The David Lin Report Banks Borrow Record $50 Billion From Fed, Expert Reveals What's Next | Michael Gayed
Nov 5, 2025
Michael Gayed, a portfolio manager at the Free Markets ETF and publisher of the Lead-Lag Report, delves into why banks are borrowing record amounts from the Fed, signaling potential market stress. He forecasts an imminent spike in market volatility due to excessive leverage and overconfidence. Despite these short-term risks, Gayed remains optimistic about long-term stock performance, highlighting the positive effects of deregulation. He also discusses the potential pitfalls of increasing liquidity and the implications of political events on market narratives.
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Monitor Leverage And Private Credit Risks
- Avoid assuming no macro catalyst is needed; watch leverage as the main crash precursor.
- Monitor private credit and leverage metrics because small triggers can cause outsized selloffs.
End Of QT Could Reignite Policy Cycles
- Ending QT may not straightforwardly help markets because more liquidity can fuel inflation and force rate hikes.
- Gayed argues liquidity expansion could prompt a Fed reversal and renewed volatility like 2022.
Favor Higher-Quality Bonds For Now
- If holding bonds, favor higher-quality like BBB or above to limit asymmetric default risk.
- Rotate to long-duration Treasuries only if credit stress forces a true flight-to-safety.