---
title: Eagle Asset Management - Volatility Examined
description: Read Eagle Asset Management's November commentary. Richard Skeppstrom of their Strategic Return Portfolio analyzes recent market volatility as Q3 closes.
image: http://www.wrapmanager.com/hubfs/MM_Logo_Images/EagleAssetManagementLogo-1.jpg
---

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# Eagle Asset Management - Volatility Examined

Posted by [ WrapManager's Investment Policy Committee](https://www.letsassemble.com/wealth-management-blog/author/wrapmanagers-investment-policy-committee)  
 November 23, 2015

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Richard Skeppstrom, of Eagle Asset Management's Strategic Return Portfolio, analyzes recent market volatility in Eagle's November Market Perspective. 

"As the third quarter came to a close, equity markets were a stumble away from panic. Bankruptcy concerns were playing havoc in the commodity space while technicians nervously watched for a Dow sell signal. If the Dow had closed below the August trough of 15666: a blood bath. I wrote that I was comfortable with my equity allocation and would just wait and see, ignoble action possibly resembling chicken excrement. Of course, my reluctance to do anything was a reliable buy signal. Don Hayes, the longstanding strategist at fondly remembered Wheat First Securities, used to say the markets will do whatever they can to confound the most. The rebound this month certainly qualifies. Not only has the market staged a striking rebound, but also sector leadership completely reversed. Energy and commodities – hated a few weeks ago – have led while healthcare has lagged. 

The violence of this reversal is impressive but the message isn’t especially controversial. It could be the first sign that the global commodity recession is moderating. [Emerging-market equities](http://www.wrapmanager.com/wealth-management-blog/emerging-markets-commodities-market-risk) – most geared to the commodity cycle – also have perked up. That isn’t a coincidence but it’s not confirmation either. Generally speaking, stocks rebound prior to the actual business-cycle nadir. It’s not prescience but it can look that way. Simply explained, unrelenting bad news and constant downward pressure eventually exhaust the sellers. The only holders left are value players and the brain-dead. And typically, more blood in the water attracts more short-sellers, crows and vultures – important, but unpleasant, carrioneaters – betting on continued pain. With no sellers left, a change in the wind can cause a buying panic as short-sellers and intrepid investors compete for scarce shares, forcing prices up. However, if – over the ensuing few months – the news gets worse, the selling will resume and perhaps make a new leg down. Most investment busts involve several legs down interrupted by violent buying panics until the news doesn’t get any worse. The last buying panic will look like market prescience but it’s really just part of the cycle. 

If I had to guess, I’d say that wasn’t the last leg down of the commodity bust but that’s just a guess. However, in the context of disappointing-but-positive global economic growth, I’m inclined to make a distinction between energy (excluding coal) and industrial commodities. Global energy demand is slowly growing along with the global economy. Where the latter goes, the former reliably follows. However, for some important industrial commodities, the growth paradigm is upended. China represented until very recently as much as 40 percent of total global demand for materials such as copper and concrete. According to a recent op-ed penned by former U.S. Treasury Secretary Larry Summers, China..." Download below to read full report.

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![](http://www.wrapmanager.com/hs-fs/hub/10700/file-2346359955-gif/blog-files/pdficon.gif) [Download Eagle Asset Management's full commentary here](http://www.wrapmanager.com/hubfs/MM_Commentary_PDFs/Eagle_Asset_Management_-_Market_Perspective_Skeppstrom_11-15.pdf)

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