We are in the middle of a giant short squeeze, and it is going to get even bigger.

Every time I cruise around Raleigh, it’s like Tesla drivers have multiplied.

This dark symphony was never going to end without sparking a currency crisis, one which allows countries to blame other countries as the source of their own internal problems. We will see that it’s not always the case.

“Invest in what you know.” You’ve likely heard this advice before.

The world will be going from an era of zero rates and loose monetary policy to higher rates and likely slower growth, except in certain sectors. Adjusting to this change will be both problematic and also full of potential opportunities.

Investors are running scared.

Remember when inflation was going to be transitory? Good times. I was in that camp myself early on, as were some serious analysts I greatly respect (and still do). Then the data began to show core inflation would be stickier than expected, and I turned in my Team Transitory T-shirt. I appreciate people who admit their mistakes. We all make them.

I had dinner with a local friend of mine last week.

Many ask if Jerome Powell can emulate Volcker. We will certainly find out. But much has changed in 42 years. Does Powell even need to emulate Volcker? Here, some prominent economists disagree. Today we’ll talk about the issues.

A few weeks ago, I said the bear market was over. What if it isn’t? Don’t interpret this as cold feet—it’s good to understand the other side of the argument.

Market veterans will tell you there are no shortcuts in investing

The world does not need another take on Jackson Hole. But here we go.

Everyone’s inflation experience is unique. We all have our particular spending patterns, so our experience will feel worse if inflation is more severe in the goods and services we normally buy. Or we might not notice it as much as others do.

19% off the lows, and people are still bearish.

Our own government cannot afford a short end of the curve much higher than it is now, and our own fiscal and monetary decisions have held down the long end of the curve in what I believe is a multi-decade period ahead that is best referred to as “Japanification”

It is my belief that the bear market is over.

The latest data shows inflation is still with us at an 8.5% annual rate. That means we can expect the Fed to keep tightening, trying to reduce demand and relieve pressure on consumer prices.

Twenty years ago, people on trading floors at investment banks worked in silos.

Mania. It’s hard to recognize when you’re in it.

It’s a recession! No, not yet!

Neel Kashkari used to be the most reliably dovish member of the FOMC.

Oil execs are walking on eggshells.

While it’s likely we are already in an as-yet-undeclared recession, it’s a very weird one if so. I have lived through quite a few of them and I don’t recall any other recession coinciding with record-low unemployment, plentiful job openings, and jammed airports.

It’s been a rough couple of months for copper.

We can draw a direct line from the Fed’s low rate regime to today’s surging inflation, asset inflation, and income and wealth inequality. Low rates produce asset bubbles which ultimately pop, but not before blowing themselves larger and multiplying into other bubbles. The process that pushed stock prices higher is the same one that is now pushing food, energy, labor, and every other cost higher. Just follow the bouncing ball.

These people, whose very job is to know the lessons of the past, either forgot them or chose to ignore them. Today we’ll look at how this manifested in the 2008 crisis period—and set up the conditions we face today.

There’s more pain ahead for still-frothy tech stocks…

The economics profession has long had a vigorous academic argument over “natural” interest rates. What would rates be if we could somehow remove all the subjective actors—central banks, commercial lenders, government agencies—that conspire to set them? What would nature do if we left it alone?

The bond market is weird, but it’s full of clues. We have 8.6% inflation, but the highest interest rates have gone recently is about 3.4%, meaning real rates were still negative to the tune of 5%. This is confusing to me and a lot of other people.

Three of my biggest winners have one thing in common…

Let’s start with a basic question. If you have unused property—cash or anything else—why would you lend it to another party?

Last Thursday, Elizabeth Warren expressed skepticism about the Fed tightening monetary policy, saying it would make people poor.

This bear market is punishing everyone and everything.

Interest rates aren’t simply the price of borrowing money. They are also information, providing signals telling economic players what to do. Interest rates are in fact the price of time. Low interest rates don’t value time very much. Bad signals produce bad outcomes… and that’s where we are now.

Crypto meltdowns. Tech implosions. The biggest rate hike in decades.

Today we’ll look at some evidence this period could even be worse than the 1970s. Then we’ll read the mea culpa regrets of someone who had a big part in that drama.

Energy has been on quite a run.

Complaining about federal debt is a time-honored American tradition. Remember Ross Perot and his hockey-stick charts? Then there was Harry Figgie’s 1992 best-selling book, Bankruptcy 1995. It was quite a sensation at the time.

The chance that all the necessary pieces will line up that way? Somewhere between slim and none, and as my dad used to say, “Slim left town.” And while my memory isn’t perfect, I don’t believe any speaker at the conference believed in the possibility of a soft landing. And even if we get one, we have serious problems that predate this inflation. They haven’t gone anywhere.

There’s a silver lining to the current bear market…

It looks like the economy will grow for a while, just not very fast. And we simply don’t know what will happen when the Federal Reserve tightens in the face of a slowing economy.

As with bodily atherosclerosis, curing our economic condition may require lifestyle modifications. But in one sense, it will be even worse: We’re all going to get the cure whether we want it or not. We’ll get its side effects, too… and you can bet there will be many.

Investors are in a pickle.

The Strategic Investment Conference wrapped up this week with another wave of strong, fascinating speakers and panels. Today I have more to share and, as you’ll see, the plot thickened considerably.

Jay Powell may think he is Paul Volcker, but he is not Paul Volcker.

I borrowed this letter’s “Soft Now, Hard Later” headline from Dave Rosenberg. It was the title of his leadoff SIC presentation, for reasons I’ll explain.

My good friend Ben Hunt of Epsilon Theory has written what I think is one of his most powerful letters ever. He’s basically saying the Fed just isn’t going to make it. I wish I had written it. He is such a wordsmith. With that, let’s turn it over to Ben.

If you haven’t noticed—perhaps because you live on Mars—inflation is here. Not just in the US but almost everywhere. Prices for everyday goods and services, including necessities like food, are climbing rapidly. The US Consumer Price Index rose 8.5% in the 12 months through March… and we know it understates categories like housing.

Interest rates are structurally set up to go higher.

It’s Easter weekend, so we are going to revisit a 2018 letter about the yield curve. The yield curve is much misunderstood and misused by many analysts. This letter will give you the tools to understand the correct importance and relevance of the yield curve. And then, a few comments about Ukraine.