Discussing Fed Chair Janet Yellen’s comments on overstretched valuations in some sectors, and just what could go wrong with the Fed’s plan, with Michael Novogratz, Fortress Investment Group LLC (NYSE:FIG) Principal.
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Delivering Alpha – Mike Novogratz: Yellen’s ‘irrational exuberance’ out of left field
first, the ish rational exuberance comment, her comment, a little out of left field. i think markets learned after — greenspan’s irrational exuberance comment that fed chairs and predicting stock markets are not necessarily a great match. well, the market did go up three straight years after greenspan said that. my guess is, that’s the less important part of the testimony. i think what you get with yellen, and what comes crystal clear is, she believes in this secular stagnation of our economy. that we are going to be slow growth for a long time, and that eastern when growth comes back, and she alluded to maybe having to raise rates as early as, you know, q2 of next year, they have a plan and their plan is, raise rates. very slowly, and probably not have to take them very high. tyson who a great line. everyone has plan until you hit them in the face. i think what’s scary now and stan alluded to it in his comments, the market is pricing in almost, the fixed income market, pricing in almost no risk that the plan is wrong. and so if inflation does come back, if yellen is wrong about secular stagnation, we’re in nor for a world of hurt.