Bob Doll, Black Rock’s bullish chief equity strategist, the raging rally is making many nervous.

Governments are heavily in debt, credit issues linger from the financial crisis, emerging market countries are battling inflation, and rising food prices are adding to political unrest in the Middle East and Northern Africa.

So, when will all the bad news make the market panic?

Doll remains upbeat. “The bearish view of the current rally is that it is liquidity-driven and based on artificial propping-up by overly easy monetary and fiscal policy support,” he wrote Tuesday.  “We believe that the economy is transitioning into a self-sustaining expansion.”

He said, six months ago markets priced in the likelihood of a U.S. double-dip recession, which—as we now know—the country avoided. As a result, indicators have been steadily beating expectations.  Now he’s betting that job growth will accelerate and keep the U.S. economy on track.

Although core inflation increased more than expected in January (including increases in prices for apparel, air transportation and rent), Doll sees this level of inflation as part of  “a long-term bottoming process… Given current high levels of unemployment in the United States, we do not believe higher inflation levels are imminent,” he wrote Tuesday. “The global recession hit the developed world the hardest and caused excess economic capacity and weaker demand levels — these trends are still evident in the developed world and are helping to hold inflation in check.”

However, inflation is clearly at issue in economies that grew during the recession and are now getting “an additional growth jolt.” While government policy is now keeping stock prices down in those markets, Doll doesn’t expect to see more central bank tightening.

Meanwhile, the economic impact of political unrest remains “localized,” he wrote.

Cash and government bonds are hardly appealing alternatives, Doll notes. “In our opinion, this environment of improving growth, low inflation and a supportive policy backdrop continues to represent a “sweet spot” for risk assets.”