Tags: Michael Gayed | Faith | Fed | Bubble

Investment Adviser Michael Gayed to Moneynews: Faith in the Fed Is the ‘Last Great Bubble’

By    |   Thursday, 25 Apr 2013 12:12 PM

Michael Gayed, chief strategist for investment adviser Pension Partners, questions the ability of Federal Reserve Chairman Ben Bernanke to heal the U.S. economy.

“I think the last great bubble of all is the faith in the Fed to fix all problems,” Gayed told Newsmax TV in an exclusive interview.

“Bernanke – Super Ben and the League of Extraordinary Bankers – will do whatever it takes and they will make sure that we don’t enter into [a] deflationary spiral.”

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The Fed is buying $85 billion a month in Treasurys and mortgage bonds.

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.

“That’s been really kind of a global [phenomenon],” Gayed said. “We’re seeing that … with the Bank of Japan and the government’s actions there. We may be entering [a time when] it is becoming more clear that the Fed and central banks cannot do it alone. That bubble … is a much bigger one to be concerned [with] than what may be happening in the commodities sector.”

Gayed addressed the recent plunge in the price of gold and questioned the performance of the precious metal amid the improvement in India’s economy. He said India has historically been the biggest buyer of gold at the margin.

“There are some aspects of the rupee’s movement which affects India’s demand for gold, but, again, what I think is happening in gold, and all commodities, is the sudden realization that maybe $85 billion per month is not enough … to cause reflation,” said Gayed.

“There is a slowdown occurring in China relative to expectations. There is a slowdown still in Europe. Nothing has been fixed or changed.”

Gayed’s concern about commodities extended beyond gold to energy.

“We have fracking and we have all of this supply that’s coming in from domestic production,” he said. “That should put some kind of downward pressure on oil prices. You have to look at it from the broader asset-class perspective. The entire commodities asset class has been lagging very badly.”

He identified the healthcare sector as unique.

“It tends to outperform without bear deflation traits like utilities, consumer staples, telecoms and bonds,” he said.

“Healthcare has outperformed all of the other bear trades within that opportunity set because … demographics are favorable toward the healthcare sector. More people are aging; more people are spending their income on health-related things, so that’s probably a secular trend of outperformance in terms of behavior.”

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.

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Michael Gayed, chief strategist for investment adviser Pension Partners, questions the ability of Federal Reserve Chairman Ben Bernanke to heal the U.S. economy.
Michael Gayed,Faith,Fed,Bubble
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2013-12-25
Thursday, 25 Apr 2013 12:12 PM
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