So much can change in two years.
On July 15, 2014, in the Fed's biannual report on Yellen's Congressional testimony, the US central bank had its first Greenspan moment when it duly warned that “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.”
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Did we say two years? Make that three months: just this past June, the Fed's monetary policy report once again warned that valuations pressures "rose for a few asset classes" as "forward price-to-earnings ratios for equities have increased to a level well above their median of the past three decades."
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Actually, scratch three months: just one month ago on the day of this year's Jackson Hole conference, when asked by Steve Liesman what his "judgment on asset bubbles", the Fed's biggest dove James Bullard said that "I think we are on the high side of fairly valued, I could see the process getting away from us, maybe tech stocks, maybe others" even as he qualified that "the Fed model has nothing about asset price bubbles, most models don't have anything about that", and as a result no Fed model ever forecasts asset bubbles, which incidentally explains why the traditional side-effect of Fed policy over the past decade has been, drumroll, asset bubbles.
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Fast forward to this past week's FOMC's press conference, when in a direct question if Yellen is worried she is causing asset bubbles "because of prolonged low interest rates", suddenly all concerns - those voiced by the Fed two years ago and three months ago, as well as those of James Bullard as recently as a few weeks, magically vaporized, and were replaced by this: "we routinely monitor asset valuations... nobody can know for sure what type of valuation represents a bubble."
So, which is it: are valuation metrics "substantially stretched", and have "price to earnings ratios for equities increased to a level well above their median", a process which risks "getting away from us", with asset bubbles emerging in "tech stocks, maybe others"... or as Yellen just said, "nobody can know for sure what valuation represents a bubble"?
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Whatever the answer, we are confident that once Janet Yellen is confident that valuations do represent a bubble, she will promptly advise the investing public to sell.