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Michael A. Gayed

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  • The Equity / Inflation Connection [View article]
    Time frame is indeed important, but I think in the short-term markets seem to only really care about whether inflation or deflation will occur in the next few years. Numerous studies have shown that correlations remain above historical averages among stocks and sectors, as assets move in tandem on economic inflation/deflation risks.
    Sep 21 11:13 AM | Likes Like |Link to Comment
  • Inflation or Not, That Is the Question [View article]
    While it appears that inflation is perhaps the only real way to resolve the huge debt loads developed economies have, it still remains unclear if policy makers can cause it to happen. The global labor "arbitrage" trade is still alive and well. Cheap labor overseas (with populations getting more and more educated) is ultimately a deflationary force and a large one at that.
    Sep 21 10:24 AM | Likes Like |Link to Comment
  • Gold, Treasuries and Dollar ETFs: Connecting the Dots [View article]
    Excellent article and comment. I think there could be another reason for Gold to break to new highs. With the Fed's intervention in the Treasury markets, and currency debasement abound by what appears to be every single country, Gold becomes the "intervention-less" defensive trade. In other words, investors who want to hedge their portfolios don't know if policy action could mess up their thesis, and Gold appears for now to be void of that.
    Sep 21 10:15 AM | Likes Like |Link to Comment
  • Trouble Brewing for the Colombia ETF? [View article]
    Quick note on ETF liquidity - because these are funds, daily volume is not the only thing to be considered. So long as the bid/ask spread is not too wide, daily volume in an ETF should not mean much in terms of liquidity.
    Sep 21 10:05 AM | 1 Like Like |Link to Comment
  • Treasuries Are Getting Buried [View article]
    With the tremendous fund flows that have gone into fixed income since the March lows, I tend to think of the expression "the crowd is right on average, but wrong at the extremes."
    Sep 17 11:23 AM | Likes Like |Link to Comment
  • Are Black Swans Not So Black Anymore? [View article]
    To the issue of rising tail risk - is the tail risk rising in equities or bonds? Even Mr. Taleb has stated that the real black swan for him would be a failed government auction. So while there may be bets of an equity crash extreme event, perhaps the real event occurs in Treasuries.
    Sep 17 11:16 AM | 1 Like Like |Link to Comment
  • Is the Risk-Off Trade...Off? [View article]
    You bring up a good point. The argument I would make here is that from a flow of funds perspective, as money gets reallocated away from risk-off assets, it could very well be a source of demand for risky assets going forward. In addition, given the magnitude of outperformance in these assets in the absence of an actual shock/event, I would argue that extremes have occurred in Treasuries and the Yen specifically, and not in the stock market.
    Sep 17 09:38 AM | Likes Like |Link to Comment
  • The Relative Treasury Trade [View article]
    Ha! I've been in this business a long time :)
    Sep 17 09:27 AM | Likes Like |Link to Comment
  • 3 Bears Threatening the New Goldilocks Economy [View article]
    Just want to put a note here that the pendulum is continuously swinging. Whereas 2009 was the year of capital appreciation, 2010 so far has been the year of income. What happens going forward remains to be seen, but it does appear that, unless we head into a prolonged period of deflation, the income theme may be running its course.
    Sep 16 11:23 AM | 3 Likes Like |Link to Comment
  • Why Tech ETFs Are Down But Not Out [View article]
    An interesting trend may be emerging in the Tech sector given announcements by Cisco and Microsoft as it relates to dividend policy recently. While Technology companies have historically not been known as dividend plays, that may soon be changing and may attract more income-oriented investors to the group.
    Sep 16 11:18 AM | Likes Like |Link to Comment
  • ETFs... Dangerous? [View article]
    In all fairness, I don't think the problem is ETF's, but rather overconfidence by investors. Studies show mutual funds tend to have a very high correlation to the market as well. I think the bigger issue is that because ETFs allow investors to trade in and out of stocks intraday with incredible speed, that it can cause pricing anomalies across the stock market universe. I use the term overconfidence because investors who believe they can beat the market tend to trade much more (to their detriment on average).
    Sep 16 11:14 AM | Likes Like |Link to Comment
  • 3 'ETF' Signs That the Stock Market Bull Wants to Run [View article]
    I would also add that a top may be in on the TLT ETF which tracks Treasuries - a bullish sign from a flow of funds perspective of money coming out of bonds to potentially stocks.
    Sep 15 03:16 PM | Likes Like |Link to Comment
  • Bull Market Continues, But Is Breakout Imminent? [View article]
    Excellent review of the interplay of asset markets right now. The sell-off in Treasuries appears to be the real case for why we could break resistance this time around.
    Sep 15 02:54 PM | Likes Like |Link to Comment
  • Corporate Debt: Who's on the Right Side of the Trade? [View article]
    Excellent article. It is worth noting that there will be selling pressure in the bond market regardless by asset allocators who must rebalance bond and stock target weightings. The significant outperformance of the bond market relative to stocks means that rebalancing by institutions would result in selling bonds in favor of buynig stocks to reach target allocations. This alone could spark a wave of selling in the Treasury market.
    Sep 15 02:50 PM | 1 Like Like |Link to Comment
  • Negative Yields, Inflation, And the Bernanke Put [View article]
    The possibility of a big uptick in inflation expectations may be coming if the recent sell off in Treasuries continues. With all the money that's been printed, any kind of a sell off in the bond market may actually be a net positive to stocks. Money has to go somewhere, especially since negative yields means theres no incentive to save.
    Sep 15 02:44 PM | Likes Like |Link to Comment