The S&P 500 (Index: SPX) has come to revolve as much around the miscellaneous pronouncements of various minions of the Federal Reserve as it does about their expectations for the fundamental future business prospects of the 500 largest publicly-traded U.S. companies.

The latest sign of how deeply dependent investors have become on those pronouncements on Tuesday, 22 February 2020. Speaking to a virtual forum of Official Monetary and Financial Institutions, Chicago Fed President Charles Evans 'accidentally' set a new expectation the Fed's future monetary policy would be less expansionary than it previously communicated it would be in announcing its new average inflation target policy.

For the dividend futures-based model we use to project the future potential levels of the S&P 500, that kind of change alters the model's amplification factor, which we think shifted from +1.0 to +1.5 as a direct consequence of Evans' statement. We've visually indicated that shift in the latest update of the alternative futures chart indicating the model's future projections.

(Click on image to enlarge)

That change also occurs as investors would seem to have shifted their forward-looking focus from 2020-Q4 toward the more distant quarter of 2021-Q1, which began last week. We think that shift can be best understood as the market starting to pay much closer attention to the 2020 election, whose outcome will have considerable impact on the future for the U.S. government's fiscal policies. We anticipate investors may switch their focus back and forth between 2020-Q4 and 2021-Q1 severval times before the end of the 2020 calendar year.

We've described Evans' rate hike statement as 'accidental' since he attempted to walk it back on the next day, though the level of the S&P 500 indicates his effort, combined with the statements of other Fed officials, was unsuccessful.

Speaking of which, there was quite a lot of noise coming from the Fed's minions in the trading week ending on 25 September 2020, mostly calling for the U.S. government to step up its fiscal stimulus efforts.