Cyclically, in our view, Western equities are in a cyclical bull market that may last for another two or three years as we move from phase two into phase three of our stylised cyclical bull market. Over the longer term, over the next decade and in two or three years' time, indeed, we expect equities to be challenged. Perhaps another new bear market. Indeed, we think over the course of the next decade equities are likely to deliver pretty much zero, or even negative, real return over the course of that entire 10 years.

The secular Western equity bear market that began in 2000 persists and in our view, could easily persist for another decade.

So cyclically, in the near term, over the next two or three years, the outlook for equities is positive in the West in contrast to the long-term secular trend and the reason we say that is because, in our view, the global economic expansion will persist.

Yes, the macro is challenging at the moment as is typical of phase two of a stylised cyclical bull market, the consolidation phase, when we consolidate the gains from phase one from 2009. It's typical, in that case, for the macro to go flat, for leading economic indicators to go flat, for ISM to be soft, for employment data to slow and so on.

But behind all that, the structural shape of the economy for the next year or two is more promising. If, for instance, you look at the credit cycle, in the near-term the credit cycle is turning. Banks are making a lot of money. They're building up capital that they will have to put to work, i.e. have to lend out. So we're coming close to a turn in the credit cycle as credit conditions loosen and support the recovery and, of course, the recent fall in bond yields adds stimulus to the US economy and adds it at a time when companies are strong. They are cash rich and there has never been a recession in the States, or a double dip, when companies have been cash rich.

All of this, this short-term cyclical underpinning of the economy, suggests a re-acceleration of growth as we go into next year supporting the move in the stylised cyclical bull market from phase two, that consolidation phase, into phase three, the rest of the cyclical bull market, the up years for the next two or three years with equities gaining 10, 12 or even 15 per cent per annum over the course of next year into '12.

So given that background, with equities so weak in August, and our view that we're still in phase two but not far off phase three of the stylised cyclical bull market, where are we now at the beginning of September?

In our view, given the weakness in August, pessimism is overdone. Both pessimism on the economy, but also more importantly, pessimism on the market. Indeed, a whole raft of our indicators are flashing up buy or strong buy on a one to three month view.

If you look at sentiment, it's never been as depressed as this since the March 2009 lows. No one is bullish. Everyone is bearish if you look at those surveys. A great contrarian indicator tells you it is all in the price. The bad news is in the price.

On top of that, risk appetite indicators, heavily beaten up, flagging up buy or strong buy on a two to three month view. Technicals showing a market that is oversold, albeit not as oversold as it was at the July lows, but still clearly oversold.

On top of that, we have a valuation of equities relative to bonds, a near-term situation which is extreme favouring equities relative to bonds. Real bond yields in the States registering less than 1 per cent, the lowest since March 2008. Earnings yield on equities almost at its highest over that time period. You're getting paid a lot to own equities relative to bonds.

So adding it all up, where are we today? Indicators are pretty clear - it's buy, strong buy, risk goes back on for September and perhaps further out into this year.

So while in the short-term the outlook for Western equities is good, in the long-term the outlook is poor. Western equities entered a secular bear market in the year 2000 when the S&P 500 peaked in March of 2000 of that year and they persist in that secular bear market.

Indeed, in our view, that could persist for another 10 to 15 years and there are three key reasons for suggesting that.

Firstly, the valuation. The valuation excess that we saw at the peak in 2000 continues to unwind. An analysis of a Shiller PE ratio shows that whilst we were at extreme highs in 2000, we're still above average levels and secular bull markets begin when equities are exceptionally cheap.

Secondly, the long cycle. There is lots of evidence of long cycles, long waves both in the economy and in the stock market. Kondratieff proved it with a commodity super cycle.

But what you also see from this chart is that when commodities are in a super cycle, equities are in a secular bear market. We're halfway into that commodity super cycle. It began in 2001. In our view, there is another 10 or 15 years to go which leads us to the conclusion equities remain in that secular bear market.

Kondratieff is backed up by the Kindleberger cycle and the Toynbee cycle and the Howard Strauss cycle. All of these cycles point to this decade as the crisis challenging decade for the west.

And on top of that, the third key reason for expecting a persistence of the secular bear market is by just looking at the structural macroeconomic challenges the West faces today. Whether it's deleveraging, which is underway in a secular way in the western financial system, whether it's the layer of derivatives that sits atop that financial system as a potential ticking time bomb just as we saw with AIG in the last crisis, whether it's money creation, whether it's potential geopolitical challenges as China and India rise to challenge the west, all of these factors contribute, or could contribute to the coming crisis decade. Structural macroeconomic challenges, potential geopolitical challenges all add to the feeling that western equities remain in a secular bear market.

That was the Longview. You can download this programme form the iTunes store, from Cantos' website or from our website www.longvieweconomics.com. If you have any questions, please do get in touch through the website. We hope you have enjoyed watching. Look forward to seeing you next month. Goodbye.