Investors who are counting on stimulus measures to stoke U.S. growth need to account for threats from a stronger dollar and higher interest rates, said Krishna Memani, chief investment officer at OppenheimerFunds.

“There is a chance for a day of reckoning,” Memani said Tuesday in an interview on Bloomberg Television. “The risks have risen materially.”

Stocks have surged on optimism that President-elect Donald Trump’s fiscal policies will fuel inflation and economic growth. The S&P 500 Index rose 0.2 percent at 10:28 a.m. in New York after closing at a record high Monday.

“This is hope -- hope driving the equity market,” said Memani, whose firm oversees more than $200 billion. “Hopefully we get the reflation story that we have been waiting for a long time.”

The rally in the two weeks after Trump’s election has been driven by speculation that a combination of lower taxes, reduced regulation and increased government spending could boost corporate profits. However, some money managers have also cited longer-term risks, including the possibility that increased tariffs could depress trade.

Advantage ‘Goes Away’

Memani mostly highlighted how higher interest rates can hurt stocks. One reason that equities have been climbing for years is that their earnings have been attractive compared with bond yields that were near record lows, he said. That especially helped utility stocks and real estate investment trusts.

But with interest rates rising, that advantage “goes away,” Memani said. And, “if the dollar is higher, earnings from overseas assets for U.S. companies go down.”

The cost of living in the U.S. rose in October for a third consecutive month, indicating that inflation is moving closer to the Federal Reserve’s target. The central bank meets Dec. 13-14 in Washington, and investors are betting that it’s certain that the Fed will raise interest rates.

Trump plans to invest $550 billion in infrastructure to make U.S. roads, airports and bridges the “envy of the world.” When asked about whether there’s misplaced optimism about the ability of infrastructure spending to stoke growth, Memani said that the U.S. could eventually face similar challenges as Japan, which has an aging population and has struggled for decades to stimulate its economy.

“The risks are quite substantial that this secular stagnation, something that Japan has been dealing with for quite some time, is a real risk to the U.S. 10, 20 years down the road,” Memani said.

“We are not Japan,” he said, citing the U.S.’s higher productivity, lower federal deficits and more favorable demographics. “But can we become Japan in 10, 20 years? Maybe."