Even if the equity market remains "quite cheap" by traditional yardsticks, Liz Ann Sonders believes a modest correction would be welcome after the market's 24 percent rise in 2013 on top of a double-digit gain of 13 percent in 2012.

Sonders took issue with people who have termed her a perma-bull, noting that she was very negative about stocks in 2007. Still, Schwab's chief market strategist told RIA attendees at this year's annual Impact conference that she believes a vibrant private sector could sustain the secular bull market that began in March 2009.

But she believes that the recovery in the U.S. is real and that it is the primary factor driving the stock market. "Corporate earnings and dividends are as important as quantitative easing," Sonders said, disagreeing with those skeptics who believe equities are levitating solely on the back of Federal Reserve Board policy.

Still, she does see short-term warning signs. "Dumb money confidence is spiking," she said. "We have [all the] conditions for a melt-up. A pullback would be healthy."

Contrary to conventional perception, the private sector has been growing at a 3.2 percent annual rate since the recession ended in the second quarter of 2009. That's isn't great but it is also not that far off its post-World War II pace. The surge in government spending that began with stimulus programs and TARP in 2008 and 2009 is now decelerating at a fast pace, bringing total GDP growth down to about 2.3 percent.

Sonders points out that the private sector, which has been deleveraging for some time, is now passing that baton to the public sector, a move that she views as normal. Private sector employment is also a few months away from hitting its all-time high.

Within the private sector, Sonders said, another healthy transition is taking place: Consumer spending is now running at 68 percent of GDP, down from more than 71 percent a few quarters ago.

U.S. growth has been too dependent on consumer spending for too long, so the fact that sectors like energy and manufacturing are emerging as new leaders is encouraging. However, residential housing remains the biggest driver of growth over the last two years.

Sonders believes both the commodities super cycle and the third consecutive 13-year bull market in gold are over. Coming out of the recession, developed and emerging market equities and commodities all rallied together. That ended in early 2011.

Within emerging markets, there have been wide disparities in equity performance. Since 2010, the Phillipine stock market has soared 142% while China's has declined by 28%.

She believes that weakness in commodities will help keep inflation very low, which is propitious for stocks. "The fact that inflation is so low supports even higher price/earnings multiples," she said.

Moreover, as China's new leadership tries to transform its economy from being totally dependent on investment to one that is more balanced and consumption-oriented, their strategy is bearish for commodity prices.

Within the U.S., signs of animal spirits are slowly reappearing. Small banks in particular are loosening their lending standards.

As for those who fear the U.S. could be losing its competitive advantage, Sonders noted that America ranked fourth on a recent survey of nations where it was most easy to do business, behind only Hong Kong, Singapore and New Zealand. China didn't make the top 90. The U.S. energy and manufacturing renaissance is no longer "a pipe dream," she said. It's a reality.