📍The U.S. natural rate, which corresponds to a neutral monetary policy - a policy that keeps the economy at an equilibrium level without inflation or unemployment - is at 2.5%, while the discount rate is above 5%. The Fed's monetary policy is tight enough that it has ended in recession in the past.

📍The big question is why, with such tight monetary policy, has there not yet been a recession and inflation remains high? There is an obvious answer - the excess savings that were accumulated during the pandemic on the back of helicopter money policies are cushioning the rate hike cycle. But it is becoming increasingly clear that inflation will not have time to fall before savings are exhausted, and then the U.S. economy and financial system will feel the full "charm" of the high rate. In my view, based on the facts, the markets are in for a tough time ahead, despite the prevailing positivity.