SPX -- Daily

The SPX continues in a well pronounced uptrend since 2/16, one that includes a clear breakout to
record highs in the wake of the Trump election victory. The enthusiasm generated by the Trump
victory reflected a fast building of consensus that US business was on the verge of a new bright
era of faster growth. May be that there would be an acceleration of top line real growth, but the
real kicker here was  the outlines of tax reform and dollar repatriation programs that alone could
boost SPX net per share by 25% over the years immediately ahead in concert with a new health
care program that would significantly line the pockets of the wealthy at the expense of most others.

The market has continued to rally this year even though the Trump agenda cloud cover reflects his own doing. Without the Trump stimulus measures, profits  are not likely grow more than 4% a year going forward after this year's recovery. There are other market players who may be content without the Trump stimulus play provided there is no significant acceleration of inflation and assuming the Fed will continue to move very slowly on its plan to raise short rates. This latter view is reflected in the narrowing of the long Treas. yield curve this year by about 50 basis points.

The market has run well out ahead of the Trump stimulus outlines since the faster rate of inflation
that would accompany stimulus laid over an economy that is already well along in its expansion
phase would force the Fed's hand on rates and probably force down the market p/e ratio. In turn,
if the Trump plans die in Congress, and we have to trundle along with low earnings growth, why
chase the current trajectory of the market?  SPX Daily