Lead-Lag Live
Welcome to the Lead-Lag Live podcast, where we bring you live unscripted conversations with thought leaders in the world of finance, economics, and investing. Hosted through X Spaces by Michael A. Gayed, CFA, Publisher of The Lead-Lag Report (@leadlagreport), each episode dives deep into the minds of industry experts to discuss current market trends, investment strategies, and the global economic landscape.
In this exciting series, you'll have the rare opportunity to join Michael A. Gayed as he connects with prominent thought leaders for captivating discussions in real-time. The Lead-Lag Live podcast aims to provide valuable insights, analysis, and actionable advice for investors and financial professionals alike.
As a dedicated listener, you can expect to hear from renowned financial experts, best-selling authors, and market strategists as they share their wealth of knowledge and experience. With a focus on topical issues and their potential impact on financial markets, these live unscripted conversations will ensure that you stay informed and ahead of the curve.
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Lead-Lag Live
Michael Gayed on Gold's Resilience, Japan's Interest Rate Challenges, and Strategic Investment Insights
Why is gold shining brighter while the yen wobbles? Join us for an enlightening conversation as we host Michael Gayed, the astute mind behind The Lead-Lag Report, who doesn't shy away from bold predictions. Michael explores the complexities of Japan's interest rate hikes and their impact on global market volatility. We dissect the turbulent trade winds blowing between the US, China, Canada, and Mexico, scrutinizing how tariffs and erratic policies from the Trump era might reshape businesses and markets. Amidst these discussions, Michael deciphers the recent spike in gold prices as a harbinger of economic unease and weighs in on the crypto market's erratic tides under a pro-crypto Trump administration.
On a more personal note, witness the exhilarating yet taxing journey of rapid business growth. We share insights into streamlining operations, the thrill of expansion, and the silver linings amidst chaos. Our dialogue offers a fresh perspective on the investment landscape, with a spotlight on treasuries and the intriguing potential of existing funds. Despite the bearish sentiment surrounding treasuries, we unwrap a strategic investment play that could benefit from widening credit spreads. Whether you're a seasoned investor or just stepping into this dynamic world, this episode provides a feast of insights and optimism.
The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.
Welcome back to another episode of Mel on the Street. I'm very excited today to welcome back Michael Guyad, publisher of the Lead Lag Report. Thanks so much for joining me again, Michael.
Speaker 2:Despite having technical difficulties, I did not relent and I'm here, despite having to figure out the virtual background thing, because, if people don't realize, this is not actually a physical location.
Speaker 1:It looks great though.
Speaker 2:You know you can get a lot of good things on Fiverr.
Speaker 1:So, to start off sort of more broadly, we last spoke back at the end of November 2024. And one of the main takeaways from our conversation then was that you were bullish on a tail event, that event being another fallout caused by Japan raising rates. Now, japan did raise interest rates last month, at the end of January, and a lot has happened in terms of the economy and politics, with the new US administration sworn in a few weeks ago. Terms of the economy and politics, with the new US administration sworn in a few weeks ago, considering all of this.
Speaker 2:what are you seeing in the markets now and how has your sentiment changed at all? No, not at all. I mean, I think there were a couple of these false freakouts you could say with hindsight around deep seek, impacting the AI narrative. Suddenly that went away, and then tariffs, which got resolved within 24 hours, with Canada and Mexico seemingly blinking to Trump. But I don't think the Japan dynamic has changed one bit. I think it's probably worse.
Speaker 2:The headline yesterday was that the 20-year bonds in Japan rose to 2%, which is pretty bad, and it shows you how far behind the Bank of Japan is in terms of its own monetary policy. You know the central banks around the world. When they're dealing with monetary policy, they basically follow what their own bond markets are telling them to do on the long end of things. So the fact that yields keep on rising this aggressively in Japan, with the BOJ still not having actually raised to the same magnitude, does still suggest what I keep saying on X, which is that Japan will panic. They're going to have to raise rates aggressively because if the inflation data continues to worsen, you combine that with oil, which I keep going back to is the real issue when it comes to Japan oil priced in yen. No, nothing's changed. I think everyone's wildly complacent on Japan. I think everyone's worried about volatility from Trump. I think the volatility you have to worry about is from the yen.
Speaker 1:So if we just pivot now to speak about tariffs, the trade war between the US as you said, between the US, Canada and Mexico was narrowly avoided, but Trump's 10 percent tariffs on China went into effect and China has hit back with retaliatory tariffs. How will this affect business in the US, do you think, and also how will it affect the market?
Speaker 2:I think it's all unclear. I mean, I've made this point before the one who wins in a fight isn't the strongest, it's the craziest, and Trump is both. So, which is why every time he threatens tariffs, it's like within 24 hours. You know it's either gets delayed because it's negotiating, you know that then happens from the counterparty. I think with China it's a little trickier because there's other dynamics there with China than what we see in Canada and Mexico. Look, I think there's a point where volatility in policy market will just get numb to it. You can argue that businesses, because they're unclear what comes next under a Trump administration, will hold off on doing certain projects. I'm not so convinced, given the optimism that we still are seeing around a pro-business environment under this president. So I think it's going to be an entertaining four years and one that's going to be volatile in rhetoric but may not actually impact fundamental business decisions all that much.
Speaker 1:Some of the entertainment like, as you said, on social media especially has been sort of around gold and Bitcoin, especially with Trump's ideas and being a pro sort of crypto president, if we could talk specifically about that. Gold's been making new all-time highs. Bitcoin's been a little more volatile, but still trading near $100,000 USD. Is this due to the politics, and what does it signal to market participants?
Speaker 2:I don't think gold is due to the politics. I think gold is due to central banks and institutional money that's afraid of something, right? I mean? I keep on saying that this now for the last year. I keep saying gold is sending a warning. I still think gold is sending a warning. That warning may be around debt, or maybe just around Japan or war any number of reasons we only know with hindsight but I do think gold's movement is based on some concern around something that's out there which goes back to why I'm bullish on a tail event. Gold is another sort of argument for that. Yeah, I don't know.
Speaker 2:With Bitcoin and crypto, like you know, when the tariffs were announced and you had that massive sell-off in the crypto space over the weekend, I think it was like one of the largest liquidations we've ever seen. It seems to me that there could be room for disappointment under Trump with whatever he may or may not do when it comes to crypto. You can argue that deregulation you know if Trump is serious about it, which he seems like he is is the biggest positive. I don't think the biggest positive is going to be the strategic Bitcoin reserve. He may not actually end up doing that.
Speaker 2:Anyway, it says oh, he promised us that. Yeah, ok, this is what people that are running for office do. He doesn't really care because, let's face it, he's not going to get reelected. He's a lame duck. It's his second term, of course, although I don't know, nothing surprises me anymore, so maybe I'll walk that back, but I think gold is still much more compelling overall. The trend is clearly still intact, the sentiment is clearly not exuberant, it's still massively underinvested and gold, historically, is a great diversifier. So, to the extent that everyone's worried about volatility, gold probably still continues to benefit.
Speaker 1:And I know a lot of retail investors, at least up north of the US border, would love to see a rotation into the mining stocks and some of the junior mining stocks, and so last time you were here we talked a little bit about rotation into small caps sort of more. In general, On the Canadian side, the TSX Venture Index closed at a 52-week high yesterday. Small cap ETFs on the US side have been lagging a little bit more. What does this signal to investors?
Speaker 2:Yeah, and actually even the tariff reaction was interesting because the bond markets saw tariffs as disinflationary. Oddly enough, because yields fell while small caps got crushed that day and now they're rebounding because, you know, due to. I think we're going to look with hindsight and say that any kind of catalyst for small cap and mid cap to really run is going to come from deregulation, from Trump. So you have this secular period of underperformance by small caps going back all the way to 2011 against large caps. Again I go back to if Trump is serious about deregulation, then that in theory should increase the margins of small cap companies. That, yes, sure they still have to deal with the rolling over of debt into a higher, for longer environment, but that could be countered by the cost savings in terms of dealing with compliance and regulatory burden. So I'm actually quite optimistic on small caps, mid caps, on a relative basis. I say relative purposely, because usually, historically, small caps and mid caps outperform in bear markets, which is the irony of things.
Speaker 1:Right, right and, and so you've had some. It started, I think, at the end of last year. You were sort of like teasing the X community about a big project that you have coming. So lastly, on a personal note, what do you have coming up for this year, and can you tell us a little bit more about it?
Speaker 2:I've got a lot of things aside from writing, aside from writing a new album, cause I am also a songwriter.
Speaker 1:I'm amazing.
Speaker 2:Um, so, uh. Well, I formed my own RIA, um, and I'm going to be launching two other funds which are different from what I've got, uh, one that's thematic and one that's on based on my leverage for long run paper, at least as far as the idea behind it. And aside from that, I'm doing all kinds of interesting work with various fund issuers and financial advisors. So it's been an exciting and very stressful time. I've been hiring a bunch of people to try to help me out. I've been trying to put processes in place.
Speaker 2:I'm at that stage in the hockey stick where I know I'm in the vertical part but I am scared about how fast it's going. So I'm very blessed from that perspective. But no, there's going to be some big things. I mean, I do think that you know, for whatever it's worth, I think my own existing funds, which have struggled because of lack of the flight to safety, trade and treasury, will probably have a comeback. I'm optimistic because I think the bearishness on treasuries probably means exactly that people should be betting on treasuries, or at least that credit spreads widen and you get that Phoenix move where there's convexity in US government paper.
Speaker 1:Well, I'm excited to keep seeing what you have coming as you update everybody on X and, as always, it's so great to talk to you, michael. Thanks for joining us again. I appreciate it, thank you.
