One of the major equilibriums in the intersection between the markets and broader economy is the risk premiums between different asset classes. Cash must yield below bonds, and bonds must yield below stocks, and by the appropriate risk premiums. US stocks expect to yield a bit under 6% going forward. This doesn’t look high relative to cash or bonds but is not particularly attractive relative to their risks. That gives a long-term Sharpe ratio (excess returns over excess risk) of 0.25-0.30. Bonds are expensive relative to cash, which is a reflection of the expectation that Fed will ease policy going forward and that rates will be structurally lower in the US going forward. When bonds yield less than cash, this pushes more investors into the front-end of the curve and key financial intermediaries in the economy experience disintermediation (i.e., lack of profitability due to an insufficient capacity to capture forward spread). This is a constraint on lending activity and will tend to slow down the economy. Occasionally having “inversions” between key risk premia is healthy for limited periods, as it helps slow down risk taking and avoid excessive leveraging in financial assets.