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S&P 500 Earnings, Relative Valuations & Opportunities

-April 2, 2018 Market Update. At least richly priced and overvalued equities are no longer the banner being waved by market bears as the elevated forward looking price-earnings ratio ("P/E") for the S&P 500 has sharply dropped from above 18x, to 16.1x today. This P/E coincidentally is the same P/E of the five-year average (also 16.1). Additionally, the estimated S&P 500 earnings growth rate for the first quarter 2018 is 17.3% and should this rate materialize, then this would mark the highest earnings growth since Q1 2011 [Source: FactSet]. What has driven the increase in the bottom-up EPS estimate for Q1 2018 and the entire year of 2018? The decrease in the corporate tax rate for 2018 due to the new tax law is clearly a significant factor in the upward revisions to EPS estimates. However, inasmuch as there has yet to be a sign that volatility has abetted history has proved that patient investors are rewarded with the best investment opportunities during bull markets that are afflicted with a market correction.