"Disappointed" Yellen Warns Investors "Be Careful", But "Don't Label It A Bubble"

While her term ended - for all practical purposes - with the conclusion of this week's January FOMC meeting, former Fed Chairwoman Janet Yellen's last official day at the helm of the world's most important central bank was marked by an explosion of volatility in the Dow, with the blue chips recording their worst single-day selloff since the collapse of Lehman brothers. 

And even though it's tempting to suspect Friday's selloff might foreshadow what's to come during the Powell era, Yellen admitted during an interview with PBS Newshour that she was disappointed to not be reappointed for a second term by President Trump - and that, if she had her druthers, she would've opted to stay

"I would have liked to serve an additional term and I did make that clear, so I will say I was disappointed not to be reappointed," Yellen said Friday.

"I think things are looking very strong."

Despite the volatility of the past week and the first nascent signs of wage growth in years - which should worry a central bank whose primary responsibility is to put a floor under plunging markets - Yellen says she expects interest rate hikes to proceed as planned.

"The Federal Reserve has been on a path of gradual rate increases and if conditions continue as they have been, that process is likely to continue," she said.

"And as it happens we would expect long rates to move up."

Unlike fellow former Fed chairman Alan Greenspan - who this week declared that both stocks and bond valuations are in bubble territory - Yellen was careful not to use such strident language.

"I don't want to label what we're seeing as a bubble.

But I would say that asset valuations are generally elevated...for the stock market, the ratio of price to earnings...is near the high end of its historical range.

If we look at for example commercial real estate and other assets, we're seeing high valuations."

But should Americans be worried about the markets?

"They should be careful and I would say diversified in their investments. What we look at is the likely resilience of the economy and the financial system... In that regard, we have a banking system that is much stronger and better capitalized and better able to withstand a shock than prior to the financial crisis."

Stlll, Yellen is refusing to rule out another selloff.

"Asset valuations could change I'm not predicting that that would happen and I wouldn't rule that out," she said.

Asked if there will be consequences to Republicans' rollback of post-crisis regulations, Yellen passive aggressively listed off the "improvements" made during her tenure at the helm of the San Francisco Fed and then as chairwoman of the Fed.

"In the area that I'm most familiar with - banking regulation - we've put in place very strong improvements to make the financial system more resilient. More and better quality capital. Capital that serves as a buffer...if there are shocks, it leaves firms able to lend..All of us need to remember the financial crisis and the terrible toll it took on Americans," she added.

When looking back at her tenure, Yellen said she feels "very good" about the progress the economy has made, noting that the unemployment rate has fallen to its lowest level in decades.

"When I see the unemployment rate fall to 4.1%...I feel very good about the progress we've seen there," Yellen said.

Watch the rest of what was effectively Yellen's exit interview below:

Comments

SoDamnMad Sat, 02/03/2018 - 11:20 Permalink

Janet  You are so full of shit you shouldn't be able to see straight.  You and Alan Greenspan will go down in the history books as not having the slightest clue about what wrath you put upon the American 99%.

JibjeResearch GunnyHerd Sat, 02/03/2018 - 11:53 Permalink

They knew!  She knew!

She can't control politics.  Her job was to keep the money rolling into the Gov and to keep the economy going without too much shock.  She did her job.

The US MIC and our elites are losing on the Global stage; thus, we will have to pay.

Yesterday, I realized that the BRICS wasn't meant to be the foot soldiers.  It's more like the Generals.  We are losing to the BRICS.

In reply to by GunnyHerd

GUS100CORRINA JibjeResearch Sat, 02/03/2018 - 13:22 Permalink

"Disappointed" Yellen Warns Investors "Be Careful", But "Don't Label It A Bubble"
 

My response: Here it comes!!! Yellen is pulling a "CYA".

The CBs are the true "financial arsonists" in America.

Circuit Breakers for Markets: 7%(L1), 13%(L2) and 20%(L3)

If MARGIN DEBT begins to unwind rapidly (500B+), then this is going to GET UGLY!

Just take a look at the SVXY chart below for the last couple of weeks.

https://www.finviz.com/quote.ashx?t=SVXY&ty=c&ta=0&p=w

In reply to by JibjeResearch

Boing_Snap jcaz Sat, 02/03/2018 - 12:42 Permalink

Hey don't you find it interesting that the day Janet hands over the reigns the markets start correcting to fair value?

I'm thinking that Trumps team has stopped the manipulation, the bond market is doing what it should, reflecting the new paradigm that selling a massive amount of debt as they're proposing raises rates dramatically.

It could very well be that we're going to see the entire enchilada fold in on itself.

In reply to by jcaz

Knave Dave Boing_Snap Sat, 02/03/2018 - 19:42 Permalink

You're giving undue credit to Team Trump, run by the same bankster barons of Goldman Sachs that Yellen hangs out with. These people are her friends and colleagues. Team Trump has done all it can to pump the market up with opportunity for massive stock buy-backs to offset the reduction in money supply that the Fed finally got serious about this week.

This week was the first time the Fed actually reduced its balance sheet as much as promised, and even Trump's massive tax gift to corporations and the wealthy was not enough to make the transition painless. This was an air pocket. The real turbulence begins when the Fed kicks the reverse thrusters mid-flight up to full power. Watch how fast the plane falls then.

In reply to by Boing_Snap

SheHunter enough of this Sat, 02/03/2018 - 11:52 Permalink

Powell is no different and no better and deeply swamp mired.

Dad a lawyer.  Grew up rich.  Now is worth over 112 million - richest of anyone on the fed reserve board.

History as a fed employee and banker.

Was director of Banker's Trust in the 90's until he lost clients millions in a derivatives scheme.

Is an O'B man - O'B was the one who appointed him onto the fed reserve board.

Now Trump elevated him to chairman.

How you say more-of-the-same.

In reply to by enough of this

DanDaley Sat, 02/03/2018 - 11:25 Permalink

"They should be careful and I would say diversified in their investments."

 

Invest, just not on planet earth, is what she really means.

razorthin Sat, 02/03/2018 - 11:27 Permalink

Fuck you, gnome bitch.  I am either in or out and happy to say I've been out for 3 weeks now.  Diversify your fucking rhetoric why don't you.

SoDamnMad Sat, 02/03/2018 - 11:29 Permalink

PBS Oh yeah   The economy has grown.  Thousands of bartender and barrister jobs created. Cheap money for corporate buybacks to boast stocks.  Auto industry in the toilet.  Student loan money given out like candy with 

defaults off the charts. Personal debt at record highs.  Construction of multi-family housing at record high while first home buying at record low.  National debt....   Need I go on.  Let's all give a golf clap to Janet for such a fine job. Wall Street bonuses for the top few were at record levels (if we knew what they actually were) so it must be good for America.

SheHunter SoDamnMad Sat, 02/03/2018 - 11:58 Permalink

..."Despite the volatility of the past week and the first nascent signs of wage growth in years - which should worry a central bank"...

That's the sentence I like.  Yeah.  Worrisome to 'Ole Yeller that the 99.999% are going to bring home maybe another $200 a week. 

Gotta keep us poor, poorer, poorest.  And ever subservient to credit card debt.

In reply to by SoDamnMad

Let it Go Sat, 02/03/2018 - 11:32 Permalink

After years of central bank stimulus, many investors have become convinced of the idea that "central banks will never let markets go down." The so-called FANG stocks have accounted for much of the stock market rally we are witnessing, however, it might be wise to step back and question the fundamentals behind the upward movement of these stocks.

It is logical that these so-called bright spots that have pulled the market higher also have the most room to fall as valuations retreat. Signs that central banks are becoming more concerned about asset bubbles growing as a direct result of their actions is in the air. A massive surge in debt across the globe as consumers, businesses, and governments have thrown caution to the wind setting up a scenario that ends in tears. The article below explores why the FANG stocks may suffer most.

http://FANG Stocks Have Potential To Really Bite Investors.html

Quinvarius Sat, 02/03/2018 - 11:36 Permalink

The fact that she didn't want to leave, and is still promoting the markets and data which the Fed manipulates, leads me to believe the plan the Fed has to print, prop, and promote is not yet over.

FreeShitter Sat, 02/03/2018 - 11:37 Permalink

Just another day in the jew s a

 

rah rah rah

 

Jerome is just going to try and keep the shit show going.....looks like mucus (mnuchin) will be the new dudley/bullard.

Roger Ramjet Sat, 02/03/2018 - 11:42 Permalink

I originally suggested that Yellen should be put out to pasture (instead of being employed by the Brookings Institute), but I now feel strongly that that would be entirely unfair to the other cows!

There is already enough bullshit in the pasture, as it is.

 

Robert Trip Sat, 02/03/2018 - 11:43 Permalink

Why are these people allowed to run our lives and monitor our every move as our country goes into the shitter drowning in debt?

Pretty soon none of us will have a pot to piss in while these fuckers make off with all of our treasure like bandits.

The Fuhrer put a stop to it.