Due to Federal Reserve Beige Book regional reports, investors increasingly believe the Fed will go on a rate hike spree this year.

CME Fedwatch sees things this way.

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Talk of $100 Oil

Fun New Narrative

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When We All Believe the Same Thing

That's my "Tweet of the Day"

Consumer Confidence

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Market in Turmoil

Stagflation Anyone?

Inflation Scare

This is the same thing that happened in 2008. When oil hit $140, I recall comments like "Next stop $200, then $300".

The same sentiment is in play right now. Nearly everyone is convinced that the inflation bet is a "sure thing".

Atwater provides a study in psychology. Others look at fundamentals:Trade wars and rate hikes will slow the already slowing the global economy. We are near the end of this cycle.

  1. Saxo Bank Quarterly Outlook: End of a Cycle Like No Other
  2. Fed's Beige Book Notes "Dramatic" Increases in Prices Due to Tariffs
  3. Germany Recession Indicator Flashes Yellow (Median Possibility 32%)

Lacy Hunt at Hoisington Management is fully invested in Treasuries with an average duration of a bit over 20 years. For details, please see The Name is Bond, Long Bond.

I side with Lacy.

Mike "Mish" Shedlock