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  • Jon Lam

Notes from the Research Desk

Good earnings growth coupled with synchronized global economic upturn have continued to fuel the lofty levels in the domestic stock market. However, the risks of a near-term sell-off are increasing.

First, we're simply due for a break given the long and large advance in stocks since last November (the honeymoon phase of the Trump's presidency is nearing an end). Second, the pro-growth policies of the new administration might not get implemented as quickly and as orderly as hoped for. Third, Brexit isn't even here yet and there are elections coming up in France, Germany and Italy. We'll see if there is another anti-Euro populist movement out there.

Further out, though, the prospects of higher market are quite good. Eventually, some or all of the pro-growth policies will be in place, and tax reform, in some shape or form, will benefit corporate earnings. S&P 500 aggregate earnings are estimated in the $140-150 range, a nice jump from 2016's earnings of $119. Global monetary authorities will probably remain accommodating, and our Fed sounds like a slow and measured approach to rate increase is in the cards. Goldilocks is alive and well right now.

The brackets of March are in full swing after great hoops action in the first two rounds. USC made a nice run, and almost sneaked into the Sweet 16 before their Cinderella story was squashed by Baylor. UCLA is in cruise control along with 2 other PAC -12 powers in Arizona and Oregon. West Coast is Best Coast!

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