They're right, especially with an economy that will have, as of the end of this quarter, returned to new record highs in economic output.  

With that, Biden is on a doom and gloom campaign, trying to convince us that they are "beginning from scratch on the vaccine distribution" and that "we are entering the toughest and deadliest period of the virus." 

Meanwhile, the states that have held their economies hostage, in effort to get bailout money from a democratic led Congress, are magically opening up.  They know the money is coming (with a Democrat controlled Senate and House), despite whatever push back there might be for grandstanding purposes. 

This push to get the $1.9 trillion approved will come, over the next couple of weeks, alongside Q4 earnings season, which should continue the trend we've seen this week – i.e. big earnings beats. 

Thus far, 86% of S&P 500 companies have reported better than expected earnings.  And the expectation of a big 9% earnings decline for the quarter is quickly eroding.  We may very well see earnings GROWTH in the fourth quarter of 2020 (compared to Q4 2019).  This all doesn't jibe with the doom and gloom economic picture being painted by the new administration.  So, the Biden team will be in a race (against improving economic data) to get the $1.9 trillion aid approved, and then will have to find a way to justify another massive trillion-dollar plus package to fund his "clean energy" plan. 

Again, as we’ve discussed, this disconnect between (egregious) fiscal profligation and a solid economic recovery (supported by a vaccine in distribution) is a recipe for an ugly spike in inflation.  And remember, the Fed has told us that they will sit back and watch inflation until they deem it to be sustainably above their target.  That means they will be behind the curve, and chasing it.

On a related note, yesterday we talked about the outlook for much higher oil prices (given the policy headwinds on the fossil fuels industry).  What is key in the inflation picture?  Oil prices. Though the central banks like to say they look at inflation excluding food and energy, their actions speak louder than their words.  When oil prices are on the move, the Fed goes on high alert, and tends to act.