The Real Risk for Markets Isn’t Tariffs: It’s Japan! | Michael Gayed
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Intro
This chapter examines the implications of market definitions, focusing on the contrasts between small-cap and large-cap stocks. It challenges traditional views by suggesting that the real market risks are more tied to potential instability in Japan than to tariffs or political influences.
Is Wall Street ignoring the true risk in markets? Michael Gayed joins Maggie Lake to explain why investors are watching the wrong risk signals by focusing on Trump’s tariffs and why small caps, Japan, and junk debt may hold the real clues to what happens next.
In this in-depth conversation, Michael breaks down:
- Why small caps are halfway through a lost decade
- How Japan’s monetary policy and the reverse carry trade could trigger a global credit event
- The dangerous disconnect between small caps and junk debt spreads
- Why passive flows into mega-cap stocks are masking real economic weakness
- How a bullish or bearish tail event could resolve these market distortions
- And why gold may not behave like a safe haven in the next crisis
Chapters:
0:32 - Tariff Tensions: Growth Under Pressure?
4:23 - Zombie Small Caps: Crisis or Transformation?
6:57 - Mega Tech Mirage: The Illusion of Market Health
9:25 - Reverse Carry Unveiled: Japan’s Financial Tipping Point
14:35 - Trump’s Dollar Dilemma: The Weaker Wish
16:02 - Unwinding Uncertainty: What Could Spark A Japan Panic?
20:59 - Gold Sell-Off: Unveiling the Warning
24:05 - Economic Signals: Growth or Gloom in the US?
27:25 - Deregulation Dilemma: Positioning for Change
29:47 - Oil Outlook: Balancing Supply, Demand, and Risk
30:56 - Equity Rotation: Shifting from Mega Caps
33:11 - Small Cap Timing: Seizing the Opportunity
35:26 - Global Pivot: Betting on International Markets
36:20 - Conviction Check: What Would Change the Game?
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