Stocks have tried to deny reality since the Fed made it clear in multiple statements there is zero chance of the Fed returning to looser monetary policy this year and every chance of it taking interest rates higher one or two more times before the end of the year.
Stocks have also being trying to ignore the immediate bond reality that took over when the debt ceiling was lifted, setting the US Treasury free to transform the bond market by selling bonds as quickly as elephant ears at a fair or ice-cream on a hot day at the beach. The chart above shows how earnings from stock-traded companies have slowly settled as yields from bonds have soared to where the risk premium between stocks and bonds has disappeared. That means pushing risky stock prices even higher when Treasuries provide equal risk-free earnings makes no sense. And the two are just now crossing over to where they will make negative sense ... as in like opening an ice-cream cart at the North Pole....
