Stocks tried to rally today, but fell back again in the afternoon. This 1840ish resistance on the SP 500 futures is proving formidable, with at least twelve tests so far this year that have failed to breach it, four times most recently.
I think we will need to see some signs of sustainability in the real economy before stocks can move confidently higher, with the Fed starting to pull back on the rate at which it throws easy money to the financiers.
And despite a few misleading statistics here and there, it is just not happening yet. This is a classic liquidity trap, where the failure of aggregate demand is causing the production side to hold back, and yet the policy makers continue to dampen the income side that fuels that demand.
Do not get me wrong, providing living wages to more people would certainly stimulate aggregate demand, but so also would a more mercantilist stance towards exports and imports, or an exogenous demand such as war. Perpetual war of the sort we see the US and UK engaging in does not quite do it, as it is a slow smolder and narrowly concentrated in high ticket technology.
How can any other outcome be expected, given the continuing anti-human nonsense that is monetary and public policy?
Have a pleasant evening.
