“A collapse is coming,” alerts Michael Gayed who has gained 60% with the crisis.
His fund has gained 60% in the year after anticipating the coronavirus crisis and now he is clear: “A collapse is coming.” He is Michael Gayed, manager of the ATAC Rotation Fund and, despite his current clear scaremongering, he says he does not want to scare any investor.
The stock market is looming at a 30% drop with the trade war, according to this guru
“These are wild times in the markets,” Gayed acknowledges in statements collected by MarketWatch. “Despite the pandemic, to which the United States is not knowing how to respond, the stock markets have not blinked, continuing with their rebound,” he adds.
The figures agree with Gayed. Equities have fallen by 30% at the peak of the crisis to rebound more than 50% from their lows in March. And all in less than eight months. Now, this manager believes that another great stock market crash is coming.
Gayed leans on market indicators such as the yield on the 10-year Treasury bond, which is at 0.5% and the yield on US debt at 30 years, below 1.5%. “It is often said that bondholders are ‘smart money’ and tend to anticipate the economy,” he argues. “The fact that the returns have not risen too much (it has been the other way around, actually) in the short term is very worrying since historically it tends to precede long periods of stress on the stock market,” he adds.
“BEFORE THE CORONAVIRUS CRASH WE SAW A VERY SIMILAR MOVEMENT”
Let’s not forget the ‘utilities’. This sector, traditionally seen as an active refuge from possible recessions, is currently performing above the S&P 500: “This should set off alarms among equity investors, including myself, since just before the coronavirus crash we saw a very similar movement, “he says.
Gayed ends his argument by agreeing again to the disconnection between fundamentals and the stock market, which other great gurus and experts have already sighted before him: “The S&P 500 has turned around the accumulated losses this year despite waiting for an economic catastrophe, the Nasdaq ‘flies’ … no one seems to think that the market can ever fall and it seems that everyone has forgotten the risk involved in investing, so the tables can change again quickly and with brutal force “he concludes.