The US Fed came as close as it could to calling out a ‘bubble’

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The US Federal Reserve can’t say “bubble”. But if it could, it possibly would have done so in its latest semi-annual financial stability report, which used the phrase “meme stocks” not once, not twice, but thrice. The central bank said that it views valuations for some assets as “elevated relative to historical norms even when using measures that account for Treasury yields. In this setting, asset prices may be vulnerable to significant declines should risk appetite fall.” In particular, it highlighted some of the most bubbly areas of the financial markets: Initial public offerings, special purpose acquisition companies, and, yes, those meme stocks.

In contrast to the mixed signals from price-based measures, a number of other measures suggest that investor appetite for equity risk is elevated relative to history. The pace of initial public offerings (IPOs) has increased to levels not seen since the 1990s. Plus, a rising share of…

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