David Rosenberg, chief economist and strategist for Gluskin Sheff + Associates, sees parallels between the financial conditions now and during the Asian currency crisis and Russian debt crisis of 1997 and 1998.
Both then and now you have "the global (non-U.S.) economy in disarray; rising default rates overseas; crumbling political, economic and financial structures; a huge U.S. dollar rally; a collapse in oil and industrial commodity prices; and a massive bond rally," he writes in the Financial Post
But the U.S. economy and stock market kept chugging along back then, although stocks endured a sharp correction in the summer of 1998. The economy didn't face a recession until 2001, and equities didn't peak until 2000.
So, "can the U.S. economy continue to expand — and the bull market in equities remains intact — with the rest of the world in a mess?" Rosenberg asks.
"The answer is yes. The proof in the pudding is in the eating that took place 15-16 years ago," he notes.
The S&P 500 index has more than tripled since March 2009, and the economy has averaged growth of 4.3 percent over the last two quarters.
"We are going through a tumultuous period right now, but, as was the case in 1997/98, I don’t see the problems overseas being transmitted into a North American recession, and that is what it would take to turn me fundamentally bearish."
James Rickards, senior global strategist at West Shore Funds and author of "The Death of Money: The Coming Collapse of the International Monetary System," isn't so bullish on stocks
The U.S. market "just feels like a bubble to me," he tells Kitco News
. "I'm not saying it couldn't go up, they may go up more. But when they come down, they'll come down hard and fast, and I don't want to be around when that happens."
The S&P 500 had a trailing price-earnings ratio of 19.48 Friday, up from 18.57 a year ago, according to Birinyi Associates.
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