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Thomas Lee, JP Morgan’s top U.S. equity strategist, went on CNBC this morning to lay out some scenarios for a Greek exit from the Eurozone, and how it could affect equity markets. According to Lee, the odds of an exit are currently about 50%.Here are Lee’s scenarios, from CNBC:
- If Greece, stays in the euro, the S&P 500 will surge to 1,500.
- If Greece exits the euro and contagion is contained, we’ll see the S&P 500 drop to 1,200.
- If there’s contagion from a Greek exit, then GDP growth in the Eurozone will drop 4% peak to trough, which could trigger a global recession. Lee didn’t quantify the hit to the stock market, but signaled that the S&P would fall considerably lower than 1,200.
On the positive side, US economic growth could be strong enough to make Europe just a regional crisis. Overall sentiment is so bearish right now, that markets are in a position to rally rather than sell off, he said.