On this episode of Full Signal, I sat down with Michael Gaiad of the Lead Lag Report, and we talked about the Japanese carry trade, why it's the biggest risk that no one is talking about, how investors can position their portfolios for it, and what this ties into with the AI trade, small caps, large caps, and much more.

This is a fantastic conversation. Michael raises some excellent points that no one

has brought up on this show before. I think you're going to love it. Michael, it is so good to see you.

And the first thing we have to get into, you've been pounding the table on Japan carry trade for

several years now. You were early on it and you've talked about it more than most people I know.

Walk us through what's going on here.

I've been obnoxious about it, is what you're trying to say.

It's like an Egyptian talking about Japan.

Who would have thought?

So let me take a step back.

So in 2023, after I argued the market had bottomed in towards the end of 2022.

I argued that you'd have a meltup in equities, but that towards the tail end of the year,

you would have a credit event, which a lot of people associate that term credit event also to me,

because I was very adamant about that in media and social media.

And when you talk about credit event, my reasoning for that was we just went through the fastest rate hike cycle in history.

And I didn't believe that you go through the fastest rate hike cycle in history smoothly.

That it would, because of lags, there would be some kind of tail event.

Question then becomes, well, what's the catalyst?

And I was thinking about it.

And it dawned to me that Japan probably is going to be the catalyst for some kind of disruption in markets. If my thesis that towards the end of 2023 a credit event were to take place, Japan would be the reason. Now, the carry trade is something that's been

out there for a very long time, but it's not really, I think, fully understood by people,

which in many ways convinced

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