Welcome to my latest video presentation. The article below is a condensed transcript; my video contains more details and several charts.

Wall Street has been overly optimistic before, in betting on a Federal Reserve dovish pivot. But such hopes seem realistic now.

The year-over-year rate of increase in consumer prices decelerated to below 5% in April, the lowest rate in two years, giving the Fed elbow room to pause interest rate tightening at its next meeting in June. We won’t get a cut in rates this year, but a pause is entirely likely.

That’s the good news.

The bad news is, the Democrats and Republicans in Washington remain far apart on the debt ceiling. In previous debt ceiling fights, a resolution was found at the last minute. But this time, polarization is worse. There’s a radical insurgency in the U.S. House that actually yearns for a default.

Since 1917, the U.S. has enforced a statutory limit on the total amount of debt that the government can issue at any given time. The existing debt ceiling was hit on January 19. Since then, the U.S. Treasury has implemented emergency steps to pay for the country’s bills. Those efforts are on track to be exhausted by June 1.

Will 2023 be a repeat of 2011?

We’ve been down this road before. The most instructive case study is in the summer of 2011. Back then, as now, we had a divided Congress and a Democratic president. The crisis prompted Standard & Poor’s to downgrade the U.S. government’s credit rating for the first time in history. A default was avoided at the last minute, but the financial markets were put through the wringer.

During the period from when the U.S. Treasury initiated extraordinary measures until the deadline on August 2, 2011, the S&P 500 plunged about 6%. The House passed the debt-ceiling compromise a day before the deadline, the Senate approved it, and President Obama signing it on August 2.

Regardless of a deal being reached, Standard & Poor’s downgraded the U.S. credit rating from AAA to AA+ on August 5, and the S&P 500 plunged another 10%. Extreme volatility persisted for another two months, but markets eventually stabilized and recouped their losses by the end of the year.

History tells us that debt ceiling battles eventually get resolved and the markets bounce back. These political dramas don’t exert a long-term influence on the financial markets, but the haggling and suspense generate volatility and temporary selloffs along the way.

Odds are, we’ll get a resolution this time around, too. The stakes are very high and the pressure on Washington from the financial and business communities to raise the debt ceiling is enormous. But in recent years, we’ve seen a lot of political norms shattered. Maybe the ceiling won’t be raised. So…get prepared.

During the current debt ceiling imbroglio, hunker down. Increase your cash reserves; money market funds are a good place to safely park your cash for a relatively short period. Until the crisis passes, avoid companies that rely on the federal government for revenue, e.g. health care providers, defense contractors, and infrastructure firms.

In the meantime, the impasse in Washington over the debt ceiling has soured investor moods, with the major equity indices finishing last week mostly lower.

The slump in oil prices is a clear indicator that a recession probably looms on the horizon. OPEC+ announced in April that they would cumulatively slash crude oil production by another 1.16 million barrels per day until the end of 2023. The cuts started this month.

However, OPEC+ has been steadily losing clout in the global oil markets, as trading in the world’s most valuable commodity increasingly becomes fractured. The rise of regional oil markets has disrupted the political order. What’s more, OPEC+ members habitually cheat on their quotas. The biggest factor weighing on crude oil prices is the global economic slowdown.

The week ahead…

Here are the most important economic reports scheduled for release in the coming days:

Retail sales and homebuilder confidence index (Tuesday); housing starts and building permits (Wednesday); existing home sales and U.S. economic leading indicators (Thursday).

PS: I’ve just explained ways by which you can protect your portfolio from the uncertainty that looms ahead. My colleague Jim Pearce, chief investment strategist of Mayhem Trader, has devised other investment tactics that can buffer your hard-earned wealth but also generate gains. For details, click here.

John Persinos is the editorial director of Investing Daily.

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This article originally appeared on Investing Daily.