That didn’t take long. Remember all of that tough talk from the new sheriff at the Fed? Three interest rate hikes in 2019? Balance sheet reduction on auto pilot? All it took was two tough months in October and December after a decade of historically steady gains and poof, all of that tough monetary policy talk is gone. Turns out the new Fed Chair is no different than the ones before him. Hey ’19, forget about the increasingly nasty hangover of mounting financial instability and geopolitical angst looming tomorrow. Instead, pour the monetary Cuervo Gold into the punch bowl, light up those fine liquidity flows, and make trading stocks today a wonderful thing.

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The Tax Cuts and Jobs Act of 2017 gave corporate earnings a sugar high. GAAP earnings on the S&P 500 Index increased at a robust double-digit rate throughout 2018. Much of these gains came thanks to the significantly lower tax rates for corporations that came thanks to the legislation that was signed into law at the end of 2017. But exactly how much of a sugar high did these tax cuts provide? And what are the future implications of these tax cuts now that the sugar high is soon to start wearing off?

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The U.S. stock market has a bit of an expectations problem. The rebound by the S&P 500 from its Christmas Eve lows has been impressive. So far, the benchmark index has rallied by +14% and has posted gains in 16 out of the last 21 trading days along the way. In some respects, this latest stock market rally has that same post crisis giddy up so many investors have come to know so and love so well. But this time around, the U.S. stock market is dealing with some particularly high expectation hurdles in the year ahead that may prove too much for our graying and infirmed bull market to overcome.

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It was only just a few short months ago that the sun was shining brightly over investors with the U.S. stock market trading at new all-time highs as recently as late September. But in the time since U.S. stocks have descended into free fall with the headline benchmark S&P 500 Index momentarily grazing what many consider bear market territory at down -20%. While stocks may soon rally strongly and quickly erase much if not all of the recent declines in value in the coming weeks, the events of the fourth quarter of 2018 cannot be undone, as they are likely foreshadowing what could become a very challenging year ahead in 2019.

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It was a heck of a week. The S&P 500 Index dropped this week by more than -7%, which marked its worst weekly performance in more than seven years. Following this drop, the benchmark index closed the week at more than -9% below its ultra long-term 400-day moving average. Put simply, it looks and feels ugly out there right now. So what should stock investors reasonably expect going forward from here?

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