Higher Rates & A Shutdown on the Menu. We think the Powell presser and the dot plots will make it clear the Fed is leaning toward one more rate hike before the year is through.

An Age of Fiscal Limits. Unlike the 1980s, however, politicians don’t seem interested in changing course.

Has the Inflation Threat Passed? We think the optimism is overdone. The M2 measure of the money supply has dropped in the past year and we think that drop is starting to gain traction, including in the form of lower headline inflation.

Still Overvalued. In other words, the Goldilocks future, where the Fed manages everything perfectly, is likely too optimistic.

Burns of Volker? We are forecasting that when all is said and done that the economy ends up a little weaker than the Fed expects this year, but inflation stays higher than the Fed thinks

Is the Recession Threat Dead? We hope they’re right about this; wouldn’t it be great! Unfortunately, ...

Discount the Happy Talk. We are not often pessimistic about equities and think the long-term is still bright. However, we think there are still problems ahead in the near term and investors need to be prepared.

Closer to a Turning Point. Ultimately, recessions are about mistakes...Almost always, it is government policy mistakes that cause this over-investment (or “malinvestment”).

January Surge Kept Q1 Positive...The problem with forecasting the economy right now is we have never been in this position before, where an unprecedented two-year surge in the money supply (plus massive temporary transfer payments) were closely followed by a dive in the money supply unlike anything we’ve seen in decades.

How to Lose Reserve Currency Status. The question is: will it? Russia, China, Brazil, and others, including Saudi Arabia, all seem to think they can find a way to replace the dollar and undermine US dominance on the world economic stage.