Sevens Report President Tom Essaye noted four

Sevens Report President Tom Essaye noted four. The first is the Trump administration itself; investors have gotten comfortable with the idea that the White House won’t pursue any policies that will damage the economy. “Trump employs a negotiating strategy that involves threatening a near absurdity and then getting people to move in his direction (so the worst case doesn’t happen, but he still exacts gains),” Essaye wrote.

Secondly, he said, there is still no evidence that stagflation is taking hold. Although tariffs may be inflationary, that will be somewhat offset, most investors believe, by lower energy and housing prices. That could mean overall inflation cools enough to allow the Federal Reserve to cut interest rates.

Third, enthusiasm around artificial intelligence is still in full swing.

And finally, stocks don’t look that expensive. The S&P 500 is trading at more than 23 times the 2025 aggregate earnings of $260 to $265 expected for its component companies, but “analysts are quickly pivoting to using 2026 earnings estimates, which are between $290-$300/share,” he wrote.

“Based on that valuation math (6,141/$295) the S&P 500 is trading at just 20.8X earnings, a reasonable number (as long as you agree with all the assumptions built into this rally).”