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Here's why a recession is 'several years away'

While the S&P 500 (^GSPC) flirts with all-time highs, many investors may be wondering how much more room do we have to go? Chief international economist at Deutsche Bank Torsten Slok joined Yahoo Finance to discuss what he sees into the end of the year -- particularly with the growing potential of a rate hike by the Federal Reserve -- and for 2016.

Source: Torsten Slok, Deutsche Bank
Source: Torsten Slok, Deutsche Bank

Slok says that while we are six years into the recovery, business cycles "don’t run on a clock," with recessions driven instead by imbalances in the economy.

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Slok doesn’t see a recession anytime soon. “We need some kind of shock, either from outside the U.S. – it could be a hard landing in China – we don't expect that.”

He added that the domestic economy, while not moving at a robust pace, reflects strength: “Things are moving in the right direction [with] the labor market, consumption, the broader picture.”

Source: Torsten Slok, Deutsche Bank
Source: Torsten Slok, Deutsche Bank

Meanwhile, with earnings season coming to a close, companies marked a dip in profits for the quarter.  But Slok says that an earnings recession does not equate to an economic recession, citing the higher dollar and lower energy prices impacting earnings as not having broader implications on the economy.

“Those two shocks – namely, higher dollar and lower energy prices – are something that mainly hits profits of S&P 500 companies but they're not big enough, if you will, to create an economic recession,” he said.

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