Michael Gayed is a veteran portfolio manager who runs funds including the Free Markets ETF (FMKT), and is the founder of The Lead-Lag Report. He joins Phil Rosen on Full Signal to discuss why policymakers may crash stocks to save bonds, the Japan carry trade, where the real AI bubble is, and why small caps hold the key to what comes next. Subscribe to Opening Bell Daily: https://www.openingbelldailynews.com/subscribe Follow Phil on X: https://x.com/philrosenn Follow Phil on LinkedIn: https://www.linkedin.com/in/philrosen/ Timestamps: 0:00 - Crash stocks to save bonds 4:34 - Japan carry trade 7:02 - Oil, yen, and Japan risk 12:05 - Fund positioning 14:51 - AI driving unemployment 17:29 - Capex and the AI bubble 19:33 - Small caps 23:04 - Rate cut before hike 23:52 - Lumber-to-gold ratio 27:40 - Most credible bull case 30:50 - Favorite sectors 33:09 - Debunking Fear-Greed index 35:59 - Semiconductor and memory trade 37:16 - What we&#x27;ll be wrong about 38:49 - Eli Lilly and obesity drugs 41:44 - Follow Michael #podcast #investing #markets #macro #stocks #bitcoin #fed

Veteran Investor: 3 sectors to buy BEFORE the MARKET CRASH

Full Signal

They will crash stocks to save bonds. You've been saying this for some time now, Michael. What does this mean? The Egyptian comes back again to talk about crashing stocks, of course. But we appreciate the invite. And as you can tell, I keep very prepared with my look here. Okay. So this has been a theme of mine for the last two and a half, three years. It's why people think I'm a perma bear, which I'm not. Okay. But let me kind of unpack this from a data perspective. Okay.

Historically, when you have major declines in the stock market, on average, you have what's called a flight to safety. Flight to safety means money goes for a moment in time into so-called risk off assets. Now, the term risk off doesn't mean no risk. We have to first identify what the term risk off means during a flight to safety. What is the safety? Risk off historically means credit risk off.

Because when you have crashing stocks or stocks declining in a very big way, typically, volatility spikes, credit spreads widen, which means that the bond market interprets volatility in stocks as increasing default risk premiums in highly levered companies. Money is afraid of that potential that you may not get its money back, right? From the bond market return of versus return on capital.

So it goes for a moment in time into the risk off assets, which don't have default risk, which are what gold, the dollar and treasuries. Okay. Now, if money goes into treasuries, yields are dropping. That's why historically, again, one of the most consistent hedges with the exception of the last several years has been long duration treasuries.

Veteran Investor: 3 sectors to buy BEFORE the MARKET CRASH

Read the full transcript

The candid version is on a podcast,
not the earnings call.

Veteran Investor: 3 sectors to buy BEFORE the MARKET CRASH

Read the full transcript

The candid version is on a podcast, not the earnings call.

The candid version is on a podcast,
not the earnings call.