Fed Member "High Valuation of U.S. Stocks, Corporate Bonds..."Vulnerable to Decline"

Amid warnings of a bubble in New York stock markets both on and off Wall Street, U.S. Federal Reserve Director Lisa Cook warned of a possible drop, saying the valuation of the U.S. stock and corporate bond markets was at a high level.Director

Cook said in a lecture at the University of Michigan School of Law that "the valuation of multiple asset groups, including stocks and corporate bonds, is at a high level."

"As the market reflects prices based on very optimistic assumptions, it may be vulnerable to bad news or a big drop from changes in investor sentiment," it noted.Director

Cook expressed concern about non-bank loans being made mainly by some large hedge funds, saying the high debt ratio could expose them to liquidity problems.Director

Cook is viewed by the Fed as a "dove" propensity in favor of monetary easing, and as a Fed board member, he holds the right to vote at all times in key rate decisions.