Peak Prosperity Can a Systemic Crisis Even Be Avoided at This Point?
Jun 25, 2025
Michael Gayed, CFA and author of the Lead Lag Report, dives deep into today’s economic landscape, linking credit cycles to systemic risks. He humorously discusses excessive liquidity's implications and the fear of a market decline. Gayed analyzes small vs. large-cap stock disparities amidst rising interest rates, warns about deregulation’s effects on market volatility, and offers insights on navigating inflationary pressures. He also critically examines AI's economic influence and questions the sustainability of rapid technological changes.
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Credit Market Disconnect Signals Risk
- There's a disconnect between credit markets and small cap stocks signaling credit risk.
- This mismatch suggests an impending credit event as junk debt reprices risk.
Fed Should Raise Rates Now
- The Fed should raise rates to cool off excessive liquidity and speculation.
- Bond markets signal financial conditions remain too loose despite rapid rate hikes.
Post-COVID Cycles and Deregulation
- Post-COVID, economic cycles are disrupted with unusual lag effects.
- Deregulation could support small caps and increase market volatility through competition.
