Yellen's "Irrational Exuberance" Moment Arrives As She Pops Momo, Biotech, Social Media Bubble

Tyler Durden's picture


On one hand Janet Yellen, Series 7, 63-certified, and a consummate expert on equity valuation said the following soothing words about market values:

While prices of real estate, equities, and corporate bonds have risen appreciably and valuation metrics have increased, they remain generally in line with historical norms. In some sectors, such as lower-rated corporate debt, valuations appear stretched and issuance has been brisk.

On the other, and sadly for holders of biotech and social media stocks, Yellen appears to have just burst that particular bubble.

Nevertheless, valuation metrics in some sectors do appear substantially stretched—particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year. Moreover, implied volatility for the overall S&P 500 index, as calculated from option prices, has declined in recent months to low levels last recorded in the mid-1990s and mid-2000s, reflecting improved market sentiment and, perhaps, the influence of “reach for yield” behavior by some investors....


... signs of risk-taking have increased in some asset classes. Equity valuations of smaller firms as well as social media and biotechnology firms appear to be stretched, with ratios of prices to forward earnings remaining high relative to historical norms. Beyond equities, risk spreads for corporate bonds have narrowed and yields have reached all-time lows. Issuance of speculative-grade corporate bonds and leveraged loans has been very robust, and underwriting standards have loosened. For example, average debt-to-earnings multiples have risen, and the share rated B or below has moved up further for leveraged loans.

Call it Yellen's "irrational exuberance" moment. Also call it a warning.


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Tue, 07/15/2014 - 10:24 | 4958861 Stoploss
Stoploss's picture

Looks like gold will be the outperformer.

As usual..

Tue, 07/15/2014 - 10:26 | 4958869 Croesus
Croesus's picture

Nah, that means S&P 8,000

Tue, 07/15/2014 - 10:28 | 4958879 MillionDollarBonus_
MillionDollarBonus_'s picture

This is all part of Yellen's plan to taper the equity rally and make sure that stocks don't get ahead of themselves. For the long term buy-and-hold value investor, this is just noise. I'm impressed that unlike many of her predecessors, Yellen is considering a complete range of economic indicators, including equity prices. Maybe if our Federal Reserve had paid closer attention to housing prices from 2002 to 2008, they could have prevented the housing collapse. It's important that economic planners take every indicator into account when planning the economy, in order to achieve optimal results.

Tue, 07/15/2014 - 10:32 | 4958896 kliguy38
kliguy38's picture

get lost you key stroke douche bag......

Tue, 07/15/2014 - 10:45 | 4958950 Headbanger
Headbanger's picture

On a busy eight lane highway too!


Tue, 07/15/2014 - 10:59 | 4959003 smlbizman
smlbizman's picture

i guess cynk just went down the sink....

Tue, 07/15/2014 - 11:00 | 4959007 Vespasian
Vespasian's picture

<== Greenspan more resembles BEAKER

<== Yellen more resembles BEAKER

Tue, 07/15/2014 - 11:04 | 4959035 RaceToTheBottom
RaceToTheBottom's picture

What being a series 7 and/or 63 gives you knowledge about bubbles?

Just got my drivers licence, want to know who will win the Indianapolis 500?


Tue, 07/15/2014 - 11:15 | 4959115 SheepDog-One
SheepDog-One's picture

I just got my drivers license let me tear apart and rebuild your new Audi A7 engine for you! I'll soup that shit up nice, I'm an expert you see.

Tue, 07/15/2014 - 11:35 | 4959223 f16hoser
f16hoser's picture

Greenspan/Bernanke/Yellen are 3 Crazy Jews!!!

Tue, 07/15/2014 - 12:06 | 4959365 Slave
Slave's picture

I love nobody cares about actual individual valuations, just some general statements from the current Fed bitch. Seriously...this is so fucked up.

Tue, 07/15/2014 - 12:42 | 4959489 RevRex
RevRex's picture

The only thing not likely to get popped is Yellen's cherry....unless Hillary is hitting that with her strap-on.....

Tue, 07/15/2014 - 12:59 | 4959558 Save_America1st
Save_America1st's picture

Does this mean she's just not a believer in the new multi-billion dollar juggernaught, CYNK? 

Tue, 07/15/2014 - 13:10 | 4959606 SafelyGraze
SafelyGraze's picture

"valuation metrics in some sectors do appear substantially stretched—particularly those for smaller firearms"

yellen disses the squirrel hunters

Tue, 07/15/2014 - 13:16 | 4959622 Xibalba
Xibalba's picture

I'm amazed that there are people willing to discuss fundamentals at all in this 'market'

Tue, 07/15/2014 - 13:24 | 4959645 Silky Johnson
Silky Johnson's picture

Greenspans mouth looks like Yellen's cunt, and they both took a busting by the Hillary strap on.

Tue, 07/15/2014 - 16:04 | 4960323 newbie vampire
newbie vampire's picture

"Greenspans mouth looks like Yellen's cunt, and they both took a busting by the Hillary strap on."

Mr Janet Yellen's cock would make Greenspan's cunt shrivel up.

Tue, 07/15/2014 - 12:27 | 4959445 alkaiser
alkaiser's picture

crazy devils ya mean

Tue, 07/15/2014 - 13:04 | 4959552 Squid Viscous
Squid Viscous's picture

got hit with the ugly stick like 99% of their tribe, inbreeding is not healthy... I actually feel sorry for these hasidic rugrats I see at the mall / poor little bastards, mom looks like someone put a wig on a lizard, and dad looks like something reeled up from an offshore shipwreck 

Tue, 07/15/2014 - 16:00 | 4960308 newbie vampire
newbie vampire's picture

Not that it matters but I betcha Mr Yellen has got bigger cojones than the other two put together.  What we need is MOAR MOAR MOAR !!! stimulus.  Mr Yellen has never met a Stimulus she didn't like.

How about this.... for job creation.  Sack all the fulltime and part-time workers and employ 8 or 10 or 12 etc new employees to work a maximum 1 hour a day.


Tue, 07/15/2014 - 11:56 | 4959313 moriarty
moriarty's picture

No that's Danny Alexander (Chief Secretary to the [UK] Treasury)

Google: Danny Alexander Beaker (Web address string too long to copy & paste) for Beaker incarnate.

Tue, 07/15/2014 - 11:06 | 4959056 slightlyskeptical
slightlyskeptical's picture

Saw a story on bloomberg. Trader who shorted CYNK at $6 has lost his job.

Tue, 07/15/2014 - 12:07 | 4959368 Hippocratic Oaf
Hippocratic Oaf's picture

Warren just asked yoda to comment with a 'straight face'

Not so sure what that means

Tue, 07/15/2014 - 16:09 | 4960338 newbie vampire
newbie vampire's picture

"Saw a story on bloomberg. Trader who shorted CYNK at $6 has lost his job."

This is what happens when Insanity rules.  All courtesy of the Fed.  MOAR MOAR MOAR !


Tue, 07/15/2014 - 10:32 | 4958898 ShorTed
ShorTed's picture

Excellent troll MDB...back to your old standards!

Tue, 07/15/2014 - 12:17 | 4959402 Greenskeeper_Carl
Greenskeeper_Carl's picture

Agreed. This guy is just fucking around. It amazes me so few see it for what it is. It's satire. Notice how many people disappear here for trolling stupid shit or pimping their bogus blogs, yet MDB is still around. Makes me wonder, has anyone ever seen MDB and Tyler durden in the same room together....?

Tue, 07/15/2014 - 12:54 | 4959537 Dollarmedes
Dollarmedes's picture


Tue, 07/15/2014 - 13:15 | 4959621 jbvtme
jbvtme's picture

carl...good call

Tue, 07/15/2014 - 10:33 | 4958902 moonman
moonman's picture

So true, I do not understand these posters on ZH who feel like they are smarter than our leaders and do not think that everything our government does is for our own good.

Tue, 07/15/2014 - 10:36 | 4958910 jmcadg
jmcadg's picture

Hey Moonman - you up MDB's moon - twat.

Tue, 07/15/2014 - 10:40 | 4958930 moonman
moonman's picture

Good too see another dumb fuckstick who does not recognize both of us are being sarcastic, do you need to the little <sarc> tag everytime?


Tue, 07/15/2014 - 10:50 | 4958965 tarsubil
tarsubil's picture

If you fool people, take it as a compliment.

Tue, 07/15/2014 - 12:01 | 4959347 Son of Loki
Son of Loki's picture

"Irrational Exuberance".....................................Sounds Bullish!

Tue, 07/15/2014 - 12:46 | 4959498 RevRex
RevRex's picture

There are so many braindead stupes here it is hard to tell.....


Just look how many say stupid shit like "Busch did it two and boath party's hour the same".....

Tue, 07/15/2014 - 14:36 | 4959905 allgoodmen
allgoodmen's picture

I can see how it might be hard to parse your <sarc> especially with MDB on board today

Tue, 07/15/2014 - 16:14 | 4960361 newbie vampire
newbie vampire's picture


Good too see another dumb fuckstick who does not recognize both of us are being sarcastic, do you need to the little <sarc> tag everytime?"

 Reckon you might do too.  Gits me a lil worried when folks take offence at sarcasm for face value.

Tue, 07/15/2014 - 11:56 | 4959314 GovernmentMule
GovernmentMule's picture

The moonman lead post proudly sponsered by the NSA. Thank you for reading and please tune in again soon...

Tue, 07/15/2014 - 10:40 | 4958921 TabakLover
TabakLover's picture

MDB, what size strap-on does Yellen do you with?

Tue, 07/15/2014 - 11:11 | 4959079 syntaxterror
syntaxterror's picture

No strap-on needed with that tool.

Tue, 07/15/2014 - 12:07 | 4959370 pods
pods's picture

"She's got a cock like a horse!"

<hat tip Slapshot>

Tue, 07/15/2014 - 12:35 | 4959467 Squid Viscous
Squid Viscous's picture

looks like she opened pandora's box, in more ways than one

Tue, 07/15/2014 - 10:55 | 4958991 Seasmoke
Seasmoke's picture

MDB has lowered expectations so low, that this looks like one of his bests posts.....MDB is good, really sneaky good !!

Tue, 07/15/2014 - 11:14 | 4959105 NoDebt
NoDebt's picture

You had me at "optimal results", MDB.  I keep thinking "optimal for whom, exactly?"

Tue, 07/15/2014 - 11:22 | 4959128 orez65
orez65's picture

Dear MillionDollarBonus, regarding your comment:

" ... economic planners take every indicator into account when planning the economy ..."

That is the problem, s..t head!!

It's called "central planning", as practiced in the ex Soviet Union !!!

A free market economy does not need any central planning !!

Tue, 07/15/2014 - 11:26 | 4959180 donsluck
donsluck's picture

New to the board, eh? MDB is a master at the straight-faced sarcastic zinger!

Tue, 07/15/2014 - 11:34 | 4959185 MillionDollarBonus_
MillionDollarBonus_'s picture

"A free market economy does not need any central planning"

Are you serious? Every economy in the world has a significant amount of central planning. Without central planning more than half of the world's economy would simply dissapear, including the entire healthcare systems of countries like Canada and the UK!!

Tue, 07/15/2014 - 11:35 | 4959222 Jack Sheet
Jack Sheet's picture

Cretin. Bugger off.

Tue, 07/15/2014 - 11:59 | 4959339 slightlyskeptical
slightlyskeptical's picture

The point being if there is Central planning then it is not a free market economy. It means there is not a free market economy anywhere in the world. As such anyone spouting out about free market economies is in reality a moronic sheep.

Tue, 07/15/2014 - 12:02 | 4959350 donsluck
donsluck's picture

Just to play along, capitalism cannot survive in a planned economy. They are mutually exclusive. A planned economy is a central tenent of totalitarianism. Think of it this way, money represents almost everything. If you control the way money is "printed", distributed, earned, taxed etc. you control everything. IE totalitarianism.

Tue, 07/15/2014 - 13:36 | 4959680 ejmoosa
ejmoosa's picture

"more than half of the world's economy would simply dissapear, including the entire healthcare systems of countries like Canada and the UK!!"


and that would be bad because...?

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