EU Debt Issue to Rile Markets for ‘Many More Years’
CNBC.com Writer
Wall Street may breathe a sigh of relief with the apparent success of the Greek bond swap, but the European debt issue will continue to rile the markets for “many more years to come.”
“Even if we band aid this Greek situation right now, they’re going to default down the road or write down 100 percent of the debt,” said Scott Wren, senior equity strategist at Wells Fargo Advisors.
Wren projects that Greece will likely require further bailouts and other European nations such as Portugal and Spain may even jump on the bandwagon.
In addition, Wren said he would not be surprised to see the market take a breather in the near-term, following the recent rally and expected slowdown in the global economy this year.
“We’ve seen downward adjustments from Chinaand Brazil,” noted Wren. Japan’s not going to do anything for us and [in] Europe...do they have a major or a minor recession?”
As for the U.S., recovery has been at a below-average pace since the end of last year. Still, Wren revised the likelihood of a recession to 20 percent from 35 percent, saying he expects to see some strength going forward.
In his weekly note, Wren said investors should maintain a balanced portfolio but suggested using pullbacks as “opportunities to average into the more cyclically-sensitive sectors whose fundamentals are likely to improve as the economy continues to grow.”
Wren’s year-end target range for the S&P 500 is 1,325-1,375.
—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC—
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