PLP Advisors, LLC

Financial Advisor Warns: Watch Japanese Bonds

 
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Grand Rapids, MI -- (SBWIRE) -- 06/06/2013 -- In today's modern world it can be difficult to stay abreast of everything that is happening financially. Dennis Tubbergen, a financial advisor, author, radio show host and CEO of PLP Advisors, LLC can be counted on to assist when it comes to understanding the latest events in world economics.

Whether people enjoy his weekly newsletter at www.moving-markets.com or his blog at www.dennistubbergen.com, Tubbergen is dedicated to sharing his viewpoints and opinions. On May 31, his blog was titled You Can't Fool the Market -- Japanese Bonds About to Implode?

"While Prime Minister Abe in Japan has vowed to continue to print money until a 2% inflation target is reached," began Tubbergen, "perhaps he forgot to consider the reaction of the bond market? Given that for a long time, Japanese government bonds were considered to be risk free, the recent spike in interest rates in Japanese government bonds should be concerning to everyone around the world, not just those holding Japanese government debt."

According to Tubbergen, a recent spike in interest rates in Japanese government bonds may indicate that the end of low interest rates for the Japanese market is at hand, with investors demanding a higher return on their investment to compensate them for their increased investment risk.

Below he quotes from an op-ed published by The Market Oracle on May 21, 2013.

Japan has fueled much of this latest rally in stocks, driving the market first with promises of money printing by the Prime Minister in November 2012, and then a massive $1.2 trillion QE program announced by the Bank of Japan last month.

The result of this has been a collapse in the Yen and a 70%+ rally in the Nikkei in the last six months.

This has been the fundamental driver of this latest risk on rally. Remember that the U.S. Federal Reserve has begun changing its language regarding QE and has even been hinting at tapering QE before the year-end. So it's the Bank of Japan who's in the driver's seat for asset prices today.

If Japan has been bad for the Yen and good for stocks . . . it's been an absolute disaster for Japanese bonds. Since the Bank of Japan announced its latest QE program, Japanese government bonds have triggered circuit breaks no less than four times due to incredible volatility.

So why should we care what happens to Japanese bonds?

First and foremost, Japan is the second largest bond market in the world. If Japan's sovereign bonds continue to fall, pushing interest rates higher, then there has been a tectonic shift in the global financial system. Remember the impact that Greece had on asset prices? Greece's bond market is less than 3% of Japan's in size.

Central bankers around the world have monitored these efforts and believed that they can implement similar plans. So if Japan's bond market begins to collapse, then it's Game, Set and Match for Central Banker policy. And what follows will make Lehman look like a joke.

Investors, take note . . . the financial system is sending us major warnings . . .

Tubbergen has a simple conclusion here.

"Be ready," he suggests.

To read the blog in its entirety go to http://www.dennistubbergen.com and select his May 31, 2013 entry.

Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.

About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to www.moving-markets.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.