Michael Gayed: Fed Has Destroyed All Stores of Value

Tom welcomes returning guest Michael Gayed, Portfolio Manager at Toroso Asset Management, to the show. Michael is the author and publisher of the Lead-Lag Report.

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Michael explains what most investors mean when they discuss risk on or off markets. There are leading historical indicators, and his whitepapers help investors understand where volatility will occur. Everything is a leading indicator in some form, and interest rates drive the entire capital system.

He watches the behavior of utilities and treasuries to determine market conditions. They evaluate the signals every week and adjust their weighting, and they were able to avoid declines and get outsized returns last March.

Utilities are a unique sector, being both highly regulated and very highly levered. This makes utilities highly sensitive to changes in performance. They will often outperform because everything else is doing poorly.

There has been a significant move from growth to value stocks and materials. Utilities may be beginning to bottom out, and lumber may have topped out. If lumber begins weakening, the housing markets may weaken, as demand may be dropping. Many people believe stimulus will continue the melt-up, but often the market does the opposite of what the crowd thinks. There could be a counter-rally that will surprise a lot of people.

If we have inflation without inflation coming to wages, we will have more unrest and market uncertainty. There are genuine dangers to the system considering the wage gaps.

Copper is about industrial demand and infrastructure. He expects to see continued upward pressure on copper, and it seems like the cure for copper is higher prices.

He discusses yields and credit spreads and what to watch for in the treasury markets. Michael argues that the most sensible thing the Fed could do is to hike rates. Controlling yields have all sorts of negative implications. He argues that rampant money printing and excess debt by the Fed only enrich the wealthy and bring out the worst in humanity. The very fabric of society is becoming at risk.

Time Stamp References:
0:00 - Introduction
0:32 - Risk On/Off Strategies
2:53 - Mutual Funds & Money Demand
5:40 - Utility Sector Sensitivity
7:46 - Current Market Indications
10:16 - A Deflationary Trade
12:22 - Inflation & CPI Metrics
14:23 - Hedging With Gold
15:55 - Copper & Commodities
17:07 - Yields & Credit Spreads
19:34 - Fed & Rising Rates
22:47 - Banks & Lending
24:15 - Australia & YCC
25:30 - Convertible Bonds
26:49 - 1.9 Trillion Stimulus
30:29 - Unintended Consequences
34:42 - Scarcity & Liquidity
39:48 - Stores of Value
41:52 - Concluding Thoughts

Talking Points From This Weeks Episode
- Risk in markets and volatility.
- Utilities and Treasuries as indicators.
- Gold and actual diversification
- Fed actions yields and credit spreads.

Guest Links:
Website: https://www.leadlagreport.com/
Website: http://torosoinv.com/
Twitter: https://twitter.com/leadlagreport

Michael A. Gayed, CFA is Portfolio Manager at Toroso Asset Management, an award-winning author and publisher of The Lead-Lag Report.

Michael is a well-respected results-oriented Investment Manager showcasing 15 years of successfully executing initiatives that result in significant revenue growth. He is known for identifying and implementing various investment strategies to capture market anomalies while maintaining a business mindset beyond portfolio management.

Michael offers a proven track record of evaluating business/investment opportunities, quickly understanding market dynamics and relationships that few tend to focus on. He is also an out-of-the-box thinker committed to strengthening organizations' financial performance through dedicated hard work and a passion for investing.

He is a graduate of (Cum Laude) NYU Stern School of Business with a Double Major in Finance & Management and has a Bachelor of Science in Finance & Management. He is a Chartered Financial Analyst from the CFA Institute.

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