Investors are navigating a mature bull market - not a bubble: CIBC

Crosscurrents bound to create bouts of volatility but also generate investment opportunities across markets

BOSTON, June 23, 2014 /CNW/ - Investors should not see today's broad stock market as a bubble but rather as a mature bull market, says David L. Donabedian, CFA, U.S. Chief Investment Officer at CIBC (TSX: CM) (NYSE: CM).

"By virtue of its duration and current valuations, equities are in the mature phase of a bull market. That means a more sober pace of advance, with a lot riding on the economy and monetary policy," says Mr. Donabedian.

"We are not in another bubble. But given the destruction over the last 15 years from the bursting of the tech, credit and housing bubbles, this question is always a wise one to ask."

Stoked by unconventional monetary stimulus and with evident pockets of valuation excess, the S&P 500 reached progressive new highs. But, overall market valuations are middling relative to the long-term average, and interest rates remain well below average.

"Excessive valuations and 'hot' IPOs in the social media and biotech spaces have been deflated, while the overall market advanced. This is an indication of rational, valuation-sensitive behavior—not a bubble," he says.

The good news is the U.S. economy continues to gain strength. "It has been a long time coming, but the US economy is showing its broadest base of health in almost a decade," says Mr. Donabedian. "We look for 3 per cent or better real GDP growth over the next few quarters—about a full percentage point higher than the average growth rate of this recovery."

There is no question that the extraordinary measures of the U.S. Federal Reserve and other central banks have been a huge catalyst for the equity bull market in recent years, he says.

The European Central Bank may be late to the party but now that it is taking a more aggressive approach, equity markets around the world, not just in Europe, will continue to find support.

"Liquidity is increasingly a global phenomenon," he adds. "Over time, though, we expect that central bank policy will be the most frequent source of market volatility."

About CIBC

CIBC is a leading Canadian-based global financial institution with nearly 11 million personal banking and business clients. Through our three major business units - Retail and Business Banking, Wealth Management and Wholesale Banking - CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada with offices in the United States and around the world. You can find other news releases and information about CIBC in our Media Centre on our corporate website at


For further information:

Kevin Dove, Head, External Communications, 416-980-8835 or

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