Top 8 Market Predictions for 2015

Here is a summary of our eight (8) key forecasts for 2015 at SmartTrust® based upon data available to us and subject to change based upon any worldwide events that are not known at this time and cannot be planned for with any degree of confidence:

1) The U.S. economic recovery will continue, and perhaps pick-up some speed, with annualized Gross Domestic Product (GDP) growth likely in the range of 2.6% – 3.0%.  This will allow the U.S. to retain its current status as “the shiny city on top of the global economic hill” in 2015.

2) The U.S. stock market will advance upon its secular bull market run with an annualized gain in the range of 5% – 9%.   As a point of reference, according to, there have been seven previous periods identified as secular bull markets from 1815 – 2008 with an average length of 14.7 years.   To contrast, the current secular bull market which started in March of 2009 is just under 6 years long thus far.

3) Europe will continue to struggle with respect to its own economic recovery though their stock markets will see intermittent periods of appreciation due in large part to expected stimulus measures from the European Central Bank (ECB).

4) Returns in Emerging Markets, a few of which, such as India, have economies that appear to be poised for significant growth in 2015, will be restrained by global economic difficulties at least for the initial stages of the New Year.

5) Despite somewhat of a lackluster housing market, REITs will continue to perform, with certain REIT sectors performing better than others, as the economy grows and in spite of rising interest rates.  To this end, it is important to recognize that REITs are not just related to the housing market and all REITs are not Mortgage REITs.  In fact, the largest component of the REITs market is not associated with Mortgage REITs, but rather is associated with Retail REITs.  Other sectors of the REIT market include diversified REITs, industrial REITs, hotel and resort REITs, office REITs, residential REITs, health care REITs and specialized REITs – including self-storage facilities.  Certain REIT sub-industries appear to be positioned well to perform in a rising rate environment for the next few years under the presumption that the Federal Reserve would not consider raising interest rates unless they believed that the U.S. economy was on a firm footing and expanding moderately well, even if the housing market is not growing as rapidly.  Additionally, REITs have demonstrated that they have performed well during previous periods where the Fed has gradually raised interest rates (Ex. 2004 – 2006), which is the path we believe that they will follow this time around (see forecast #7 below).

6) Oil prices will remain at depressed levels, perhaps dipping into the $40 a barrel range, earlier in the year but start to return to more “normal” levels during the second half of 2015.   This will allow the U.S. to continue upon its energy independence initiative and help those companies (Ex. fracking, infrastructure, MLPs, etc…) contributing to the growth of the energy sector.

7) The Federal Reserve will likely embark upon their measured, drawn out tightening phase with a 25 Bp (i.e. 0.25%) hike in the spring of 2015.  In this regard, we believe that the Fed will raise the Fed Funds Target Rate between 75 Bp – 100 Bp by the end of 2015 and arrive within the range of 2.50% – 2.75% by the end of 2016.

8) We do not believe that it is a foregone conclusion that the yield on the U.S. Treasury 10 year note will rise above 3% in 2015 as some are suggesting due to the expected market volatility in 2015 that could continue to attract investors to the safe haven of U.S. Treasuries in addition to the slow pace of tightening on the part of the Fed that we anticipate with respect to interest rates (see forecast #7 above).