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US stocks still most appealing option among tough global markets, economist says

U.S. stocks have long been referred to as the most attractive out of several poor global options, but the situation is now becoming even more dire, according to one economist and market strategist.

Markets around the world have faced some trying sessions. In particular, European equities that have already had to contend with slow growth tanked after Britain surprised most investors by voting in favor of leaving the European Union. In the U.S., the S&P 500 and the Dow fell powerfully after the Brexit vote, but recouped about half of those losses between Tuesday and Wednesday.

Conditions like upward pressure on wages and regulation, a less high-growth environment for the developing world and more political uncertainty could make it harder to turn a profit in the U.S. market, said Max Wolff, chief economist at Manhattan Venture Partners, on CNBC's Power Lunch on Wednesday.

"That being said, getting negative interest rates being in the bond market with all the headwinds there, or running back to the developing world doesn't look like a good idea," Wolff said. "We don't love the dynamic but we don't see the bottom dropping out in U.S. equities right away."

U.S. stocks are "an increasingly filthy cleanest shirt in an outright grotesque hamper," is how Wolff sums up the situation.

Erin Gibbs, equity chief investment officer at S&P Global, agreed with this sentiment that in the long term, the U.S. is still one of the safer places for investors to keep their money.

"The S&P 500 is trading about 2 percent just below its high its peak it made back in June and when you look at valuations the S&P 500 has been trading at this really tight range for the past 18 months," Gibbs said on "Power Lunch." That suggests to her that if risk appetites improve, valuations could indeed drive stocks higher.

Still, Gibbs ultimately sounds similar to Wolff.

"Short term there's a little room to grow, long term still one of the safer places for your money," she added, meaning that she too is cautiously bullish on the relative strength of U.S. stocks.


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Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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