We believe it is asking too much of markets to absorb a record-setting fiscal stimulus in the face of recovering economy without expecting further pressures on interest rates. This means the US Treasury needs to borrow substantially from others besides the Fed.

There are many reasons to be optimistic about the next few years in equities. There are also reasons to expect more volatility in the medium term, as markets come to understand where rates might go, to understand if sustained inflation materializes and to see if EPS expectations meet reality.

There are three more Treasury auctions coming this week alone. Just like four years ago, a new US administration may have some “sharp elbows” for world markets, despite ostensible actions to help both the US and world economy recover. We put money on the prospects of a longer-term recovery, even as there are periods of doubt and worry along the way. Specific recommendations are contained herein.