Yellen Gives Thumbs Up

Federal Reserve chief Janet Yellen signaled that rational exuberance is just fine.  That, at least, is how some of America’s largest money managers interpreted her comments on Wednesday suggesting interest rates will remain low through 2016.

It reinforced their views that easy money means the U.S. stock market rally has further to run despite notching a series of record highs already this year. That could easily put the S&P 500 benchmark on track to surpass 2000 for the first time, and to do so well before the end of the year.

Such a gain for 2014, after a 30 percent rise in 2013, would surprise those who worried that stocks might be getting overvalued and were due for a sizable pullback.  One reason for increasing confidence is that the resilience of the market has been very strong in the face of various shocks this year. A combination of an improving economy, rising earnings, and the cheap borrowing costs, has made that possible.

Reuters

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