The turmoil in Europe sparked by French and Greek election results won’t derail the bull market for U.S. stocks, says Jim Paulsen, chief investment strategist of Wells Capital Management.
In the spring of 2010 and 2011 worries about Europe did push the U.S. market down. But this time around, Europe is in much better shape, he tells Yahoo.
“The patient in Europe went untreated until last fall,” Paulsen says. “Then finally the doctors treated it.”
Editor's Note: Google Banned This Video But You Can Watch it Here
European Central Bank (ECB) President Mario Draghi cut interest rates twice, the ECB massively expanded its balance sheet, a “liquidity ring” was placed around troubled banks, and haircuts were enforced on Greek bond holdings.
“I think ever since then, the crisis in Europe has been better,” Paulsen says.
And he’s not worried about France’s new Socialist president Francois Hollande. “If we move toward less ferocious austerity, maybe that’s a better track out of this crisis than one where we cut, cut, cut and expect to grow again,” Paulsen says.
And he believes Greece is of limited importance. “Who needs Greece in a world that has a lot of other economies growing smartly?”
Others aren’t so sanguine, with the Standard & Poor’s 500 Index hitting a two-month low.
“The situation in Europe could get worse before it gets better,” James McDonald, chief investment strategist at Northern Trust, tells Bloomberg.
“The concern is about the potential that Greece . . . defaults and leaves the euro.”
Editor's Note: Google Banned This Video But You Can Watch it Here
© 2024 Newsmax Finance. All rights reserved.