Michael Gayed: European Financial Sector On Life Support

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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.

Michael discusses the differences between volatility and risk. Risk comes when you might have a permanent loss of capital, while volatility can usually be overcome with patience. It's essential to identify the weather that is coming in markets. Conditions are always changing, and you need to be aware of the trends.

Michael feels we are heading toward a storm. The Fed has broken the bond market when they choose to buy up assets. Stocks and bonds may no longer be sufficient to diversify your portfolio.

Fed policies have enabled prolific spending and an ever-increasing wealth gap. The argument today is that debt doesn't matter, but that will have unintended consequences.

Today, there is a large degree of complacency surrounding the risks. European financials are looking horrendous. Lumber may be a warning sign of a weakening economy. The Fed has stated they will do whatever it takes to keep the equity markets propped up.

Faith in the Fed will burst at some point, but that bubble will likely last for a while longer. More money is flowing into hedging assets like gold. Further weakness in commodities like oil, lumber, and energy could sign a coming storm for the global economy. He says, "Risk is always where you don't see it."

Time Stamp References:
0:00 - Introduction
0:40 - Risk versus volatility.
2:30 - Treasury markets.
3:40 - Bonds and diversifying.
4:50 - Money velocity, deflation vs inflation.
6:40 - What inflation means to the Fed.
7:40 - When will Faith in central banks fail.
9:25 - Elections and possible risks.
11:30 - Signals before the February crash.
13:20 - Second guess "Don't fight the Fed"
14:20 - Gold correlation to equities.
15:30 - Inflation scenarios and gold.
17:55 - Other precious metals.
19:10 - Dividend yielding stocks in your portfolio.

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

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