States he is cautiously optimistic but has bad scenarios. Believes unlocking private capital brings growth but also new inflationary pressures not factored into markets. The bond market will tell the direction. There's a probability the 10-year yield goes over 5%, maybe 5.5%, which would shock the equity market.

Says it would start a needed national conversation about deficits. Trump policies seek private-sector growth, but there are large inflationary pressures. A scenario of much more elevated rates due to inflation would have a very negative impact on equities, force a revaluation, but create a real deficit conversation.

Says the Fed focuses on current data, not future policy. Sees no short-run scenario for the Fed to reverse course. Base case is rates staying stickier, with a more normalized, steeper yield curve. Can see the Fed easing shortly, but the 10-year will be locked in its current zone. In all his scenarios, the yield curve gets steeper, not flatter.