by Calculated Risk on 1/04/2016 08:44:00 PM

Tuesday:
• All day: Light vehicle sales for December. The consensus is for light vehicle sales to decrease to 18.1 million SAAR in December from 18.2 million in November (Seasonally Adjusted Annual Rate).

A few excerpts from Tim Duy's article at Fed Watch: A Look Ahead Into 2016

What do I expect to see in 2016? Briefly, here are my baseline expectations for the year:

1.) No recession. I think that fears of recession in 2016 are overblown. Softness in the manufacturing sector is the primary motivation for such fears, but this ignores the declining economic importance of manufacturing in the US economy. Manufacturing now accounts for just 8.6% of jobs. I think people are falling into a trap of overemphasizing the importance of manufacturing as a cyclical indicator. A broader perspective indicates little reason to be worried of recession in 2016
...
5.) Inflation will accelerate. I think 2016 will be the year that economic resources become sufficiently scarce to push inflation back to the Fed's target. I know this may seem like a wildly optimistic call given the persistence of low inflation during this cycle
...
9.) The Federal Reserve will continue to hike rates, slowly. I expect that economic conditions will be sufficient for the Federal Reserve to justify 100bp of rate hikes in 2016. Although the Fed will not want to appear mechanical in its normalization process, they will likely find themselves hiking every other meeting beginning in January. They will be slow to begin the process of "normalizing" the balance sheet, although I expect that they will be fully engaged in that conversation by the middle of the year. That conversation will take on more urgency if they have difficulty controlling short rates with their new tools.

There is much more in the article (and I generally agree with Dr. Duy).