Fed Chairman Speech: lruths and lies

Posted: July 17, 2014 in Uncategorized

Truths. US is still far away from self -sustaining growth

Truths. Biomed and Social Network securiries (eg Facebook and Linkedin) are way too expensive

Lies: the average SP500 company is not expensive -there is an increased level (highest ever – the second peak has been in 2007) of company buybacks that alter the normal ratios (earning per share) and make it all look “nice and clean”).

The market is trembling and the Fed want to push it higher. The higher it pushes the more risky it becomes*.

Why they push it higher? The Fed tried to spur the economy first lowering the rates to zero so that bank would lend to the business. But the banks would not do it.

The Fed now is pushing the market higher to make feel the “average Joe” rich and positive and go and spend more. From the ground it does not seem to work either.

If the music stop, there is no floor. The issue no one knows when it stops. For now the market looks like “climbing a wall of worries”.


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