May 13, 2015

Stocks more expensive than Bonds according to Janet Yellen

[Janet] Yellen didn't slam stocks as materially overvalued. She couched and qualified her comments (as did Warren Buffett last weekend) with the notion that stocks were highly priced but were not as expensive as bonds. In addition, Yellen said bond rates could be moving higher in response to future monetary policy moves.

In essence, she has prepared markets for more risk in the future.

To this observer, she had a right to say what she did and spoke her mind in a balanced and thoughtful manner.

Over history, multiple Federal Reserve chairs have expressed similar views on the capital markets -- as one of the Fed's stated mandates and missions is to defend our economy against the emergence of systemic risk, to monitor systemic risk and to promote financial stability.