STAFF NEWS & ANALYSIS
Looking to Hike? Yellen Finally Admits Stocks Are Overpriced
By Daily Bell Staff - June 23, 2016

The Federal Reserve Says U.S. Stocks Are Overpriced  … It’s the starkest warning yet under Chair Janet Yellen. The Federal Reserve on Tuesday delivered its starkest warning yet under Chair Janet Yellen that by its assessment U.S. stocks are pricey.  “Forward price-to-earnings ratios for equities have increased to a level well above their median of the past three decades,” the Fed’s twice-annual Monetary Policy Report, the U.S. central bank concluded. -Reuters

We missed this. In her Tuesday statement to Congress, Yellen said asset prices were too high.

It’s true of course. But no doubt she has an ulterior motive for mentioning it.

Maybe this is a new way for Yellen to justify a rate hike.

She needs a rate hike to slow the market and provide the Fed some room to cut rates as necessary.

So far her justifications for a hike aren’t working.

One rate hike was implemented and almost collapsed the market.

Then she stopped. For now Yellen’s rate hikes are all talk.

Nobody really believes her anymore. Nobody believes that the US is in a recovery.

Few who work with US economic numbers believe them.

More:

Tuesday’s report marked the first time since Yellen took office in February 2014 that the Fed has characterized overall equity valuations as being “well above” their norms.

In July 2015’s report, delivered as the benchmark S&P 500 stock index was within 1.0% of its all-time closing high, the Fed made no specific reference to stock market valuations.

Perhaps Yellen is worried about a crash that will be blamed on her.

Either a hike or a crash will have a negative effect on equity prices.

The solution to this gathering storm, as we have pointed out, has to do with acquiring interests in tangible assets.

Here at The Daily Bell, we just introduced a junior mining sponsor, our first ever: a Vancouver-based explorer with promising projects in Argentina.

The company is Golden Arrow and the CEO is Joe Grosso. You can see an interview we did with him HERE.

Golden Arrow is partnered with a well-known mining firm Silver Standard in exploiting what could be a major silver discovery.

Miners are likely still cheap, relatively speaking, and silver has a long way to travel to reach parity with its historical ratio.

Conclusion: Whether you are invested in juniors or not, silver should be considered for at least a modest part of your portfolio along with gold.

If you have questions about Golden Arrow, you can reach representative Shawn Perger here: Shawn: 1-800-901-0058 or 778-686-0135. See the website HERE.

 

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  • Bruce C.

    She probably didn’t want to get too technical, but if you divide a stock price by zero earnings you get a number larger than 15, which is the historical average price-earnings ratio.

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