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2024 started out the year with high expectations for interest rate cuts with some forecasting as many as 7 rate cuts this calendar year. There was absolutely no precedent for such a thing and they were goofy if thinking that the inflation dragon had been slain. More likely is 1 or 2 rate cuts…only 1 pre-election. The Fed tightening did trim the rate of inflation significantly but it remains near 3.5% and appears to linger stubbornly above the Fed target of 2%. While the Fed has engaged in deflationary monetary policy, fiscal policy the world over remains inflationary to counter it. Western economies are ramping up spending to build arsenals that they once thought was unnecessary before Putin’s aggression. Supply chains are not going back to pre-covid structures as the US in particular re-shores a significant portion of its manufacturing capacity that it previously off-shored during globalization. The Biden administration has also engaged in infrastructure spending that feeds new demand for raw materials and labor into the economy. With all of this happening, getting back down to 2% inflation anytime soon is unlikely without a significant slowdown/hard landing. Fed patience will be required. As both consumers and businesses are likely…

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