Market Valuation Varies in Lock-Step with Equity Allocation
Constant of motion reflects market microstructure
Robert Armstrong, the FT finance editor, debunks the idea that the Fed’s asset purchases have been driving stock market valuations. Specifically, he debunks the “famous bond manager,” Jeff Gundlach’s tall tale:
It’s like, if you take the capitalisation for the S&P 500, and you divide it by the Fed balance sheet, it looks a lot like a constant.
Armstrong c…
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