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The historic rise of US equities is about investors' belief in Uncle Sam, according to an analyst from investment bank Morgan Stanley.

"This year has been a story of how well America has done," analyst Ruchir Sharma told CNBC. He described the recent rise in the US economy as "American exceptionalism."

"We may or may not believe in [American exceptionalism], but the financial markets have never believed in it to such an extent," he said.

The analyst was referring to the 3.5-percent growth in the US economy for the first nine months of 2018, which is reflected in the "very richly valued" US financial markets.

According to Sharma, the last decade has widened the 'huge gap' between the US and emerging markets. Other analysts have noted that the US contribution to the global economy is overestimated.

The US share of global GDP now stands at 18 percent, a significant slide from the 30 percent seen after World War II. The Chinese economy has quadrupled its share to 16 percent, while emerging markets like the BRICS countries (Brazil, Russia, India, China, South Africa) and others account for 60 percent of global GDP.

"We live in this very peculiar situation where the role of the dollar in global finance is just idiotically more important than the US economy. So, if a strong economy translates directly into a higher dollar, some of these things just sort of follow like night and day," economist Jim O'Neill said last week.


Comment: RT also reports:
'Biggest bubble in history of mankind': Ron Paul says US stock market will soon plunge by 50%

The recent jump in Treasury bond yields indicates that the US is barreling towards a potential recession and market meltdown at an increasingly fast pace, according to former Republican congressman Ron Paul.

"We're getting awfully close. I'd be surprised if you don't have everybody agreeing with what I'm saying next year some time," the retired politician told CNBC.

Paul's remarks come as the benchmark 10-year Treasury yield rallied to seven-year highs, intensifying fears over rising inflation.

"It can be pretty well validated by looking at monetary history that when you inflate the currency, distort interest rates, and live beyond your means and spend too much, there has to be an adjustment," the politician said, adding: "We have the biggest bubble in the history of mankind."

It's not the first time that Paul has made such dire warnings. He has been cautioning investors for years that when the bubble eventually bursts, it could cut the stock market in half or more.

Paul predicted the February correction, but not in terms of its size and scope.

The former congressman acknowledged that his previous predictions of a downturn haven't come to pass, but said that it's just a matter of time, based on the looseness of US monetary policy since the 2008 financial crisis.

"I know it's going to happen," Paul said. "It will come, and the bubble is bigger than ever before."

A number of other politicians have also voiced concerns over ballooning deficits, including current US House Speaker Paul Ryan, who issued a warning regarding the nation's debt in 2012.
The trouble with predictions of a financial collapse is that they're usually based on reality, whereas world markets, for the most part,
particularly Western markets, are not: