We’re really beating a dead horse on this one, but bear with us.
One of our big observations for the year has been the tight relationship between the Egyptian and Greek stock markets.
You can see a 6-month chart of both at this post, which we wrote about yesterday.
In our view, this isn’t just some amusing “correlation” without meaning. We think it shows something deep about global markets, that regardless of fundamentals — which are horrible in both countries — these high-beta, junk markets are moving in tandem.
If you grasp this — that in 2012 the world is going crazy for beaten down risk of all sorts — then it makes sense that these markets are booming together. It also shows why trying to give a real fundamentals-based explanation for the rallies doesn’t do a lot of good.
In fact, as this post from FT’s Beyond Brics shows, people are pulling their hair out, trying to figure out why on earth anyone would be buying Egyptian equities.
Anyway, just to hit the point home, we thought today’s action in both markets was pretty freaky.
And here’s Egypt…