Again, this is not new information.  They've been telling us this even before the pandemic, and they've made it more abundantly clear in recent months.  Now it's formal policy, to allow a period of hot inflation, to compensate for the long period of below target inflation. 

What does it all mean? 

It means the Fed's pandemic policy response is, by design, inflating GDP, inflating away debt, and consequently resetting the price of everything higher (consumer stables, consumer products, services, labor, stocks, real estate, commodities … everything).  They will do nothing to risk choking it off to early. 

So rates will remain at zero for quite sometime.  And as we've discussed, with zero rates, the multiple on stocks can go much, much higher – for a lack of alternatives for return.  

With this in mind, the S&P 500 trades above 3,500 today. 

But ignoring the rate environment, and ignoring the deluge of liquidity that has been dropped on the world in recent months, those that try to call tops and constantly see bubbles are getting noisy – for reasons like, "too far, too fast" or "too expensive" or they just don't like the level of the index (the eye test, "too high"). 

For perspective on where this can go, let's revisit my analysis on the long term trajectory of stocks, and what it would take to put us back on path of 8% annualized, from the pre-global financial crisis peak of 2007.