The Great Divide – Part II

For the first time during any bull market since at least 1960, economic policy has remained contractionary (i.e., TPS has been below the 50th percentile) throughout the entire bull run.

On Monday, I introduced a methodology to examine the degree of economic policy support. I combined three separate economic policies – fiscal, monetary, and dollar – into a single “Total Policy Stimulus” (TPS) indicator which can gauge the force of overall U.S. economic policy. On Monday, I discussed the “Great Divide” between the degree of policy force currently being implemented by fiscal policy compared to that currently in force from monetary policy. Today’s missive focuses on the current degree of overall TPS and what this implies about future economic growth and leadership in the stock market.