Janet Yellen knows why the stock market has been on a record tear. The chairwoman of the Federal Reserve on Wednesday offered up a pretty clear explanation for investors’ recent elation over equities in her testimony in front of the House Financial Services Committee.
“I think market participants likely are anticipating shifts in fiscal policy that will stimulate growth and perhaps raise earnings,” Yellen said, responding to a question about what is behind the markets' meltup.
That description is what most on Wall Street refer to as the Trump rally. That is a revival of so-called animal spirits inspired by expectations that President Donald Trump will unfurl a host of pro-business policies, including a loosening of bank regulations, increasing fiscal spending, and cutting individual and corporate taxes.