BofA: 'Pockets of equity market are incredibly cheap'

Pockets of equity market incredibly cheap: Pro

Bank of America forecasts the will hit a target of 2,000 points by the end of 2014 and give an investors an 11 percent price return, the latest in a string of bullish market predictions for next year, the bank's head U.S. equity strategist told CNBC on Friday.

"Where we're sitting right now is really the sweet spot for equities," Bank of America's Savita Subramanian said Friday on "Squawk on the Street." "You've got a low but sort of a rising interest rate environment. You've got low contained inflation. And the beginnings of what look like an economic recovery. That's actually been a pretty good spot for equities historically."

(Read more: Goldman's Hatzius: Expect steady growth in 2014)

Traders on the floor of the New York Stock Exchange.
Jin Lee | Bloomberg | Getty Images

Subramanian told CNBC that rising interest rates brought about by the Federal Reserve scaling down its massive bond-buying program will allow sectors such as technology, energy and industrials to catch up with financial and consumer stocks that benefited from easy money policies.

"A lot of the laggards over the last few years could actually take the reins," Subramanian said.

(Read more: Get ready for 10 percent drop in 2014: Goldman)

The economy seems to be emerging from five years of "hyper easy money" policy and into a midcycle market, Subramanian said.

"We've been in what feels like a very long bull market but we've just been in a protracted easy money type of environment," she told CNBC.

(Read more: Selloff or buying chance: Which carries the day?)

Subramanian said "pockets of the equity market are incredibly cheap. It might not feel like it, but they are."

—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street."