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There's a risk to the market rally, strategist says

Investors bullish on President Donald Trump's pro-growth agenda have pushed U.S. stocks higher, but the timing of that agenda is now a risk that could derail the rally, strategist Mark Luschini told CNBC on Monday.

He believes there has to now be some type of legislation on tax reform and deregulation to push economic growth higher, and it should happen sooner rather than later.

"The longer that continues to get pushed out into the year, such that it may not even have an impact in 2017, becomes worrisome for me as an investor as I think about an 18 times forward multiple on the market," the chief investment strategist for Janney Montgomery Scott said in an interview with "Power Lunch."

Trump has promised tax reform, deregulation and infrastructure spending, but has not provided specifics yet. House Republicans are also working on a tax reform plan.

Chad Morganlander, portfolio manager at Washington Crossing, agrees the market is pricing in too much too quickly.

"The market is building in this expectation of revenue growth for the S&P 500, earnings growth, as well as economic acceleration, not only on a domestic front but on a global front. That acceleration, I believe, will happen but not to such a degree," he told "Power Lunch."

Therefore, he urges investors to be cautious, particularly with the S&P 500 expected to generate 4 percent to 6 percent total annual return for the next several years.

To hedge against the risk, Luschini advises investors not to abandon the more defensive sectors of the marketplace, like utilities, consumer staples and health care.

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