Last year began with a global synchronized recovery, historically low volatility, extreme bullishness, a ramping economy, and the potential for greater than 20% S&P 500 (SPX) operating EPS growth. We begin 2019 with a synchronized global slowdown, high volatility, extreme bearishness, a sharply slowing economy, and the potential for flat SPX earnings growth. We believe the fourth market crash over the last 40 years more than discounts the slowing domestic and global economy, as long as the Fed stops making policy and communication mistakes, the Trump Administration resolves the trade conflict with China, and the yield curve remains positive. The comments from Fed Chair Powell at the American Economic Association and recent comments from the Administration helped relieve the fear around these issues.

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