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The Real Risk for Markets Isn’t Tariffs: It’s Japan! | Michael Gayed

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Mar 31, 2025
Michael Gayed, a Portfolio Manager and Publisher of the Lead Lag Report, dives into the overlooked risks threatening markets. He argues that investors are fixating on tariffs while Japan's monetary policies could trigger a global credit event. Gayed highlights the stagnant state of small caps, the illusion of mega-cap strength, and the disconnect with junk debt. He suggests gold may not be the safe haven it once was and emphasizes the need to rethink market signals for better investment strategies.
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INSIGHT

Small Caps: The Real Market

  • Small caps, often overlooked, are a better indicator of the U.S. economy's health than large caps.
  • They represent small businesses, the true drivers of economic growth and activity.
INSIGHT

Yen Carry Trade Explained

  • The yen carry trade involves borrowing cheap yen and investing in higher-yielding assets elsewhere.
  • A strengthening yen forces deleveraging, impacting global markets.
ANECDOTE

Yen Carry Trade in Practice

  • Michael Gayed recounts a conversation with a real estate developer from Honduras.
  • The developer uses the yen carry trade to finance property purchases, highlighting its pervasiveness.
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