The S&P 500 is massively overvalued – and likely to plunge like it did last year, top economist David Rosenberg says

• David Rosenberg expects a repeat of last year’s sharp decline in stocks as risks mount in markets.
• The economist sees several headwinds including Fitch and Moody’s downgrades and Chinese deflation.
• The S&P 500 is way overvalued by historical standards and relative to other assets, Rosenberg says.

Get ready for a repeat of last year’s slump in stocks, as investors wake up to the mounting risks in markets today, David Rosenberg has warned.

The Rosenberg Research president pointed to deflation in China, the prospect of higher borrowing costs for the US government after Fitch downgraded the country’s credit rating, and a looming credit crunch after Moody’s cut the credit ratings of several US regional banks. He also singled out the resumption of student-loan payments in September as a likely drag on young Americans’ future spending.