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Markets not pricing in Europe risks: Pro

A resurgence of the euro zone crisis in the headlines could catch investors off-guard, Brooks Macdonald Asset Management Head of Investment Strategy Gemma Godfrey said Wednesday.

"The risk that markets don't seem to be prepared for is actually the aftermath of the German election," she said on CNBC's "Fast Money."

Godfrey noted that markets have been pricing in the potential reduction in the Federal Reserve's $85 billion-per-month asset-purchase program, also known as the "taper," as well as a re-election of German Chancellor Angela Merkel.

(Read more: Beyond taper, clear sailing for stocks: David Bianco)

"What they haven't priced in for is a resurgence of the euro zone crisis in the headlines," she added.

Godfrey, who has more than $7 billion in assets under management, said that there were a couple of outcomes that could shock the markets.

The first surprise would be a loss for Merkel.

But even if she does win, "she will still have problems progressing and supporting the euro zone as a whole because there's growing euro skepticism and there's growing opposition to the bailouts. And the reason that this is important is that Greece potentially is going to need more support."

(Read more: Trading ahead of the Fed's taper announcement)

Other economies could also provide a drag on the market, too, she said.

"And if we look at Portugal, the Portuguese 10-year has been hitting that 7 percent mark, so obviously that's a cause for concern.

"And Slovenia might be the sixth country to request a bailout. So, there is potential for the euro zone to come back into the headlines."

(Read more: Short this stock after S&P 500 spikes)

The risk for investors is the attractiveness that Europe has presented, Godfrey added.

"U.S. investors have been investing historically high amounts of money into euro zone equities," she said. "It's the highest amount since 1977."

(Read more: Jeremy Siegel: 'There's some juice left in this market')

Godfrey also said that there were still opportunities on the continent, particularly in "strong international companies that just happened to be based in Europe."

"However, in the periphery there's still cause for concern," she added.

By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.

— CNBC's Katie Young contributed research to this report. Follow her on Twitter: @katiecnbc.

Trader disclosure: On Sept. 18, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Pete Najarian is long calls AAPL; Pete Najarian is long calls C; Pete Najarian is long calls INTC; Pete Najarian is long calls BBRY; Pete Najarian is long calls YHOO; Pete Najarian is long SBUX; Pete Najarian is long FB; Stephanie Link is long AAPL; Stephanie Link is long JPM; Stephanie Link is long MS; Stephanie Link is long CSCO; Stephanie Link is long WFC; Stephanie Link is long FB; Stephanie Link is long ADBE; Stephanie Link is long JOY; Michael Murphy is long BAC; Josh Brown is long AAPL; Josh Brown is long TLT; Josh Brown is long P; Josh Brown is long VAW.

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