Vitaliy Katsenelson, CIO at Investment Management Associates and writer at http://contrarianedge.com/, was on Tech Ticker on December 10. He thinks Japanese Government Bond yields (JGBs) will rise in the future as rates re-price to compete with other Government bonds. With Japan's Debt/GDP at 200% and funded mostly internally by their aged population, when they're forced to tap outside sources to buy their debt, investors will demand higher rates. If demand is soft, Japan will reach the "Keynesian endpoint" and have to monetize their debt by raising taxes and printing money, which leads to "high" inflation. Watch the video below. Interesting, so when does the secular bear market begin in the Yen?
Regarding the U.S., Vitaliy believes QE2 will result in stagflation (TT video #2) and equities are stuck in a secular trading range just like 1966-1982 (Barron's December 11, 2010).
Katsenelson: Japanese Yields Will Rise, U.S. Market In Secular Trading Range
12/17/2010 06:00:00 AM