Our quarterly update for the year-end 2017 went to print on January 23rd, which was only two weeks ago. At the time, the S&P 500 had already gained 6.2% from the be-ginning of the year. In our Opening Thoughts, we re-marked that the global growth picture looked great, corporate earnings are strong and that the recently passed tax cut is adding even more fuel to the fire. And then we considered what might derail the bullish outlook. We concluded with the statement that “if we had to pick any one concern, it would be inflation. For the moment it is not a factor but it should be watched closely.” On January 1st the U.S. 10 year treasury bond yielded 2.46%. By the 23rd of January the yield had increased to 2.63% and hit 2.84% last Friday. Suddenly the prospect of inflation has become a material factor affecting both equity and fixed income valuations.