Update Preview
Markets are consolidating right around 7100 after breaking through 7000 — exactly the pattern I was laying out last week. A half-percent dip today off renewed Middle East negotiation headlines, but the underlying setup hasn't changed.
The bigger topic in this update, though, is theoretical — and I think it's important. There's a lot of noise in the macro world right now about "liquidity," and I want to walk through why I think that framing is actually missing what matters. Liquidity crises can take a swing at asset prices, but they don't break the system. What breaks the system is something else entirely — and understanding that distinction is the difference between being right about a scary headline and being right about where the market actually ends up six months later.
I'll also cover the flows picture, the deficit impulse, the economic calendar for next week including Powell's likely final FOMC as chair, and how we could grind higher into the summer even with some inflationary data starting to filter through.
