Byron Wien, vice chairman of the advisory services unit at Blackstone Group LP, warns investors to "buckle up" for more stock-market volatility.
Wien told CNBC
that while he doesn't expect another steep decline in the large cap S&P 500, he does see more downside ahead.
"I'm not looking for a bear market. We have further to go, but I don't think it's going to be a major downshift from present levels," he said. A bear market is loosely defined by a 20 percent or more decline from a recent high, CNBC explained. The S&P 500 is currently 11 percent from its May 2015 peak. "I don't think we've seen the ultimate lows," he added.
Wien expects traders to remained stressed the market to fluctuate violently as crude prices also remain unstable.
"Oil has been the key factor [this year]," he said. "If you want the stock market to prove me wrong and continue to rally from here, you really need oil to stabilize and move up," he said.
"We did think originally that a decline in the price of oil was favorable, but now I think a rise in the price of oil indicating the whole system would be stable is the most bullish thing that could happen," he said.
Wien expects the S&P 500 to close the year negative by approximately 5 to 10 percent. The index is currently trading around 1,895, more than 7 percent lower than where it started 2016, CNBC reported.
"My view is that there's still bad news out there. … We're going to reach a bottom somewhere in the first half," he added.
While the jury is out on whether the selloff is over, U.S. index futures advanced early Tuesday, signaling equities will extend gains into a third day, on growing speculation that the recent selloff was overdone.
“A large proportion of the rout we saw in the first six weeks of the year was overdone, particularly with regards to banks,” Peter Dixon, an economist at Commerzbank AG in London, told Bloomberg.
“Does it mean the selloff is over? No clearly not, but it’s definitely a positive signal. You get this significant divergence between the market perception and reality, which over time will close, and that’s why we are seeing the rally we are seeing and it gives you some hope.”
There is another school of opinion stating that the market rout might not be all that bad.
The recent global stock-market bloodbath has frayed investor nerves but it may end up being "a shot in the arm for the world economy."
"So, at the risk of sticking my neck out a long way, let me suggest that the equity bloodbath this year is little more than noise in the particular set of circumstances facing us," the U.K. Telegraph’s Ambrose Evans-Pritchard
"This is a stock market rout we should celebrate," he says. "We toiling workers can allow ourselves a wry smile. For most of the last eight years, the owners of wealth and inflated assets have had things their own way, while the real economy has been left behind," he wrote.
"The tables are finally turning. The world may look absolutely ghastly if your metric is the stock market, but it is much the same or slightly better" for the working class.
(Newsmax wire services contributed to this report).
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