Just the potential for a U.S. recovery will bring the "enormous" amounts of under-invested cash back into the stock market and could send shares higher in the near tem, Philip Manduca, head of investments at ECU Group told "Squawk Box Europe."
"I do believe there is a sentiment out there, right or wrong, that the US is going to recover," he said.
"There is this feeling that the worst is behind us in terms of the housing market … and there is a feeling that economic indicators that are coming out (of the U.S.) are less bad than they were estimated to be."
"I know that there's an enormous amount of money on the sidelines that is under-invested… if you get any further rally in the US market it will self-propel," Manduca added.
Inflation in the U.S. and Western Europe is not domestic, but imported and this may bring relief to investors who may expect central banks to embark on an easing cycle, Manduca added.
But economic growth prospects are still gloomy and getting into the equity markets is still tough, he said.
Watch interview at left.
The current correction in the price of oil shows that speculators have driven the market for the past six months and they were allowed to do so because it was one of the few areas where banks were still making money, he said.
But commodities prices will remain high, with the price of oil depending on how much Asia, and especially China, will slow down in the following months, Manduca added.
"I don't think they can slow down. They need growth to stay in power in China," he said. "We're going to have to deal with high commodity prices for some time."