.
"Maybe over the next twelve months we get, you know, one or two percentage point gains, but it doesn't feel like a really robust market environment." — Savita Subramanian
Bonus Insights
Subramanian listed the worries in one breath: "Every worry is starting to surface about tech, AI, interconnectedness, leverage."
On the central bank she split the effect in two rather than calling it good or bad: "And you've got the Fed tightening, which I think is good in terms of controlling inflation, but it's also a slowing mechanism for the economy and spending."
The anchor framed the whole segment off her published note, which said the market is overdue for a pullback and entering a seasonally weak period
Subramanian's bottom line is that nothing in the market looks euphoric, and that is the point: the setup is a long calm stretch, a weak stretch of the calendar and a central bank still tightening, which together make a 5% drop the normal outcome rather than a shock.
Products, Companies & Tools Mentioned
Bank of America (Subramanian's firm, whose year-end target she moved to 7,400 and which published the note behind the segment)
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