This post will be on the short side, as I am leaving Laguna Niguel in California at the end of the Commonwealth Summit Club conference. I wanted to take some time, however, to comment on something that has been forcing itself to my attention all week: the supply chain issues that are driving much of the current inflation concerns.

After the past several crises, some real and some manufactured, we are now on our way to the next one: the debt ceiling. To pay for the spending Congress has authorized, the Treasury needs to borrow more money. But it can’t borrow more money because Congress has said there is a ceiling to how much it can borrow, and the Treasury has hit that ceiling. So, Congress has essentially forbidden the Treasury to borrow enough money to pay for the things that Congress has said the Treasury has to pay for. If this makes no sense to you, well, I agree. But this is where we are, again. We have seen this movie several times before.

Here we are on the cusp of the end of the most important Fed meeting since, well, the last meeting. The headlines are going back and forth as to whether Chair Powell will announce tapering (i.e., slower Fed purchases of bonds). The consensus is no. But if not, what will he do? All is uncertain.

For those who haven’t heard, global markets slumped yesterday as a Chinese real estate developer, Evergrande, was reported to be approaching bankruptcy. For many, this news brings to mind the great financial crisis of 2008. Back then, a collapsing real estate sector almost took the U.S. and global banking system down, starting with the Lehman Brothers investment bank. Now, the fear is that Evergrande could kick off China’s “Lehman moment.” In other words, many are starting to worry that we could be facing another global financial crisis.

This coronavirus update will be shorter than those I have done previously for a couple of reasons. First, there is not much new news. While case growth at the national level appears to have rolled over, other national data is mixed. The case slowdown is by no means certain. Second, the national case data is significantly misleading for many areas, which continue to suffer much higher infection rates than the rest of the country. So, while it is worth taking a look at where we are, the medical situation remains uncertain.

One question I get a lot is whether the market is overvalued. Or, to put the concern the way my son would, is the market crazy expensive? All year, even as the market continued to rise, many people called out high valuations. Now that the market has pulled back, at least for the moment, fears are rising that we may see valuations collapse—and the market with them. Should we be worried?

Yesterday, I appeared on Fox Business’ Morning with Maria to discuss the markets, inflation, consumer spending, and what’s ahead for the fourth quarter. Listen in to hear more.

After inflation, which we talked about yesterday, the next biggest set of questions I get focus on what the effect of the new tax law will be and whether the higher tax rates in it will derail both the economic recovery and the market. People generally make a good argument about how it will hurt confidence, take money out of consumer and business spending and investment, and generally take us back to a state of depression. I understand the arguments. But two things are missing that would make them convincing: facts and context.

One of the most urgent and consistent questions I have been getting recently is around inflation. With the headline numbers high—and they are high—the concern is that we are moving back to the 1970s and that inflation will stay at the current 5 percent or run even higher. That conclusion seems reasonable, given the large federal deficit and spending over the past couple of years. When combined with the signs of slowing growth, it could point back to stagflation. The 1970s are calling. Maybe disco will come back as well?

My colleague Sam Millette, manager, fixed income on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam!