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Fed Warns Equity Valuations "Appear Stretched", P/E Ratios Are "Somewhat Elevated"
Confirming last year's warning, The Fed's Monetary Policy Report has sent a broad message to the markets in what may be Yellen's Irrational Exuberance 2.0 moment:
"Overall equity valuations by some conventional measures are somewhat higher than their historical average levels, and valuation metrics in some sectors continue to appear stretched relative to historical norms...
With regard to asset valuations, price-to-earnings and price-to-sales ratios are somewhat elevated, suggesting some valuation pressures...
...valuation pressures are notable in some asset markets,
At lower-rated and unrated nonfinancial businesses, however, leverage has continued to increase with the rapid growth in high-yield bond issuance and leveraged loans in recent years... new deals continue to show signs of weak underwriting terms and heightened leverage that are close to levels preceding the financial crisis.
Of course, as we saw previously, markets have no interest in 'following the Fed' when they say "sell."
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Full Monetary Policy Report:
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The only thing stretched more at this point is the truth.
Bush's fault....again
Pure CYA on the part of the Fed. This way, they can say: "See? We warned you..." Drivel, pure drivel.
"You are safe, your currency is centrally planned, we have control over your stored value, you're fine.... until we lose control and then don't say we didn't warn you."
i wonder if Janet has ever been 'stretched'?
Ya, thanks a lot for that image. Ooofff.
Funny, she didn't mention anything about price-to-equity ratios this time.
Look at that masonic building. All DC architecture. The mother lodge.
Add the jesuits (Georgetown), Langley...the geomantic grid in DC is mind boggling.
FED up!
Anyways, for anyone who thinks nomother teresa was a saint, read on....just like Gandhi.....
https://aadivaahan.wordpress.com/2015/02/24/20th-century-of-lies-and-dec...
Where's that guy who wrote that thing about Season 5 of the Grexit yesterday?
valuation metrics in some sectors continue to appear stretched relative to historical norms
lmao. Don't stop there mr. yellen.
How about m2 supply, money velocity, bonds, yields, average incomes, work force participation, debt to income ratio, foodstamp usage, on an on.
Lets talk historical norms.
It is 11:00 AM NY time. Do you know where your Dip was? No need for that picture to be on a milk carton.
"Watch the screen, watch the run, watch the pass. I TOLD YOU!" - John Madden
Phil Gramm's fault.
Lots of stretching left to do before damn thing breaks. Besides the Banksters have not turned on each other yet. But they will just like they did with Lehman and Bear Sterns. Then you will know it is serious.
Actually they have drawn the lines between the TBTF and the lower fodder banks. That is important distinction.
They will let other banks fail and then the TBTF banks will get them for free. Happened with WAMU and with Cyprus and is happening now with Greece.
I was wondering where all those Bank of Lynching America Countrywide branches were coming from.
This, too, is true. And it will take some time before that happens.
I will continue to Buy the daily dips as stocks indices climb the wall of worry.
Happened with Wachovia when it was absorbed by Wells Fargo. However,, it's still laundering money for the Criiminal Pure Evil Psychopaths at the CIA so business as usual.
Abolish the Fed.
There is as much chance of that as there is in getting Diversity in the socialist Hebrew media.
BUY
"...and the Fed is in no way to blame"
less stretched than Yellen's box as a curious brooklyn teenager
http://www.businessinsider.in/Janet-Yellens-High-School-Friends-Remember...
A photo of Yellen in high school. Not exactly the kind of gal I normally pumped.
"Yellen edited the school newspaper"...a propagandist even then.
which is, that pic of yellen looks like flounder with a wig on..animal house was just alright.
"Somewhat..."
http://tos.mx/QOH829
Yes, key choice of words.
ridiculously, insanely, absurdly, falsely would have been more accurate . . .
what a crock
Wait....are we still listening to what the CBs and Fed 'says' versus what they 'do'? Silly people.
Of course there is no interest in selling. There's nothing else out there that's profitable. There is the possible exception of US Treasuries.
The health of the stock market is now one of the mandates of the Fed, got it.
This time is different. Stocks have reached a permanently high plateau.
Nothing a negative interest rate won't cure
Not as streched as out as our behind will be when the Federal Reserve and the banksters get done with the 99%.
So if we're at the top end of valuations, in a mark to fantasy world, the only thing to do is BUY,BUY,BUY!!!!!
Thank Gawd for the Fed and their infinite wisdom
"At this point, what difference does it make?"
there is no spoon, period...
I will bet ZH my 401k that this was said to get retail equity investors scared so that institutional equity investors can buy in a slightly lower prices.
I thought that's what dark pools were for.
Let's face it, going long equities is basically short selling the 99% which have no political power to stop CBs from printing. While morally objectionable, it is a pretty safe bet.
- Sep 2008
Understand your point but it was a different economic and political system in 2008 and before.
Pre-2008, the system has slightly more characteristics of capitalism. Post-2008 it has more characteristics of that Haitian guy who got ****ked up the butt with a broomstick by the NYPD.
so good for you--you can buy with both hands the quarter percent pull back
99 percent of retail is not aware of what the fuck is propping up stock prices. If it is going up it is good, Retail gets scared at the bottom not the top.
And if stawks ever do dip down just a bit, that's only 'regrouping before charging higher again'.
Yep. It will be fail safe strategy until the day comes when the market goes offline.
What slightly lower prices....DOW up a solid hundo. No fear eva again!
No issues. Riskless market. PPT fully in place. BTFD.
"Overall equity valuations by some conventional measures are somewhat higher than their historical average levels, and valuation metrics in some sectors continue to appear stretched relative to historical norms..."
Wow..as much as theyre always rainbows n unicorns bout this stuff..i cant believe that these words would be spoken.
Reading between the lines..that says the market is pretty much f'd, and hold on to your hats.
Lets just see how much moar stretching this baby can take.
doesn't matter if the numbers are horse shit.
yellen just orders the banks to bid this pig higher.
velocity is dead, but that doesn't matter either.
the goal is to kill the shorts and concentrate the wealth - the latter being the definition of a depression
>"Overall equity valuations by some conventional measures
>are somewhat higher than their
>historical average levels
Well guess what Janet baby, overall interest rates by all conventional measures are bent and twisted, factor that in and the equity valuations make what sense there is in this crazy world.
This admonition oughta be good for at least another 1 or 2000 points on the Naz.
The last time a Fed Chmn mentioned overvaluation fears was Greenspan's "irrational exuberance" speech. And we all know that just lit the fuse for a 3600 point rally over the next three years.
How many warnings do we get before they hit the flusher? Bankers are frothing at the mouth to complete the rope a dope. Even Martin Armstrong finally stopped waiting for a correction and said go long, just like he did in oil 6 months ago.
Let's face it, when the Central Bankers have their equivalent of the Nuremberg Trials, they are going to say "but they ordered me to put the 99% in the gas chambers.."
What is she talking about? Valuation pressures are evident in all asset markets. That's what happens when you push interest rates below where they should be - asset prices go above where they should be. That was kind of the plan, to create the next set of bubbles. Keep pretending that wasn't the goal Janet.
Does this constitute a warning?
Or is it gloating?
The term 'somewhat elevated' is akin to 'well contained'
OT:
Financial war with Russia.
http://fortruss.blogspot.ca/2015/02/financial-war-us-wants-to-trigger-wa...
MUSHROOM CLOUDS are a-beckin'.
Fed speak "Appear stretch" = "CRAZY" / "NUTS" / "INSANE"
Well then, we are not at the "exuberance" stage yet! No worry.
LOL - this is exactly what the FED wanted! 'easy' credit = high valuations of credit. If credit valuations in the corporate capital structure are high, it's a no-brainer that the equity structure of the capital structure will follow along. This will only change when the cost of credit is raised - by the FED. There is no scenario where credit valuations are high, but equity valuatins are not.
I doubt the American markets will ever collapse again.
We are in a currency war.
The Pentagon runs our markets today.
"appeared stretched"=going much higher.
They didn't say overvalued so all is well.
All my models use a discount rate of 0%. This market still has plenty of legs.
The FED sets short-term rates by following what's happening on the rest of the curve. The idea that the FED controls rates is a false construct. It does its best to maintain the illusion that it controls rates.
The FED will move when the bond market tells it to move.
So does stretched mean bubble or not?
Because when the S&P was at 1950, just some 8% lower, but with plenty of shorts to burn and VIX to sell, they didn't see it being above historical norms.
Yellen got asked in the Jun 18 FOMC press conference whether they see the stock market being in a bubble. She did't think that was the case. The S&P closed at a new all time high that day.
S&P 500 close on Jun 18, 2014: 1956
S&P 500 close on Feb 23, 2015: 2109
Now, the S&P is some 8% higher 250 days later and they see stocks as being above historical average levels.
But if it would drop like 7.25% back to where it was? Would that be a totally unsuspicious level again and it could go up again?
It's starting make sense only if these stock market comments are to provide the smokescreen for the casino owners for the market moves, really. They need to generate moves. Even the FX market doesn't move much lately.
And let's not forget this interesting action pointing to the 2130 level. Coincidentally, we're almost there:
Berserk, Broken Rampathon Algo "Buys" The S&P At 2,130
http://www.zerohedge.com/news/2014-12-18/berserk-rampathon-algo-just-bou...
Jun 18 FOMC press conference
Question at 47:25
https://www.youtube.com/watch?v=rfAg3BJCC1c
PETER BARNES
Peter Barnes with Fox Business, ma’am. Can I—just to follow up a little bit on what Pedro asked about. Specifically, what about equity markets? I mean, right now, today, the S&P 500 is on track to close at a—another record high.
You have said that you have not seen any evidence of bubbles in equity markets, and that they have been trading within historic norms. Is that still the case today?
CHAIR YELLEN
So I don’t have a sense—the Committee doesn’t try to gauge what is the right level of equity prices. But we do certainly monitor a number of different metrics that give us a feeling for where valuations are relative to things like earnings or dividends, and look at where these metrics stand in comparison with previous history to get a sense of whether or not we’re moving to valuation levels that are outside of historical norms, and I still don’t see that. I still don’t see that for equity prices broadly.
So I guess these 'animal spirits' are still just puppies and kitties?
No shite, Sherlock.
That's a 'sign'.. Time to put up the interest rate!