2017-12-11 08:42:00 Mon ET
stock market gold oil stock return s&p 500 asset market stabilization asset price fluctuations stocks bonds currencies commodities funds term spreads credit spreads fair value spreads asset investments
Fed Chair Janet Yellen says the current high stock market valuation does not mean overvaluation. A stock market quick fire sale would pose minimal risk to the economy and the macroprudential system. During her final Federal Reserve press conference, Yellen says the prime metrics such as the forward aggregate stock market P/E and P/B ratios are on the high end of historical ranges when the Fed warns that asset prices appear to be high. In fact, the low-interest-rate economic environment is supportive of higher stock prices and home prices. In this context, there is a reasonable balance of financial risks that manifest in the form of less worrisome levels of both bank leverage and private credit growth.
A recent Project Syndicate op-ed article sketches the key reasons for U.S. stock market rational exuberance such as better economic growth with low inflation, monetary and fiscal stimulus, full employment, and higher net income in both the household and corporate sectors. As the world economy skyrockets on all cylinders in America, Europe, and China with robust economic growth since the global financial crisis of 2008-2009, U.S. inflation remains below the 2% target, unemployment is less than 5%, and monetary policy normalization continues at a moderate pace. Federal Reserve shrinks its balance sheet post-QE, finishes the full course of 3 interest rate hikes in 2017, and then expects another around of 3 to 4 rate increases in 2018. The current 7-year uptick in U.S. corporate net income typically precedes the European and Asian counterparts in subsequent episodes. All of these reasons help justify the current Trump stock market rally as rational exuberance and optimism.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2019-03-25 17:30:00 Monday ET

America seeks to advance the global energy dominance agenda by toppling Saudi Arabia as the top oil exporter by 2024. The International Energy Agency (IEA)
2023-06-14 10:26:00 Wednesday ET

Daron Acemoglu and James Robinson show that good inclusive institutions contribute to better long-run economic growth. Daron Acemoglu and James Robinson
2018-11-29 11:33:00 Thursday ET

A congressional division between Democrats and Republicans can cause ripple effects on Trump economic reforms. As Democrats have successfully flipped the Ho
2018-12-29 09:32:00 Saturday ET

Andy Yeh Alpha (AYA) AYA Analytica financial health memo (FHM) podcast channel on YouTube December 2018 AYA Analytica is our online regular podcast and news
2019-07-30 15:33:00 Tuesday ET

All of the 18 systemically important banks pass the annual Federal Reserve stress tests. Many of the largest lenders announce higher cash payouts to shareho
2020-09-17 12:28:00 Thursday ET

Many successful business organizations develop their distinctive capabilities and unique value propositions for strategic reasons. Paul Leinwand and Cesa