2020: The Year of Reflation?

Published on
December 16th, 2019
Duration
12 minutes


2020: The Year of Reflation?

Trade Ideas ·
Featuring Michael Gayed

Published on: December 16th, 2019 • Duration: 12 minutes

Michael Gayed, CFA, publisher of the Lead-Lag Report, discusses how traders should position for a potentially reflationary macro environment in 2020. In this interview with Jake Merl, Gayed highlights the importance of a steepening yield curve, drills down on the battle between inflation and deflation, and explains why financials and emerging markets are poised to outperform the S&P 500. Filmed on December 12, 2019.

Comments

Transcript

  • JG
    James G.
    8 January 2020 @ 23:40
    Someone who is in the business should be able to realize that inflation is a TAX on everybody. I would rather have a tax I can see.
  • SG
    Shubham G.
    4 January 2020 @ 23:54
    He says "buying high, selling high" has worked last 10 years; now "buy low, sell high". How is buying Financials here buying low? XLF is at all time highs at $31!
  • PH
    Peter H.
    26 December 2019 @ 10:59
    To an extent, the deflation question is slightly out of sync. The adage, "What gets measured, gets fixed" holds very true. The descision by central banks as well as the media (who over the long term are who make the banks accountable via public attitudes, elections and legislation) to focus on the measured CPI only is the issue. Effectively, any aspect of inflation not covered by the CPI (i.e mortgate repayments, retirement investment cost for a specific return) are allowed to inflate. Meaning huge asset inflation. In parallel, the fed has taken the mantle of "keep equities high" as a core tenent, since that is how they are told they are doing a good job(In Australia is is house prices). Which has distorted markets, largely at the encouragement of most of the gov, citizenry and business community. Meanwhile, the positive effect on business investment vs interest rates vanished hundreds of basis points ago. I think a true reflation wouldn't be especially hard, the risk is turning it off. A Prof Keen style cash giveaway (auto payoff 5k from all citizens debt, if you have no debt, you get it as cash). But I worry that once any inflation geta going, increasing the interest rate will knock out a lot of zombie companies that can't adjust quickly.
  • dp
    david p.
    22 December 2019 @ 23:54
    I hope the US economy crashes and burns. END the Fed!
  • IS
    Ionel S.
    17 December 2019 @ 21:45
    The curve will steepen, but it eventually "bull steepen" with FED droping rates because we are 0.3% away in unemployment rate terms from a recession! Jobless cliams are lagging Fed funds with 2.5 years and now they are starting to jump up!!! just saying...
  • TB
    Tom B.
    17 December 2019 @ 15:25
    Inflation not running high due to technology is like a beach ball pushed under water. Uber bond holders are subsidizing your discounted uber ride (vs. cab ride) as this compagny and many of the so called unicorns are not self sustaining without the cheap credit. That's all it is. Very doubtful that the Fed hasn't influenced inflation in healthcare and education.. cost of money influences everything. Maybe not intended but surely caused by central planning. Reflation is the only way out otherwise it will be pandemonium.. worldwide.