Federal Reserve chair Janet Yellen testified before Congress today and was full of bad news. * The labor participation rate is too low * The number of people among the long term unemployed is at historically unprecedented high levels. * Inflation is starting to pick up, but not enough to warrant raising interest rates (Wall Street is looking for a small rate hike). * Wage gains are anemic (a sign inflation is not yet a concern.) * Productivity growth is too low * The housing sector has shown little recent progress, has leveled off and is disappointing this year. * Small cap bio-tech stocks and social media stocks are overvalued. * Economy seems to be picking up but "we have seen false dawns before." This sort of testimony by the Fed chair has the potential to send markets downward. The NASDAQ, home of most small cap stocks, is down about 1%. However, the S&P500 is down about .5% and the Dow is down only .2%. I would have thought they would go down further. There's still a half day of trading remaining. We'll see.