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"The U.S. equity market is flashing warning signs, according to chief market strategist Chris Watling.

Watling, also the chief executive of London-based Longview Economics, expects stocks to fall into a bear market over the next three to six months thanks to lofty valuations driven higher since September last year.

The S&P500 was trading at 3,985 on Wednesday morning at a price-to-earnings ratio of nearly 20x even as the U.S. central bank attempts to tighten financial conditions.

According to Watling, valuations are now in “bubble” territory and have never been so high except during the dot-com and pandemic-era boom in stock prices.

“You’ve got a market here on a forward P/E ratio of 18 and a half times, which has only really been substantially higher in a bubble,” Watling told CNBC’s “Squawk Box Europe.”


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