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Should U.S. Investors Lose Sleep Over Europe?

Should U.S. Investors Lose Sleep Over Europe?
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Benzinga had the chance to speak to Oppenheimer Funds' Chief Economist Jerry Webman this week, ahead of the ENGAGE 2015 International Investment Education Symposium to be held at Wayne State University on March 26.

One of the topics Dr. Webman talked about was the current turmoil in the Eurozone.

Related Link: Oppenheimer's Chief Economist Is Asked: What Will Murder The Bull Market?

From quantitative easing and currency weakness to potential sovereign debt defaults, Europe has been in a constant stream of headlines in recent months. When asked if long-term U.S. investors should be losing sleep over the unpredictable chaos, Webman responded.

Market Disconnect

In particular, he pointed out how much European stock markets have outperformed the U.S. market so far this year. However, he explained the disconnect between stock markets and underlying economies.

According to Webman, "European companies have figured out how to take advantage of lower labor costs, a cheaper, more competitive currency and favorable monetary policy. Good European companies are figuring out how to make money and attract investors."

Greece Default On The Way?

Greece's debt woes have been a hot topic of discussion lately, as investors are waiting to see if the country will default on its debts.

Webman stopped short of predicting a Greek default, but did indicate that he "wouldn't be surprised" if it happened.

What To Look Out For

Outside of a major ECB policy mistake or an "extremely low-probability" string of exits from the Eurozone, Webman believes long-term investors have little to fear from Europe.

Although he described these dangerous scenarios as "very unlikely," he cautioned that Europe is worth keeping an eye on because "unlikely things sometimes happen."

Image credit: Public Domain

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