The moment of truth has arrived in terms of the financial economy versus the real economy, Ed Harrison told Real Vision during today’s Daily Briefing.

Harrison’s framework has been focused on the September/October time frame as a period of increased downside risk due to volatility, and today he said he believes that the gap between the real economy and financial economy will be closing soon.

He argued that we’re about to get a lot more clarity on the economic and earnings fronts, and with the data we’ve been seeing over the last two days coming in below expectations, including jobless claims and retail sales numbers, it appears that the economic recovery may be stalling.

“Data is going down at a rate that is more precipitous than expected, so that has got to feed through to how people are thinking of the economy and thinking about earnings growth,” he said. Harrison believes this will create more downside risk as we move through this volatile period and expects that as more concrete earnings numbers come out, they will tell us what’s really going on in the economy.

None of this is having a dramatic impact on markets, which Harrison said is good in terms of market sentiment; it definitely reacted but didn’t close on its lows, so we’re not seeing the market fall apart, he said. Momentum to the upside continues in equities, but Harrison warned that there are telltale signs of a mania happening.

He cited leveraged technology ETFs, short-dated retail options trading, and the Snowflake IPO as evidence of this market exuberance. “[Snowflake] is worth five times what it was worth as a private company valuation just a few months ago, which gives you an idea of the run up in these tech companies that we’ve seen,” he said.

Harrison concluded the conversation with his thoughts about yesterday’s FOMC meeting and the impact the Fed’s actions will have going forward.

“The Fed is done. We’ve become the bank of Japan,” he said. What the bond market is telling you is it doesn’t matter that the Fed is out of bullets; it’s all smoke and mirrors, he said. Forward guidance isn’t meaningful, it has no impact on the real economy, and it is not going to put money in average people’s pockets.

Harrison also said he doesn’t believe there will be any impact from the Fed’s actions on inflation over the long term. “Nothing they do will be more effective than what they have already done.”