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.

Where is the Economy? Recessions are ultimately about mistakes, about too much optimism given underlying economic conditions and the need for economic activity to adjust back downward.

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

Here’s Something to “Fitch” About. We think about this because government sponsors this crazy lottery at the same time it shirks its own fiduciary responsibilities.

Not All Recession Theories Make Sense. Why does this matter now? We think a recession is coming because the economy was artificially stimulated during COVID but the M2 money supply has declined in the past year. In addition, by rewarding short-term cash, the inverted yield curve should eventually limit business investment and risk-taking in general.

Still Growing. No one should be popping champagne when they see Thursday’s GDP report. The good news is that it won’t be negative. The bad news is that even if it hits our estimate of 2.1% this is a far cry from the robust growth of the economic expansions in the 1980s and 1990s.

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.

The Red, White, and Blue Swan. As we approach July 4th it's important to take a step back and realize that a Red, White and Blue Swan really did allow people to make their own history and truly change the world! Happy 4th of July to you all.

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