Equity markets have switched from fear to outright complacency in the space of one year and are ignoring the warning signs, according to SquawkBox Europe's guest host, Phillippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
Indicators such as the VIX, which is currently trading around recent lows, is an example of the complacent attitude which ignores the huge global debts built up over the length of the crisis, Gijsels told CNBC Monday.
"We have always labelled the move from the March (2009) lows as the mother of all bear market rallies and we stick to this view, even though it has already moved quite a bit further than we expected, (we thought about 30 percent to 40 percent but clearly underestimated the animal spirits)," he said.
He goes further and describes this move as a "dash for trash" in which the equity for companies with the weakest credit rating has outperformed the companies with the better credit rating.
On the macroeconomic front Gijsels believes the West continues to face severe deflationary pressures which will offset the overheating in emerging markets such as China and India.
"We expect a soft patch, weakness in the second half of the year as the positive inventory correction has run its course and fiscal measures, i.e. tightening, start to work against the economy. It remains to be seen how strong the economies in Europe and the US are once the stimulus measures wear off," he said.