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It sounds like a 'Goldilocks' market to me: Expert

  • U.S. markets are experiencing the "Goldilocks" standard of high growth and low inflation, says Michael Arone, State Street Global Advisors chief investment strategist.
  • "We have good but not great growth, low interest rates, and pretty tame inflation with decent earnings growth. To me, that's the very definition of 'Goldilocks,'" he said.

U.S. markets are experiencing the "Goldilocks" standard of high growth and low inflation, Michael Arone, State Street Global Advisors chief investment strategist, told CNBC on Tuesday.

Arone isn't alone in this view. In May, a record level (34 percent) of investors described the economy as 'Goldilocks,' according to Bank of America Merrill Lynch Fund Manager's Survey.

"It does sound like Goldilocks to me. We have good but not great growth, low interest rates, and pretty tame inflation with decent earnings growth. To me, that's the very definition of 'Goldilocks,'" he told CNBC's "Power Lunch."

Goldilocks found by the tiny wee bear. A 20th century Childrens' book illustration for 'The Story of the Three Bears.'
Michael Nicholson | Corbis | Getty Images
Goldilocks found by the tiny wee bear. A 20th century Childrens' book illustration for 'The Story of the Three Bears.'

All week, the market has been breaking records. On Monday, U.S. stocks hit record highs as Wall Street looked ahead to the release of Netflix's quarterly results. On Tuesday, the Dow Jones industrial average rose, breaking above 23,000 for the first time.

Despite these highs, Arone sees three major risks to the market.

"U.S. earnings are beginning to decelerate. A monetary policy mistake certainly could derail the markets. And lastly, zero could be the legislative victories the Republican Party has as they go towards campaigning for midterm elections next year," he said.

Unlike Arone, Steve Massocca, Wedbush Securities managing director, predicts the markets will continue to rise.

"I think the overwhelming impetus of this market is global central banking," he said on "Power Lunch."

"One of the largest holders of Apple and Google is the Swiss Central Bank," he said. "As long as it's pedal to the metal from all these large central banks, I think the markets continue to go higher, asset pricing continues to go higher."