U.S. stocks could jump as much as 20 percent, led by technology companies, as the global economy rebounds from Europe's debt crisis, said Barton Biggs.
U.S. stocks could jump as much as 20 percent, led by technology companies, as the global economy rebounds from Europe's debt crisis, said Barton Biggs.
“I'm betting the next move in the U.S. market is going to be up 15 to 20 percent,” Biggs, who runs New York-based hedge fund Traxis Partners LP and whose flagship fund returned three times the industry average last year, said in a Bloomberg Television interview. “I would just point out that the world is having a strong economic recovery, and so is Europe.”
Biggs recommended buying U.S. stocks last year when benchmark indexes sank to the lowest levels since the 1990s. He didn't give a timeframe or refer to a specific measure. The Standard & Poor's 500 Index rose 0.3 percent to 1,163.02 at 12:06 p.m. in New York, rebounding from a 1 percent loss.
The stock gauge climbed 4.4 percent yesterday, the most in more than a year, after European policy makers announced an almost $1 trillion loan package to contain the region's sovereign-debt crisis. The S&P 500's advance followed an 8.7 percent slide since April 23 -- and the biggest weekly retreat since the start of the bull market in March 2009 -- on concern Europe's leaders weren't doing enough to avert the threat to global credit markets.
An index of the S&P 500 Index's computer hardware companies was the biggest contributor to yesterday's advance.
“There are plenty of opportunities in the U.S.,” Biggs said, adding that shares in drug developers look cheap and that property companies are also attractive. “It's by no means a foregone conclusion that we have a crisis every three years and, my God, that the world is coming to an end. I don't believe that's what's happening at all.”
Governments of the 16-euro nations have agreed to lend as much as 750 billion euros ($958 billion) to the most-indebted countries to resolve the region's debt crisis, while the European Central Bank said it will counter “severe tensions” in “certain” markets by purchasing government and private debt.
Europe's debt problems illustrated the need for nations in the region to evolve towards a federal system of government capable of enforcing more “discipline” on countries, said Biggs.
“In the long run, Europe will have to become similar to the United States,” he said.
Biggs said in March 2009 that stocks would rise, following which the S&P 500 Index ended that year up 23 percent. On March 22 this year, Biggs told Bloomberg TV that U.S. stocks had the potential to rally a further 10 percent. The gauge has shed 0.5 percent since then.
