A Fed chair talking down sectors of the stock market? It happened yesterday as Janet Yellen testified in front of Congress, and it's not the first time we've seen this. Most will recall Alan Greenspan's infamous "irrational exuberance" speech in December of 1996, in which he warned of stock market excesses.
Back then the clear warning sent the market reeling, but it soon recovered, and rallied for another three years before finally losing momentum and collapsing.
So what exactly did Yellen say? Here's the portion of her testimony that stole the show:
" ... valuation measures for the overall market in early July were generally at levels not far above their historical averages, suggesting that, in aggregate, investors are not excessively optimistic regarding equities. Nevertheless, valuation metrics in some sectors do appear substantially stretched—particularly those for smaller firms in the social media and biotechnology industries ... "
I thought Donald Luskin from TrendMacro put it ... Log in or subscribe to continue reading.
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