Are the stock markets a bubble? Perhaps, especially the valuations on Wall Street are pretty sporty, no question about it – especially if the economic situation in the USA continues to deteriorate. American industry is also increasingly finding itself in difficult waters. This can be seen from the Purchasing Managers’ Index for Trade:
The weak economic data worldwide and globally falling interest rates are pushing yields on government bonds to ever new all-time lows in Europe. Yields on bonds are also falling in the USA – and could, as some fear, follow European bonds into the negative yield area:
But is that a healthy development? In fact, the bonds, calculated in the price-earnings ratio, are extremely expensive – and therefore immensely risky. Many institutional investors are speculating on further increases in bond prices, and therefore falling yields, in the blessed belief in the central banks, which will somehow do it with zero interest rates or even QE.
But what if not? The following video from “Mission Money” sums up the dangers (german):