Outgoing Federal Reserve Chairman Janet Yellen gives a press conference after a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, USA, on December 13, 2017.
Jonathan Ernst | Reuters
Treasury Secretary Janet Yellen told CNBC on Thursday that there may be parts of the U.S. stock market that investors should be wary of.
In an interview that aired on “Closing Bell,” Yellen said he believes higher stock valuations are understandable, given the Federal Reserve’s accommodative monetary policy.
“Well, in part we are in an environment of very low interest rates,” said Yellen. “And although valuations are very high, in a world of very low interest rates, price gains, tight multiples tend to be high. That said, you know, they can be sectors … where we have to be very careful,” he added. Yellen, who took over as head of the Treasury in late January under President Joe Biden.
The comments came in response to the question from CNBC’s Sara Eisen, who asked whether Yellen thought it made sense that the main US stock indices were trading near record highs during the coronavirus pandemic and its related economic damage. She also asked about major stock movements in initial public offerings and SPACs.
Yellen did not specify which sectors she was referring to.
Bitcoin has also undergone a major change in recent months and the world’s most valuable cryptocurrency surpassed $ 52,000 for the first time on Wednesday.
Yellen said he considers bitcoin a “highly speculative asset” and noted that it has seen high levels of volatility in recent years. Asked if she believes it needs to be regulated, Yellen said that any action should be to protect investors.
“I think it’s important to make sure that it is not used as a vehicle to obtain transactions and that there is investor protection,” said Yellen, former Fed chairman. “And so, regulating institutions that trade with Bitcoin, making sure that fulfill their regulatory responsibilities, I think it’s certainly important. “
Cryptocurrencies have generally seen an increase in adoption recently by established financial companies. Mastercard said last week that it plans to support certain cryptocurrencies in its formal network, while BNY Mellon, the country’s oldest bank, will launch a unit of digital assets later this year.