June 18, 2014

Fed Chair Janet Yellen answered questions at a press conference today and the market has rallied since. She made several comments viewed a positive including the following:

• Equity prices at appear to be at historical norms and not over valued
• Many reasons to expect above trend economic growth
• Economic activity is improving in the current quarter
• Economy is on track to meet its objectives and the GDP contraction observed in the first quarter was an aberration.
• No set timing for interest rate increase
• Low volatility could lead to an increase in leveraged speculation
• Current monetary policy remains appropriate

We remain bullish and believe this could lead to another leg up for equities in the short to intermediate term. GDP growth will translate to higher corporate earnings. The low interest rate environment and equity valuation relative to the bond market could also lead to further Price/Earnings Ratio expansion.

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