It was business as usual as markets closed up today, but investors need to look at the developing macro picture and consider the economics, policy measures, virus trajectory, and the inflows that are driving equities higher, Ed Harrison told Real Vision during today’s Daily Briefing.

Harrison said that he’s skeptical of claims that we’re seeing greater breadth and new leadership in the equity market and that it’s still weighted toward the winners like Google, Amazon, Netflix, and others. Much of that has to do with the near-record amount of ETF flow into the market, which Harrison said tells him there’s a wall of liquidity hitting market and creating the uptrend.

He called the ETF inflows a positive feedback loop and said that valuations are stretched because of it, which creates vulnerability if earnings later in the year fall short of expectations.

All of the gains we’ve seen have been a product of multiple expansion and that is a result of lack of guidance, he said. Because companies are not giving EPS guidance, it makes it easier to give them a free pass – but that will come to an end in September and October.

ETF inflows aside, there are other troubling factors at play in the current macro picture, Harrison said. He’s paying particular attention to rising eviction rates as stimulus protections end and said they’re not just a bearish indicator but a symbol of policy failure, and that they will have negative consequences both economically and psychologically on the American consumer in terms of consumption and savings.

He also talked about what the rising virus infections mean for the economy. Because cases are skewing younger, we’re more practiced at treating the disease, and another nationwide shutdown seems unlikely, he said it is possible that this surge may only have a muted impact on the economy this time around.

However, death counts are a lagging indicator so it will still be some time before we really see the effects. If the mortality rate is on par with New York City’s at its peak, it is hard to imagine there won’t be more negative effects and we have to be prepared for the downside risk, he said.