At this time last year, many referred to the current bull market as "one of the most hated" in history. There was a host of things to worry about and if memory serves, many prominent analysts opined that there was no justification for the joyride to the upside that was occurring. Oh, and Wall Street's best and brightest didn't see the S&P 500 gaining more than 6%-8% on the year. Oops.

Fast forward to today. The "hatred" has been replaced what can only be described as uber-optimism. Everybody on the planet now understands that the global economy is on the rise, that the tax bill is going to pad the bottom lines of corporate America, that repatriation is going to bring hundreds of billions back to the U.S. (and that money has to go somewhere, right?), and that stocks need to be "adjusted" higher to reflect all the good stuff that is going on right now.

Heck, even David Tepper is optimistic these days. Mr. Tepper, head of Appaloosa Management and one of the most influential folks in the hedge fund business, told CNBC late last week that the bulls still has room to run.

First, Tepper poo-pooed the worries of excessive valuations by saying, "Explain to me where this market is rich? It's not rich with the tax thing that just changed earnings projections. With earnings forecasts going up and interest rates where they are, how is this market expensive? I don't see the overvaluation. World growth is higher."

More specifically, Tepper created some excitement among viewers by referring to the current stock market as "cheap" from a valuation standpoint. "The market coming into this year doesn't look rich, in fact, it looks almost as cheap as coming into last year," Tepper opined.

Next, Tepper provided a one-line summary of what many see as a potentially sticky wicket for the market at some point in 2018 - increasing inflation expectations. "There's no inflation," Tepper said. 'Nuff said.

Then the subject of the new tax bill came up. In case you've been living in a cave, recall that the new bill lowers the corporate tax rate to 21% from 35%. And while this doesn't help every single company across the board (for example, technology has been singled out as a sector that may not see a big benefit from the bill), analysts do project a serious uptick in S&P 500 earnings for 2018. So there's that.

In terms of what to worry about, Tepper did suggest that there was one area to pay attention to - bond prices. The bottom line is that Mr. Tepper believes yields are the key to the question of whether or not the stock market can keep on keepin' on this year.

"The market can't go down until the bond market gets hit. It's amazing where interest rates are," Tepper told CNBC.

So there you have it. Everybody loves this market and the only path forward for the stock market is up. Okee dokee.

Thought For The Day:

Not the fastest horse can catch a word spoken in anger. -Chinese Proverb

Current Market Drivers

We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).

      1. The State of the Economy
      2. The State of Fed Policy
      3. The State of Earnings Growth

Wishing you green screens and all the best for a great day,

David D. Moenning

Disclosure: At the time of publication, Mr. Moenning held long positions in the following securities mentioned: none.

Note that positions may change at any time.

Disclosures

The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any investment program.

Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

Mr. Moenning may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Positions may change at any time.

The analysis provided is based on both technical and fundamental research and is provided "as is" without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.