Group 1 - The market is overly optimistic about the economic outlook, ignoring the negative impacts of unprecedented high tariffs, particularly on small businesses and inflation [1] - Multiple factors, including tariffs, a weak dollar, and potential demand slowdown, are impacting the inflation outlook, with tariffs expected to drive inflation higher in the second half of the year [1] - The labor market's ability to buffer against economic recession is weaker than in any period post-pandemic, with fewer job vacancies per unemployed person compared to 2021-2022 [1] Group 2 - The U.S. fiscal policy is creating a tug-of-war effect on economic growth, with both tariffs and fiscal measures raising inflation risks [2] - Inflation-protected assets, such as TIPS, appear relatively cheap, and could benefit if market sentiment shifts towards inflation concerns [2] - The Federal Reserve's economic forecast suggests a median expectation of a 50 basis point rate cut this year, but inflation pressures may lead to fewer cuts than anticipated [2]