Fed on the valuations of the S&P 500. In conclusion
[t]he bears will suggest that
if ever there were a time for the scales to fall from investors’ eyes over the Wizard-of-Oz-like nature of
the Fed, then this is it. We (the authors, as opposed to the collective “we” at GMO) are inclined to the
latter view. Betting on the Fed’s ability to generate continued market levitation seems like a dangerous
game to us, but as Newton long ago opined, “I can calculate the motion of heavenly bodies, but not the
madness of people.”