Headwinds

Despite dire predictions, the US stock market is up over 38% since Trump was elected president. However, there are now serious headwinds that likely will keep the breaks on further dramatic advances in equities. They are:

- The Federal Reserve's easy money policy (Quantitative Easing) has stopped. In fact the Fed is well into the process of reducing its balance sheet by about 3.5 trillion dollars. This means that this much liquidity is being removed from our economy.

-Yes, Trump's fiscal measures (tax and regulation reform, trade terms, infrastructure spending) have boosted our economy and corporate earnings. But price-earnings ratios in the stock market are still above historic averages.

- The geo-political risks of Iran and North Korea still pose a dire risk to the world order and stock markets.

- The Fed is on track to raise interest rates multiple time both this year and next. Higher interest rates increase the discount that must be applied to corporate earnings.

- Robert Mueller's team of crack partisan investigators seem hell-bent on taking Trump down. This is a pall on his ability to keep things moving forward.

- Current trade negotiations with China and NAFTA could easily result is trade wars that would take at least a short-term to the US economy.

So, will the stock market make dramatic new highs despite these many headwinds? The odds seem against it. But then Trump has a way of defying the odds.