The S&P 500 is likely to keep rising sharply and gain more than 30 percent from present-day highs, leading to a potential stock market bubble and subsequent meltdown, Sarasin Bank's chief strategist warned.
In a note to clients, Philipp Baertschi says he expects investors to become increasingly bullish. He says the S&P breaks through the 2,000 point barrier in 2015. The S&P has reached new highs in recent sessions and is currently trading around 1,550 points.
"The longer interest rates stay at zero, the greater the pressure on institutional investors, in particular, to shift portfolio allocations. We could potentially witness a strong rally in equity prices over the next two to three years, provided interest rates remain artificially low," Baertschi said in the note.
As the euro zone debt crisis recedes and fears of a major negative impact from the fiscal cliff and recent sequester decline, investors have grown more bullish, taking markets up to all-time highs in recent sessions.
London's blue-chip index the FTSE 100 closed at 6,500 Monday not seen since pre-financial crisis times of January 2008.
He added that the latest global monetary and fiscal policy measures make a "melt-up" scenario more likely.
"In this scenario, within two years the S&P 500 Index rises above 2,000 points," Baertschi added, going on to caution that "this equity bubble is followed in subsequent years by a meltdown associated with significant price setbacks," as investors' sentiment can switch "very quickly from a melt-up to a meltdown scenario."
He adds that the macro economic backdrop remains positive for the U.S. despite the high unemployment rate and high gasoline prices, with the recovery in the housing market acting as a stabilizing force. He expects economic growth to accelerate.
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Joseph Lavorgna, chief U.S. economist at Deutsche Bank dismissed notions that the rally had the hall marks of a bubble and told CNBC.com that the S&P hitting the 2,000 mark by mid-2015 was "not inconceivable."
"It's an aggressive call and it's more than people expect but it's not extreme. If we end the year  at 1,650 and the start of 2014 the economy looks healthier then equities probably will move higher.
"The multiples are relatively low and stocks are cheap versus bonds. There's been very little inflows into equities in the last five years but there's no bubble, not in any way, shape or form," Lavorgna said.