The sweet grande dame of the central bankster world sees nothing but the brightest future to the furthest horizons for the markets she has been nurturing with her benevolent “wealth effect,” as one of her close colleagues called it. While Grandpa Greenspan routinely warns now that stock and bond markets are in bubbles, Grandma Yellen says,
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 of commercial real estate and other assets, we’re seeing high valuations.
In other words, we should really be calling it the “everything bubble” where stocks, real estate and “other assets” (such as bonds) are all at the top their curves. But that should be no concern; and, of course, she would not label any of these things as “bubbles” because that would mean she has presided over years of creating an empty world full of financial troubles.
“Bubble, bubble, toil and trouble” would, however, be the best words to describe Yellen’s policy and what is to come out of it….
—David
