In our April 2016 quarterly commentary, we said that the market needs earnings to rebound, but more specifically we said that it needed higher commodity and oil prices. We also observed that given the connection between commodities, rates and the banks, a rebound in the former would bode well for the latter. A year later and the market is certainly higher, and earnings have rebounded largely because of a bounce in commodities with WTI oil up 37%. As a result, the Energy sector was the best performing sector of the market in 2016, and bank stocks have been among the biggest winners over the past year. Corporate earnings, as measured by the S&P 500 Index’s EPS, are expected to record their 3rd consecutive quarter of positive year-over-year growth, and the current 9% growth rate will mark the highest year-over-year earnings growth reported by the index since the 4th quarter of 20111. We think this makes good sense and is consistent with the broader picture. With that said, the market’s valuation has become even more stretched with the forward P/E ratio of the S&P 500 topping 18x, which is the highest level in 13 years.