{"id":23623,"date":"2013-11-19T08:30:21","date_gmt":"2013-11-19T13:30:21","guid":{"rendered":"http:\/\/www.ino.com\/blog\/?p=23623"},"modified":"2013-11-18T15:53:11","modified_gmt":"2013-11-18T20:53:11","slug":"janet-yellen-nails-it","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2013\/11\/janet-yellen-nails-it\/","title":{"rendered":"Janet Yellen Nails it"},"content":{"rendered":"<p>From an <a href=\"http:\/\/biiwii.com\/wordpress\/2013\/11\/17\/guest-hearing-janet-yellen\/\" target=\"_blank\">earlier post<\/a> by Biiwii.com guest Doug Noland:<\/p>\n<p><em><strong>Senator Dean Heller:<\/strong> \"A quick question about quantitative easing: Do you see it causing an equity bubble in today\u2019s stock market?\"<\/em><\/p>\n<p><em><strong>Yellen:<\/strong> \"I mean, stock prices have risen pretty robustly. But I think that if you look at traditional valuation measures, the kind of things that we monitor, akin to price-equity ratios, you would not see stock prices in territory that suggests bubble-like conditions. When we look at a measure of what\u2019s called the equity risk premium, which is the differential between the expected return on stocks and safe assets like bonds, that premium is not \u2013 is somewhat elevated historically, which again suggests valuations that are not in bubble territory.\"<\/em><\/p>\n<p>Thank you Ms. Yellen for testifying to my point.\u00a0 Equities are not in a bubble by \"<em>traditional valuation measures\"<\/em>, just as I have been saying.\u00a0 If you are sincerely and actively bearish the market you had better be bearish because you either think monetary policy is about to fail (i.e. its efficacy is going to wane) or that policy makers are going to be forced to cease and desist, most likely by the Treasury bond market.<!--more--><\/p>\n<p>&nbsp;<\/p>\n<p>Yes folks, here is <em>that<\/em> chart once again (courtesy of <a href=\"http:\/\/slopeofhope.com\/socialtrade\/chart\/editor\" target=\"_blank\">SlopeCharts<\/a>) telling its story of a broad US stock market rising in line with one of its \"<em>traditional valuation measures\"<\/em>, general corporate profits (green line).\u00a0 Right there in parabolic accompaniment of stock prices and corporate profits is Janet Yellen herself, as represented by the black line, which is money supply growth courtesy of the Fed's ongoing ZIRP and QE operations.<\/p>\n<p><a href=\"http:\/\/biiwii.com\/wordpress\/wp-content\/uploads\/2013\/11\/sp500.profits.ms_.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-14548\" alt=\"sp5001\" src=\"\/\/biiwii.com\/wordpress\/wp-content\/uploads\/2013\/11\/sp500.profits.ms_-500x309.png\" width=\"500\" height=\"309\" \/><\/a><\/p>\n<p>She tells the truth.\u00a0 Stocks are in line with traditional valuation measures; and also with <em>non-traditional<\/em> policy measures.\u00a0 This week in NFTRH 265 we introduced another view into this dynamic\u2026<\/p>\n<p><a href=\"http:\/\/biiwii.com\/wordpress\/wp-content\/uploads\/2013\/11\/debt.spx_.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-14549\" alt=\"sp5002\" src=\"\/\/biiwii.com\/wordpress\/wp-content\/uploads\/2013\/11\/debt.spx_-500x405.png\" width=\"500\" height=\"405\" \/><\/a><\/p>\n<p>Excerpted from NFTRH 265\u2032s closing (Wrap Up) segment:<\/p>\n<p>\"Federal debt was used throughout the meat of the 20-year secular bull market as Alan Greenspan feasted upon the wellspring of monetary goodwill that was left by his predecessor Paul Volcker's inflation fighting policy (as interest rates approached the high teens).<\/p>\n<p>Federal debt was then ramped down after it had done its job in instigating a bubble in stocks (S&amp;P 500's Hump #1).\u00a0 As we have documented in other graphs, Hump #2 was instigated by the bubble in commercial credit that was promoted by official policy on the Fed Funds rate.<\/p>\n<p>Now we have Hump #3.\u00a0 This one is rising in real time with a 'hockey stick' of debt accumulation by the Federal Government as well as the Federal Reserve.\u00a0 The racket will end.\u00a0 So if people want to view NFTRH as a fundamentally bearish newsletter, so be it.\u00a0 NFTRH is bullish on honesty and bearish on dishonesty on the biggest picture.<\/p>\n<p>The stock market is honestly rising as far as credit accumulation, money printing and willful policy will take it.\u00a0 Right now, that appears to be pretty far.\u00a0 But I simply ask that people remain aware of the mechanics beneath the surface of the mania.\"<\/p>\n<p><a href=\"http:\/\/www.biiwii.com\" target=\"_blank\">Biiwii.com<\/a> | <a href=\"http:\/\/biiwii.com\/wordpress\/about-nftrh\/\" target=\"_blank\">Notes From the Rabbit Hole<\/a> | <a href=\"http:\/\/biiwii.com\/wordpress\/free-eletter\/\" target=\"_blank\">Free eLetter<\/a> | <a href=\"https:\/\/twitter.com\/intent\/follow?original_referer=http%3A%2F%2Fbiiwii.com%2Fwordpress%2F&amp;region=follow_link&amp;screen_name=BiiwiiNFTRH&amp;tw_p=followbutton&amp;variant=2.0\" target=\"_blank\">Twitter<\/a><\/p>\n<p>&nbsp;<\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>From an earlier post by Biiwii.com guest Doug Noland: Senator Dean Heller: \"A quick question about quantitative easing: Do you see it causing an equity bubble in today\u2019s stock market?\" Yellen: \"I mean, stock prices have risen pretty robustly. But I think that if you look at traditional valuation measures, the kind of things that [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[1840,5912,819,4273,5608,5092,4785,5911],"class_list":["post-23623","post","type-post","status-publish","format-standard","hentry","category-general","tag-biiwiicom","tag-doug-noland","tag-federal-debt","tag-gary-tanashian","tag-janet-yellen","tag-nftrh","tag-notes-from-the-rabbit-hole","tag-senator-dean-heller"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Janet Yellen Nails it - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/wwwtest.ino.com\/blog\/2013\/11\/janet-yellen-nails-it\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Janet Yellen Nails it - INO.com Trader&#039;s Blog\" \/>\n<meta property=\"og:description\" content=\"From an earlier post by Biiwii.com guest Doug Noland: Senator Dean Heller: &quot;A quick question about quantitative easing: Do you see it causing an equity bubble in today\u2019s stock market?&quot; Yellen: &quot;I mean, stock prices have risen pretty robustly. 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