---
title: Eagle Asset Management May 2015 Market Perspective
description: Richard Skeppstrom comments on the US Market's neutral state in Eagle Asset Management's May 2015 Market Perspective. Get the full report here.
image: http://www.wrapmanager.com/hubfs/MM_Logo_Images/EagleAssetManagementLogo-1.jpg
---

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# Eagle Asset Management May 2015 Market Perspective

Posted by [ WrapManager's Investment Policy Committee](https://www.letsassemble.com/wealth-management-blog/author/wrapmanagers-investment-policy-committee)  
 June 10, 2015

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[Eagle Asset Management](http://www.wrapmanager.com/wealth-management-blog/topic/eagle-asset-management-inc) portfolio manager, Richard Skeppstrom, provides his May market perspective.

"A Catch-22: The powerful earnings advance will peter out without better economic growth but the Fed will raise rates if the economy accelerates." Richard Skeppstrom, manager for Eagle's Strategic Return Portfolio, comments on his view of the U.S. Market's neutral state.

Neutralish

U.S. markets appear boxed-in. A pause was inevitable but this may be something different and it hinges on the catalyst for higher prices. It’s something of a Catch-22.The powerful earnings advance will peter out without better economic growth but the U.S. Federal Reserve will raise rates if the economy accelerates. It’s likely to be one or the other and the markets aren’t thrilled with either; hence, the pause. We’ve ignored weak gross domestic product (GDP) quarters in the past few years because margin expansion won the day and the Fed as on hold. But the Fed targeted 2015 for rate increases and while the thrust of margin expansion may not be exhausted, it’s certainly narrowing.

In any case, we must face facts: We are slowly but surely sun-setting a period of remarkable earnings strength and Fed accommodation. How long the market will remain in stasis is unknowable. I wouldn’t be shocked to find us in this range a couple years from now. But that’s a pragmatic view and the markets aren’t failingly pragmatic. Ignoring the fi ne print for a moment, history will show a furious capital-markets advance on the heels of the 2008 crisis followed by, in my view, a stubbornly long period of low returns. But I’m more melancholy than alarmed at the moment. The economy will grow some this year; valuations aren’t mad; and earnings won’t seriously disappoint. If this doesn’t exactly sound bullish, what exactly does it sound like? Neutralish? That’s a halfclever term for a half-satisfying strategy: somewhere between neutral and bullish on stocks. You can see why I’m not widely or even narrowly quoted in the financial press. Anyway, I have modestly reduced my exposure to U.S. stocks and raised my cash. I still fi nd bond yields forbidding.

A critical question is: Should there be more exposure to markets outside the United States? Waiting for a pullback in European bourses has so far been a mistake. The Euro Stoxx 600, a broad European index, is up 18 percent with Germany, its largest market, up 21 percent. Those figures surely won’t annualize but it demonstrates the swiftness with which investment regimes can change. As to the evidence of real economic improvement, there’s more smoke than fire. Clearly European quantitative easing (QE) and collapsing bond yields (German 10-years at 0.15 percent) are driving money into stocks..."

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