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Yellen's "Irrational Exuberance" Moment Arrives As She Pops Momo, Biotech, Social Media Bubble
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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Looks like gold will be the outperformer.
As usual..
Nah, that means S&P 8,000
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.
get lost you key stroke douche bag......
On a busy eight lane highway too!
i guess cynk just went down the sink....
Saw a story on bloomberg. Trader who shorted CYNK at $6 has lost his job.
Warren just asked yoda to comment with a 'straight face'
Not so sure what that means
"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 !
Excellent troll MDB...back to your old standards!
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....?
Batman.
carl...good call
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.
Hey Moonman - you up MDB's moon - twat.
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?
If you fool people, take it as a compliment.
"Irrational Exuberance".....................................Sounds Bullish!
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".....
I can see how it might be hard to parse your <sarc> especially with MDB on board today
"
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.
The moonman lead post proudly sponsered by the NSA. Thank you for reading and please tune in again soon...
MDB, what size strap-on does Yellen do you with?
No strap-on needed with that tool.
"She's got a cock like a horse!"
<hat tip Slapshot>
looks like she opened pandora's box, in more ways than one
MDB has lowered expectations so low, that this looks like one of his bests posts.....MDB is good, really sneaky good !!
You had me at "optimal results", MDB. I keep thinking "optimal for whom, exactly?"
Dear MillionDollarBonus, regarding your comment:
" ... economic planners take every indicator into account when planning the economy ..."
That is the f...ing 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 !!
New to the board, eh? MDB is a master at the straight-faced sarcastic zinger!
"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!!
Cretin. Bugger off.
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.
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.
"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...?
Can anyone here do beter than Yellen? Look, we all know that we should have let the system implode in 08. But we didn't. Now, the problem is even worse, and there are fewer solutions. What would you do in Yellen's case?
Scenario 1) Continue to print mad ZIRP but let the equity bubble take its own course and explode on its own. Result- total destruction of modern society as a deflationary depression of unimaginable magnitude is unleashed upon humanity.
Scenario 2) Raise interest rates slowly but steadily until the Fed rate reaches 2%. Result- a massive financial coronary as liquidity dries up faster than the coochie of a menopausal housewife with resentment issues. Then, as no-one can get debt-money to run their vig-payment scams, a massive deflationary depression sets in with actual Holodomor victims lying in the streets.
Scenario 3) Prosecute banksters and put them in jail and/or execute them. Govt stockpiles staple food items for redistrbution. Declare a debt moratorium and reset the entire system, based on a gold standard. In the interim, there will be issues of starvation and social dislocation, but you feed people until the economy gets back on its feet. Result: A total destruction of the Nuland-et al financial vampire system, and a return to real productivity without the onerous burden of usury debt slavery. This is totaly unacceptable to the Nuland et al drones like Yellen, so she will continue to muddle onwards towards a total disaster. But if the tribe survives, collateral damage is not important.
I'll assume your more extreme suggestions are just a joke, but the truth is many of your proposals have already been implemented in the Dodd-Frank bill passed by Predident Obama in 2010, which is one of the reaons we are seeing such promising growth in the economy. The Dodd-Frank bill amde a number of legislative changes, including improved oversight of the economy by government regulators and a number of changes to improve the stability of the financial system.
We Predident now
MDB--Dodd-Frank also includes the provision enabling the banks to Corzine your bank account. I suppose you support that as well. As a reminder, dollars are nothing more than a representation of your labor. You earned them, you paid taxes on them. So if they bail-in the banks, its nothing more than outright THEFT of my LABOR.
At the risk of a -1 vote, I need to point out that deposits in banks under FDIC protection are not insured over $100,000.00. Therefor, you are assuming risk when your deposits exceeed these limits.
Its actually $250,000 now. However, that doesn't preclude them from taking more than that if there are bail-ins. Remember, they can write the rules and change the rules any time they want. It won't be in your favor or mine though. Just a reminder, however, that dollars are just a representation of your labor. Taking your dollars is nothing more than taking your labor. Taking your labor is slavery.
Don't call it a 'bail-in'. Call it 'creditors' doing their part to save the banks they love.
That might be the politically correct thing for them to call it, or the Orwellian thing to call it, but it's still theft. Most people "think" they are putting "their" money into the bank for safekeeping. Not to become a shareholder.
Y o u are the joke here.
As long as there is "monetary policy" there will never be stability;
Effect, be-cause.
As long as there is "monetary policy" there will always be tyranny;
Effect, be-cause.
The problem is "monetary policy."
The solution is to resolve the problem.
3, my children deserve a chance to avoid this:
third down; http://www.woodpilereport.com/html/index-378.htm
It is so, so telling when a Fed chairman opines on equity sector valuations. I read the transscript and despite my cynicism that I thought couldn't get worse, I still had a WTF moment.
"Maybe if our Federal Reserve had paid closer attention to housing prices from 2002 to 2008, they could have prevented the housing collapse."
It was Greenspan's intention to create a housing bubble.
I green arrowed you for finally showing up again. Where the hell have you been????
"Economic planners"? Is that like "military intelligence"?
this was actually one of your better ones in a long time. well done mdb. WELCOME BACK YOU LOVEABLE DOUCHE YOU.
Yo Tyler's
Would it be possible that when someone gets to a -50 on their post - when that happens the post disappears
at - 50 a post is most likely BS & really dont deserve to be read IMO
Da Yooper sounds like a sore winner
You´re impriving MillionDollarBonus. Really good stuff.
this fucking hag has me looking at broom etf's
Looks like Yellen is boycotting Kev' from pumping IBB/FB/LNKD/CYNK/RUT for the rest of the summer. No problem. You can still buy the ATH in other sectors.
The players that mean anything are now short.
Look for a planned crash in the fall so money will flow into the bond market to make up for lack of QE.
John 3:16
I though John 3:16 read: The holy players that mean anything are now short.
For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.
I encourage you to work out your salvation through Jesus Christ.
I encourage you to work out your death anxiety through Friedrich Neitzche, Albert Camus, and John Paul Sartre
The Fundie force is strong on ZH SuperRay....:-)
Rather the no-Fun die crowd.
Those damn nihilists need to take it up their dead german ashes too though.
Two sides of the same misery coin.
To Kierkegaard: do not pass Go, do not collect $100.--
Funny how I can't find a quote in the Bible where Jesus says anything even remotely close to that sentiment. Do you really believe it could be that easy? Just believe in him, and then you are saved? Really?
Religion = having someone to get you off the hook everytime you sin.
All hail the Cheesus Sliced!
I fucking HATE religion. Truly.
The only thing you and Zhers have in common is we both believe the end is near.
But you have been waiting for the end of the world for 1,972 years
If there is a plan, I think that would be it.
i'm buying more Amazon cuz Bezos is building a moat around his zero margin businesses...at some point they will be enormously profitable, LOL
So why did a dashing young fella like Ben leave such a prestigious job and hand it over to an old lady?
Gosh, I bet every Wall Street boardroom has their scalpers out at the old folks homes around New york. You just can't beat the experience.
After all, its just one of the worlds most important jobs.
If your hanging on this old lady's words, you may as well be hanging from her teets.
SPY down .03%. This is a tough day for bulls.
"Our current estimate at the Fed for returning to normalized monetary policy remains somewhere between 800 and a thousand years. Or when hell freezes over, whichever comes first. Now I look forward to your questions."
or until my unused twat dries up like a raisin, oh wait ...
FED wants gld/corn lower, DJIA higher, lower rates. No one cares about small caps. More illegals, more ebt, more dreamers, more financial aid, more subprime, more part time, more FED central control please.
Same ole, same ole. The fed crooks blow up a bubble, and blame the 'markets' for reacting in a predictable manner. Of course, they're all are on the same side.
Can't get any attention put on the fed though. That would end their little rigged casino. The fed is the in-house dealer passing aces to 'the boys'.
Once you see through all this . . . it almost seems obvious. Doesn't it ?
Wheeeeeeee
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Doh!
For example, average debt-to-earnings multiples have risen, and the share rated B or below has moved up further for leveraged loans.
I wonder what the current interest rate environment has to do with this....hmmm???
Central planning knows no limits.
the fed only cares about one thing, the stock market. FB is almost as big as JPM. Now that's some funny shit right there.
It's the best way available for the retail market to participate in the current bull market in spying and invasion of privacy - of course their valuation's sky rocketing.
what does JPM add to the economy?
Why, more dead bankers & $18B of BOLI.
Shitloads of commercial bank funny money.
trying to guess which one's more funny, the insolvent bank or the useless "social media" stock that everyone will be laughing about in 5 years?
Bubble popping, Dutch Boy looking, mother fucker!!! Bring back that guy with the beard!!!!
It's about time, as to retain any type of credibility Yellen "has to talk this thing down a bit".
USD/JPY can only hold on so much longer here before finally breaking down in conjunction with YEN breaking out.
Carry unwind is going to come much sooner this time around , as NO ONE is gonna get caught with their pants down around their ankles this time.
More on this and other great forex trade related info at : http://forexkong.com/2014/07/14/yellen-must-get-hawkish-doves-will-cry/
Zuckerberg needs to fly to the Fed and get on his hands and knees pronto: all part of his fiduciary duty.
and this...."there are mixed signals concerning the economy" LOL along with "noise" etc translates to "I have no clue"
Naw . . . she's got all the numbers, you can bet on that.
They know exactly how its going . . . . theyre the ones doing it.
Never fall for their 'duh . . . we're cluess' act.
Espirito Santo holding about to go Fukuyama, or Hiroshima, make your pick.
http://www.forexlive.com/blog/2014/07/15/incestuous-portuguese-corporate...
Bizarro World News headline: Bank Profit Falls 8%, Stock Price Up 4%
she just popped my cum bubble :)
I saw everything; It was the Groundhog who dunnit!
"zerohedge @zerohedge 6m
YELLEN SAYS FED MINDFUL OF PREVIOUS ’FALSE DAWNS’ IN ECONOMY."
LOLOLOLOLOL, oh ha ha, ha ha, ha... my sides, my sides... ha ha ha, LOL
False dawn? Is that what it is? I thought it was the headlight of an oncoming train.
I like those bathroom tiles as background for that chart!
Can praying increase your profits? https://www.youtube.com/watch?v=Cd-Ttgh1PAA
Kindly fuck off with your religion bullshit, no place for it here.
Thanx.
Another tolerant lover of the first amendment. Most normal people simply ignore...and there we have it!
First Amendment applies only in the US, and then only to Congress. So take your religion and bugger off
A friend of mine convinced me to attend a "CEO" (Christian Enterprise Organization) seminar where the message was that belief in God would make you "wealthy". When pressed by what was meant by "wealthy", it turns out that they meant financial wealth, not just wealthy in spirit, etc. The key, we were told, was to "tithe" which was to give 10% of what you made to the church. Then someone asked whether the tithing rule applied to personally owned businesses, holding companies and family trusts and whether tithing applied to gross revenue, net profits or EBITDA. After some blank stares and awkward stumbling, we were told that God would like the rule to apply to gross revenues, but that it was sufficient if you gave net profits. It was really nice to get that clarification
bob it seems you only like your religion, while all "moooslimes" are terr'rist fucks...?
Another Bay Area jealous liberal intellectual NIMBY twisting the knife into the backs of local industry (1 percenters!!!) whenever she gets the chance.
More jawboning and gobbledy gook.
Just fucking crash already.
Trying to get my mind around this one since I'm a rookie financial news junkie. To use an analogy:
We have a plane at 30,000 feet with engine failure and broken landing gear approaching an eventual crash landing. The likes of Santelli say, "Hey, we need to warn the passengers that all is not right with this plane and it will eventually crash." The likes of Leisman would say, "We've descended in this lovely atmosphere for 20 minutes and we haven't crashed yet, so your advice is sh!t. See how pretty the clouds are. And besides, we'll be so rich by the time we land, we'll be too happy to care." The likes of Yellen and The Bearded Guy knew the plane was defective before it launched, but are just arguing at which altitude to tell the truth that would avoid the commoners rushing first class where they are sitting.
Do I have this about right?
I'd say you have it about right. And the altitude for truth-telling is treetops.
naw, treetop level is just "noise"
Haha. And here's the thing. My aunts and uncles, my father, mother and nieces all see that this is the true state of affairs. Years prior, all they knew about how the economy was doing was listening to a 30-second announcement on the radio from ABC News about now much the stock market went up or down that day. But now we have alternative media and we know, and are preparing for the next crash the best we can. Watching the Fed try to transform reality into unreality is idiotic to us.
You also could tell about FEDs from different countries fighting over who is in first class while pointing out the others are in economy.
Because that will make all the difference.
Not quite.
The Ponzi Munchkin and her Beard knew the plane was defective, and arranged to be paged just before boarding in order to announce an emergency has called them away. "We'll meet up with you on a later flight. BonVoyage, Bitchez."
I guess you could say that with the very nature of The Fed, they designed the plane to crash and convinced the government that their design was sound and that they should manage all the crash landings like a self-serving consultancy.
Gold now getting fucking slammed
In language so cryptic, Alan Greenspan would blush!
Dow promptly plunges 0.05%
A serious level, given the whistling past the graveyard that has gone on since May.
This is why there will never be a 10% pullback: if that began to happen, the muppets would panic, having never experienced anything like that in recent memory. The panic would lead to a crash.
The Fed can't print Xanax once panic sets in.
Only one thing matters:
EXTINGUISHING OF RESERVES.
Rates are irrelevant as they do not extinguish reserves.
Eventually Senate will order the Fed to drain reserves by selling bonds, otherwise world will totally dump USD and resort to barter as it is doing.
Reserves make the market
Reserves break the market
Nothing else matters.
Selling bonds to whom? With real inflation running well over 3%, who is going to buy those bonds? LMFAO!!!!
Lot's of buyers if yield is high enough
There are $40 trillion officially in existence and another $20-30 trillion rumored to be in computers in 80 offshore locations.
Drainage of dollars is needed otherwise world will totally ignore it
That's the point moron, yeilds are not high enough. There are no buyers for that shit paper.
Ok, let me explain this to you:
USD = bonds without expiry and without yield
UST = bond with expiry and with yield
That is just a swap for yield. Both are bonds.
Only Fed or Gov can extinguish USD.
UST self extinguishes at expiry
At right yield, people will swap yieldless USD with acceptable yielding USTs
Let's say: 5-6% of 10 yr?
I agree on your bonds/banknotes lecture, but the reason for wanting/holding bonds or cash is different
I, for example, hold USDs for liquidity needs reasons. a Pension Fund manager buys bonds for yield. he has no use for USDs and I have no use for USTs
USTs "self estinquishes"? a UST has to be estinguished with... USDs
Correct for normal economic situation When world keeps using USD without doubting it.
World is dumping USD now because there are too many of them.
$40 trillion officially exist and another $20-30 trillion unaccounted for in offshore locations.
As within anything, the value of something depends on its scarcity
USD scarcity is needed for the world to keep using it
you have it wrong, the more of something you are selling the more widely used that thing becomes and the more valuable it is. (the textbooks are wrong) scarcity means there is no market for your product. the dollar is reserve currency because its traded everywhere and has a liquid market and is not likely to change much in value overnight. big dollar problem is when someone other than US takes dollars in payment for goods and services they few options to buy American goods (or more importantly military hardware, because we limit who can do that) and so they are forced to take UST in exchange, zero interest paper, while the dollar loses value slowly and erodes their exchange value. thats why foreigners dont like the dollar
So let's print $10000000)00 trillion more
Dollar bonds stocks are not edible
The value of a currency is acceptance for goods and services not for bonds and stocks
The term "deep liquid market" is just propaganda and means nothing.
Financial market disconnected from economic output kills the economy
It's the opposite.
USD is extinguished with UST sold by the Fed.
And there you have it, for the yield to rise, the price must fall and the current holder will take the loss. The FED would have to be bailed out. So...it won't happen. We can look forward to decades of capital destroying low interest rates.
Triple Lehman is far far far far far better than the world dumping USD which is under way and accelerating
This is now a National Security issue with Military involvment.
In a nut shell:
It seems to me that most people don’t get the fact that the world doesn’t need Americans. They could all be replaced with a computer that receives invoices from different currency origins and prints the necessary “dollars” to fulfill payment. The producing nation need not produce anything except invoices to get the dollars to buy oil.
Unlike other nations, we need not “produce a tradable thing” to get “dollars"
America needs to produce nothing and thus need not exist in a logical sense.
The only thing the “computer” would need to do is protect itself from being destroyed, and not allow other “printers” to create dollars.
The “computer” could trade the various currencies, within its memory, against one another for yield to pay for electricity and satellite laser rays.
It boils down to these facts once distilled to its lowest common detonator.
I know this is far too brief for so complex an intertwining of factors, but in essence – that’s about it.
B R I L L I A N T
That is correct.
Though USA does offer one service:
WORLD PEACE.
US Military protects world trade routes and "forces" commodity and energy countries to actually...supply them.
Without US Military doing this job, world would be like in 1930s, mostly bilateral trade, no world currency, which basically what is slinding into currently.
USA Military is the dollar backup.
If USA military stops intervening defending world trade routes and LITERALLY FORCING resource countries to export their resources, world would be going towards ww3.
It is sliding into the mode right now.
Sadly so!
The Homeland (UTB America) is a nation without a people. Although, via unprecedented immigration from all nations, the citizens of America are becoming the people of other’s nations, who see themselves as a people who are citizens in the Homeland.
The Homeland is not America. It is post modernistic and Eastern Philosophically.
Unlike the long resident citizens of America who assimilated into a nation of citizens as a people, the now unassimilated value their people cohesion over the rights of citizens, while demanding all the benefits of citizenry in a democracy; one of which is to remain separate as a people, demanding they be accepted as they are, and the citizens change in their favor because citizens have no history as a people.
As this progresses through time, we(The Homeland) will become a polyglot nation, as Teddy Roosevelt warned, undone by old prejudices, which will divide the nation.
Then, world peace will evaporate into WWI all over again, if in fact that war has ever ended.
@SillyWabbits,
To put it another way: America? There is no there there.
There you go!
"Now"?
True. It's always been, but now it's very acute. World is abandoning USD
Not the current Senate.
There is no other option for Congress.
Order the Fed to Drain reserves in trillions and manually cause Triple Lehman or see dollar die.
It's already too late.
Congress is corrupted, but not stupid.
Congress just killed Iran deal today.
GPRO is a 5 billion dollar company ...
Candy Crush, Pandora, Linkedin (a fucking website and nothing more), Facebook
you have to value it based on 2025 earnings, when everyone with any dough will be walking around with a Gopro taped to their skull...
Yellen? I heard you was dead.
So what? Her warnings are followed by promises not to upset the apple cart.
And now back to your scheduled PM adjustment.
It is pretty simple. The FEd has lost all credibility. They have to pop the equity bubble to get some back.
This babbling macroprudential bitch is driving me crazy this morning trying to trade...
WTF is macroprudential- can anybody define it????
Thats what I thought, just another woman that likes to hear her macroprudential mouth talk............
That would be "showing careful good judgment in a big picture sense."
Which is bullshit of course, lol.
You tradin'? I got some candy bar wrappers here, what ya got to trade fer?
I got some baseball cards for your candywrappers.
I don't care how small of a hole the FED tries to control the burst, it still blows up. Shit, I'll just use a smaller pin to pop the bubble. That's like saying I'll use a smaller match to light the gas with.
It's gonna be loud when it blows!
Dire warning from the bubble-poppin Fed.....DOW now down a jaw dropping -5 points.