Headline: Tariffs Loom, but Stock Market Remains Resilient, Driven by Earnings Surge

Introduction:
Despite the impending threat of tariffs, the stock market continues to trade near record highs. This apparent contradiction stems from the market's belief that any tariffs will be short-lived or less burdensome than feared.

Earnings Impact of Tariffs:
Analysts estimate that tariffs could significantly impact earnings, with Goldman Sachs predicting a 2-3% reduction in S&P 500 earnings. BofA estimates an impact of up to 8%.

Importance of Earnings:
Earnings are the primary driver of stock prices, with a tight correlation between the two. Goldman Sachs highlights that earnings have contributed significantly to S&P 500 returns over the past decade.

Current Earnings Performance:
Despite the tariff concerns, earnings continue to outperform expectations. Nearly two-thirds of S&P 500 companies have reported strong Q4 earnings, with growth rates at 16.4%. This trend could offset some of the negative impact of tariffs.

Market Standoff:
Companies and analysts are generally waiting for more clarity on tariffs before making earnings revisions. The stock market, meanwhile, continues to trade high, suggesting investors are betting on benign tariff outcomes.

Macroeconomic Crosscurrents:
Recent data points indicate continued job growth, rising wages, and stable unemployment. However, some indicators, such as job openings and quits, show signs of cooling in the labor market. Consumer sentiment has also declined, potentially conflicting with resilient consumer spending data.

Positive GDP Growth Outlook:
The Atlanta Fed's GDPNow model projects real GDP growth of 2.9% in Q1, supported by strong demand for goods and services.

Conclusion:
The long-term outlook for the stock market remains positive, driven by expectations of continued earnings growth. The market's resilience amid tariff threats highlights the importance of earnings as the primary driver of stock prices. While risks always exist, the long-term investor remains optimistic about the ability of the economy and markets to overcome challenges.