Market valuations, Janet Yellen and Nuke LaLoosh

B U S I N E SS
Sunday, May 31, 2015 | Daily News | Page B5
U.S. consumer sentiment
Market
drops in May to 90.7
valuations,
Janet Yellen and
Nuke LaLoosh
compared to
most other asset
classes.
The irony
of Ms. Yellen’s
comment is that
she neglected
to mention what
Margaret R. is arguably the
McDowell most important,
and potentially
Arbor Outlook most overvalued
market of all, the
Baseball is too slow.
bond market.
There’s too much
standing around and not
Margaret R. McDowell, ChFC,
enough action. I know
AIF, a syndicated economic
this not because I watch
columnist, is the founder of
Arbor Wealth Management,
the games but because
LLC, (850-608-6121~www.
my husband occasionally
arborwealth.net), a Feeties up the living room
Only Registered Investment
television, especially
Advisory Firm located near
during the SEC Baseball
Sandestin.
Tournament. But he’s
an anomaly. He still
loves the game. Even
The Wall Street Journal
recently featured an
article entitled “Why
25-50%
Licensed Cosmetologist
OFF
ALL PO
Children Are Abandoning
& Hairdresser
BRAIDS NYTAILS,
Baseball.”
& UP-D
O’S
Now imagine that
L a rge s tS e le c tion of
the SEC (Southeastern
L ightW e ightS yn the tic or
Conference, not
Hum a n Ha irW igs
Securities and Exchange
on the E m e ra ld Coa s t
Commission) mandates
Ponytails • Braids • Falls
that conference
Full and 3/4 Hair Pieces
tournament games should
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last 12 innings instead
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of nine. And then they
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That is essentially
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what happened recently
when Federal Reserve
Chair Janet Yellen
asserted that stocks
valuations are “quite
high.” If that is indeed
the case, the primary
reason that they are
high is because of
Quantitative Easing and
the low interest rate
policy pursued by the
Federal Reserve itself. So
Chairman Yellen neglects
to mention that this
situation may have been
caused, at least in part, by
the policies of the Federal
Reserve Board, which she
chairs. As Nuke LaLoosh
would say, “That’s a real
humdinger.”
Most economists agree
that former Chairman
Bernanke and the
Federal Reserve Board
had their backs against
the wall at the onset of
the Great Recession.
Their policy decisions
were vital to help restore
liquidity and health to
a swooning economy.
So they held interest
rates at a minimum,
encouraged lending and
borrowing, and forced
investors looking for
yield into capital markets
and away from savings
accounts and CDs. This
policy probably helped
kick start and nurture the
run of the current bull
market. And although QE
has ended here at home,
markets have become so
dependent on the Fed that
they tend to dive every
time there is talk of rising
interest rates.
So for the Federal
Reserve to be critical of
the “overvaluation” of
securities is more than
a little disingenuous.
Securities may or may
not be overvalued. Here’s
why: If you think interest
rates are going to rise
significantly in the near
future, then they probably
are overvalued. But if you
think interest rates are
Bill Burns
going to remain the same
or are only going to move
slightly higher in the
near future, then stocks
may not be overvalued.
In fact, if interest rates
Bill Burns is a registered representative of, and securities are offered through, USA Financial Securities
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be undervalued when
Barclays Research economist
Employers added a healthy
223,000 jobs in March, up
from an unimpressive 85,000
in March. And unemployment tumbled to 5.4 percent
last month, lowest since May
2008.
Still, consumers have
reasons to be cautious about
the economy and their own
financial wellbeing.
The Commerce Department reported Friday the
U.S. economy fell at a 0.7
percent annual pace the
first three months of the
year, hurt by severe winter
weather and a widening
trade deficit. And gasoline
prices have been rising after
hitting a low of $2.03 a gallon
in late January. Prices at
the pump are up to $2.74 a
gallon from $2.56 a gallon
a month ago, according to
AAA.
The Michigan index
still stands well above May
2014’s 81.9. Despite the May
dip, most economists say
consumers’ mood remains
consistent with healthy
spending.
“We continue to look for
a pickup in consumption
over the next two months,”
Barclays Research economist Jesse Hurwitz wrote
in a research note.
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“Relax, all right?
Quit trying to
strike everybody
out. Strikeouts are
boring and besides
that, they’re fascist.
Throw some
ground balls – it’s
more democratic.”
Crash Davis to
Ebby Calvin LaLoosh
in “Bull Durham”
“
We continue to look for a pickup in consumption over the
next two months.” Jesse Hurwitz
2114108
WASHINGTON (AP)
— A weak U.S. economy
pulled down consumer
sentiment in May.
The University of Michigan says its index of consumer sentiment dropped
to 90.7 from 95.9 in April.
The May reading was the
lowest since November.
Consumers of all ages
and income levels were
gloomier this month. And
they were less confident
both about current economic conditions and the
future. But Richard Curtin, chief economist of the
surveys, noted that the
index has averaged 94.6
the first five months of
2015, highest since 2004.
On Tuesday, the Conference Board, a business group, reported that
its measure of consumer
spirits showed modest
improvement in May. Its
consumer confidence
index rose to 95.4 from
94.3 in April. The Conference Board credited an
improved job market: