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7-Jul-13 World View -- Mohamed Morsi's replacement in Egypt may be 'better' for Israel

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** 7-Jul-13 World View -- Mohamed Morsi's replacement in Egypt may be 'better' for Israel
** http://www.generationaldynamics.com/pg/ ... tm#e130707



Contents:
RSS feeds are reinstated
Egypt's opposing camps plan large rival protests on Sunday
Political drama over appointment of ElBaradei as Egypt's PM
Mohamed Morsi's replacement in Egypt may be 'better' for Israel
Bond yields rising worldwide


Keys:
Generational Dynamics, Egypt, Mohamed Morsi, Tamarod,
National Alliance in Support of Legitimacy, Al-Nour party,
Mohammed ElBaradei, Muslim Brotherhood,
Israel, Sinai, bond yields

John wrote: This may mean nothing, or it may mean something. But if it means something, then here's what that something could be: It could be that large over-leveraged investors have been losing money in the stock market, and are being forced to raise cash quickly to cover their debt margins, and so they're selling their most liquid asset, government bonds, which pushes bond prices down and yields up. If that's true, then it could be an early sign of a bigger selloff in stock markets in the weeks to come.

When you have a bubble the valuations get absurd. Look for a moment at Japanese bonds. The 5 year bond pays 0.33% interest per year. The central bank increased the money supply by 6% in 30 days. There are many days now where the Yen drops 1% in value in a day (like Friday). It is absurd to hold bonds for 5 years to earn a total of less than 2% interest when the currency often drops that much in 2 days and they are increasing the money supply by about 2% in 10 days. Japanese bonds are in a bubble. I am sure of it.

The rest of the world's government bonds are also in a bubble, but Japan is easier to recognize.

So the way I look at it is that when the bond bubble pops, which may be starting now, then rates will shoot up and this will cause P/E ratios for stocks to go way down, crashing the stock market.

Of course, we can both be right.