Even those high valuation levels are a bit like, they don’t apply to the entire stock market. For example, in my own portfolio, the P/E ratios of the largest holdings with 2022 forecasts (2022 starts in 2 weeks, by the way) are 9.4, 10, 11.2, 13.5, 13.6, 15.8, 17.1.
Of course, these also have optimistic earnings forecasts for next year, but the levels are such that if earnings don’t significantly dip, there’s no “air” in them, but rather the opposite.
I don’t think this FED announcement was bad news at all. Now the markets have a pretty clear outlook for next year, which brings a lot more certainty, and at least for now, it seems that this inflation spike will be overcome in a controlled manner without drastic measures. After all, a risk scenario was also hinted at, where the FED would already be pulling the “emergency brake”. Now, however, the steps have been set, and whether the FED raises interest rates 2, 3, or 4 times next year probably doesn’t have a big impact on the market if the economy is seen to develop strongly, as is now forecast.