In a major break from the norm, Fed Chair Yellen mentioned specific industries the Fed believes are overvalued
In a major break from the norm, Fed Chair Yellen mentioned specific industries the Fed believes are overvalued. The last time the Fed mentioned specific equity sectors was in July of 2000, but today's comments were far more targeted. Yellen told the Senate Banking Committee that general valuations are in line with long-term averages. However, she said forward P/E multiples for small caps, biotechs, and social media companies are high relative to historical norms. This is an entirely new approach from a Fed Chair and will very likely impact investors' decision-making. It looks like the Fed is trying to deflate potential bubble areas without hurting overall asset inflation. The Fed believes the economy still needs work and doesn't want to raise rates to combat certain overheated sectors. It will be really interesting to see how this new Fed experiment works out. (VIEW LINK)
I'm an investments analyst for a US-based independent investment research firm. My focus is on economics, options, and all types of stocks, but especially tech, Internet, and renewable energy companies. I have experience as a options market...
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