Michael Gayed: "Nothing Has Gone Wrong Until It Does"

Finance U Public Finance U
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Originally published at: https://peakprosperity.com/michael-gayed-nothing-has-gone-wrong-until-it-does/

In this episode of Finance U, my guest is Michael Gayed, who claims that the stock market may be crashed to save bonds.

But maybe stocks were going to crash all on their own, given the ridiculous fantasy finances that are immediately apparent when one peeks under the AI hood.

Sure, AI is powerful, and both Michael and I use it daily, but real-world experience shows that at scale it remains error-prone and, given that, perhaps not all that much cheaper than human labor. Yet.

Or perhaps it will be the SpaceX IPO that will suck out critical liquidity at a shaky time when stocks are already priced higher than at any other time in history?

At 93x revenues and a $1.77 trillion valuation, SpaceX is, by far, the most ambitious IPO in history.

Michael keeps a close eye on credit spreads (the yield difference between higher and lower-rated bonds). He observes that the Fed prioritizes credit spreads (default risk) over stock prices. If forced to choose, he says, the Fed will “crash stocks to save bonds,” which will, in turn, give it the air cover it needs to cut interest rates (badly needed for U.S. debt refinancing).

Michael has long been a keen student of Japan and the carry trade. He’s long-predicted that Japan will suffer severe consequences when the carry trade finally reverses, a process that is now underway as evidenced by the blow-out in Japan’s long bond yields.

Japan has intervened at least 3 times in recent months to prevent the yen from breaching the 160 (to the dollar) level. The most recent intervention was the largest in the series, and it didn’t even last 2 months, indicating the degree of stress the Japanese monetary (and soon financial) system is under.

Adding to Japan’s woes is the Iran war and the closure of the Strait of Hormuz.

Michael sees the Iran conflict as keeping oil prices elevated for longer than markets currently project. Rising oil + weak yen = cost-push inflation in Japan (and globally). Again, this adds to the pressures on Japan’s currency and bond markets.

Add it all up, and Michael is bearish on several asset classes but is not perma-bearish. He says that opportunities exist in defensives (utilities, healthcare, consumer staples), gold, long-duration Treasuries (tactically for the risk-off play), value, non-tech, and international/real assets.

Like me, he sees true diversification as including skills, health, and local resilience beyond portfolios and money.

As always, these are risky times. During such moment passive investing absorbs the risk, and a tactical, risk-managed approach offers a superior path to limiting downside losses and participating in the areas where a bullish stance can pay off.

Timestamps

00:26 Introduction to Current Market Dynamics
03:18 The AI Narrative and Market Valuations
06:26 The Role of Credit Spreads and Fed Responses
09:17 Japan’s Economic Challenges and the Reverse Carry Trade
12:25 The Impact of Global Events on Financial Markets
15:26 The Role of Leverage in Market Crashes
18:33 The Future of AI and Market Expectations
21:25 The Influence of Speculation and Manipulation in Markets
25:27 Conclusion and Future Outlook
34:12 The Inflation Crisis in Japan
36:25 The Reality of Cryptocurrency and Market Dynamics
41:43 Liquidity Concerns and Market Signals
46:25 The Oil Market and Economic Implications
51:47 Stagflation and Government Spending Challenges
56:15 The Future of AI and Economic Resilience

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Michael Gayed said in reference to the possibility of hyperinflation that we may see a rise in “Criminality”. What are we talking about here exactly? Does that include Prostitution? Will Gen Z resort to Prostitution?

When Paul Kiker does his Retirement Planning for Clients he said that he runs various Inflation scenarios.

What if we ask Paul to run an Inflation Number of 15%? Or, 20%?

At an Inflation Rate of 15%, after 5 years assuming no salary raises, then half the population will be living in their cars wearing their obnoxious, bright red, made-in-Bangladesh “MAGA” hats….

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“Baby Boomers get all of the chicks…”

“Chicks” - I love that word….

I read somewhere that the “Top” 15% to 20% of Men basically attract ALL of the Women.

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I love Michael Gayed!! And you two have great chemistry together!!! He keeps saying, essentially, “It’s not that simple!” I love him trolling Michael Saylor. :joy:

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Apparently those boomer men have all the chics, huh?

ETA, the comments I responded to were edited since my reply. I will leave this as originally posted with this added comment. Perhaps I offended, and that caused the other PP member to edit his post around what I posted here. No offence was intended.

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What struck me about the discussion between Chris and Michael Gayed is how obtuse the people running the Casino seem to be regarding how their shenanigans affect the common people who just want to be left alone to live their lives and not be lied to constantly and abused. The Baby Boomers just want to skim money from the Stock Market and/ or Buy Cheap in the event of a Crash which is difficult to predict with all of the blatant market manipulation and to keep their asset prices inflated.

Michael Yon told an interesting anecdote recently. He said that when he was in the Special Forces in Iraq that the Iraqi insurgents were always, constantly setting off car b…mbs. But, the U.S. Media and the Higher Up’s had no idea that car bo…MBs were constantly going off. They thought that car b…o..MBs were only exploding during isolated visits by American VIPS flying in-and-out of Iraq, otherwise, it was “quiet”.

This observation is significant for some reason. It says something about the obtuse American elites and the bureaucracy?

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I stumbled upon this article just keeping up on other tech news and saw Japan is publicly ready for inflation or whatever the future holds.

Japan enters the era of digital money. Three largest banks launch their own stablecoin

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The datarate coming from this guest’s mouth is too high for me. I tried playing the video at 75% but then it takes even longer to listen so not gonna do that. I will scan the transcript for highlights.

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Wouldn’t stop the bottom 20% of men trying to implement pre-nups.

What really matters is ones opinions of oneself.

Oh and how you interact with others of course

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I was making am off color response the previous users choice of words, and not meant to be serious, but rather to high light the generational and gender based angst that were present in what I was replying to.

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In terms of savings, it is scary how many people don’t have anything to lose. So they won’t care or riot if we lose our stuff to inflation. If you read the language a lot of people use, they describe anyone with more than a few quid as “wealthy” - so when they say they want the wealthy to pay/lose everything - that includes most of us.

In terms of earnings and inflation, I think the goal is to inch people’s lives down bit by bit and figure out the minimum they will not riot for. All can be done quicker under War Powers, so that might be on the cards at some point when the slow decline needs a boost/the system needs a reset.

By the by - you have me wondering what scenario might cause Paul to turn to his client and say, “Well, if this happens, your wife is going to have to go on the game. These are the rules that have been forced upon us.”

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This is a good point. I think it applies as much of not more to the reactions we might see from those with zero savings, and is a relevant part of the elites are executing.

It’s ashame that while seeming so affluent, the vast majority of Americans are living week to week and month to month. When they loose to economic bubble crashes they really resent their more frugal counterparts who suffer less.

Yup, tax the rich could mean beating on your neighbor’s door.

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So was I.

He tried to prove his point by linking me a video that referenced needing a pre-nup over just 2mil in assets.. that women are just not to be trusted in a relationship with at best average wealth.

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Are you saying that 2 million is, at best, average wealth?

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When in reference to pre-nups, absolutely.

I can’t fathom the narcassim needed to put a loved one through a pre-nup over 2mil.

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Really? And the average man is 6’4 and earns multiple hundreds of K’s?

Delirious. Well 2 million is a lot of money. If it is such a pitiful amount to you, then why not just sign the prenup, it’s peanuts anyway according to you. Right?

If the woman is not in “business” why does she not want the prenup?

Doesn’t she belive in her girl power?

I think it is obvious that you don’t believe what you are writing. You just think women should get freebies without earning them.

And if I look at your last couple of posts you think the bottom 20% of men have 2 million. Delirious.

You just outed yourself.

I can’t fathom the narcisissm thinking that someone should give you a million just for hanging out with them on a consistent basis. What makes you so special?

You proved you can’t be trusted by your comments. And so do millions of other women on a regular basis.

The contract needs to be changed so women don’t get any cash and prices. If the game rules get written that way, women may start behaving properly, instead of approaching relationships as a grift.

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My view also. And the transcribed text holds no gems either.

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2 million in assets is not alot in the context of needing to protect your wealth. Being worth 2 mil, doesnt mean you have that in the bank, this is the kind of person who could be worth that in Australia:

If you’re in your mid thirties, earning the average 80k, life insurance and Superanuation (401k?) adds up quickly. As soon as you’re in some industry like Trades, Military, Paramedics and you do some aide buisness like flipping houses, trading stocks or stacking metals, have been given endowments or assets from a deceased relative - well that 2mil can be made quite quickly with little risk.

Of all the people that would get pre-nups that amount would easily be in the bottom 20%. Don’t confuse that with the average wealth of every man and woman..

You’ve missed alot of the background to this conversation in any case. You can read some of the thread here, its not that enlightening, just context

https://tribe.peakprosperity.com/t/the-fat-pipe-june-5th-2026-trump-wavers-on-iran-nuclear-dust-ai-hits-mad-max-stage-you-are-the-exit-liquidity-grab-bag/47771/37?u=tianamarie