Most major stock indices closed at record highs despite a rise in interest rates. Since the close of 2017 the yield on the 10-year US Treasury Note has moved from 2.40% to 2.64%, its highest level in more than three years. That said, we do not believe that interest rates pose an immediate threat to stock market valuations. However, equity investors must be cognizant of the slope of the yield curve and the pace of the rise in interest rates. We believe a gradual increase would be viewed positively while a rapid one less so. All sectors of the market are at or near record levels, except for the interest rate sensitive utility and telecoms. It appears as if tax reform was not priced into the stock market. As noted the last several weeks, we continue to favor health care, industrials, financial services as well as select technology companies. Economic fundamentals are strong enough, corporate earnings are sound and interest rates should remain a tailwind (relatively low) – all factors that should provide support for equities at or near these levels. We have noted continually that there remains an upside bias and the downside appears somewhat limited. We see no reason to alter this posture. In addition even if the upward trend that has been in place since the election is broken it is still difficult to envision a bear market. For now, we continue to be tilted toward the optimistic side. Stay diversified. There is no need to be a hero. Your portfolio must be measured against your long-term objectives with long-term capital being allocated accordingly. Do not be caught up in the day-to-day noise of the markets.