I just got over 9 hour flight and I was reading about the Japan elections and Wall Street's reaction to it, like the hedge fight found insight. And then I was reading, as I arrived here, the mainstream news, and I was surprised because the stories are polar opposites, and I was not planning on making a video on this, but I think you deserve to understand the difference between what those who understand financial systems do and think about how Japan could be a catastrophic risk for US investors. Now I know Trump just gave his endorsement to the new Japanese Prime Minister, and congratulations to her and all that. But if you want to understand what mainstream media isn't telling you, then stick around for the next few minutes. Right after the election, Japanese interest rates spiked to their highest level since 1999, more than 25 years ago. And if you own just any US stock, which let's be honest, most of you do, right? You need to understand what's happening right now. Because there is$1.4 trillion of money sitting in Japan that could move US markets overnight with no announcements. And the lovely lady that Trump just endorsed, well, she's the one with her finger on the trigger. So my promise to you here is a little unplanned to break down exactly what happens at the election, why it matters for your portfolio, and then I'm going to give you my one, two, three, I think, three-step framework for protecting yourself and hey, maybe even profit from this. Because I think that's possible, but only if you understand what's actually going on here. If you're wondering who the heck I am, my name is Felix Preen. I used to be an investor and banker and normally uh always chaperoned by my trusted uh golden retriever. So it's just my thoughts, might be a little less coherent today. But I'm also the founder of the GOAT Academy, where for the last six years, my Wall Street mentors, the guys I look up to and learn from, have been teaching over 20,000 students how the markets really work. So my mission for my little retirement here is to give you guys, the regular investors, the same knowledge, the same understanding that's really taught only to bankers. Because when something like a Japanese election happens, and you know, the analysts on Wall Street, they write those 20, 30, 50-page reports for their clients, you know, the hedge fund clients, and and you well, you get 30 seconds on CNBC of somebody not telling you anything particularly useful. So my goal here is to give you what the hedge funds clients get: the real story, the actual risks, how you can position yourself. And by the end of this video, you'll understand literally more than 99% of investors out there. And why what happens in Tokyo can you know empty out your retirement account if you're in New York or anywhere else in the world. So let's start with actually what happened here. Japan just elected a new prime minister, Sane Takaichi, and I'm undoubtedly mispronouncing that. My apologies to uh you know everybody Japanese in the room. And she won a landslide victory. She won a two-thirds supermajority. That means she basically has unlimited power, more or less, to push through whatever policy she wants. No gridlock, no compromises, none of that nonsense we're used to in in Europe and the US. Just unfiltered whatever she wants. Now, who is this lady? Well, three things I think that you need to know. One, she's a big nationalist, big on Japanese identity, big on defense. Two, she's a, well, a bit of a China hawk, really. And then three, and the one that really matters to you is she's very pro-stimulus. That means money printing, stimulating the economy. She wants to spend a lot of money. She's promising massive government spending promises, she's promising tax cuts, a two-year suspension of the food tax. That's particularly popular apparently in Japan. And if you tune in last week, I was just in Japan, right? Um, but her message to Japanese voters is I'm gonna put more money in your pocket and I'm gonna spend more on everything. And if you're a politician, that's usually what makes you popular, right? But what it actually means is that they're gonna flop the system with the money and they're gonna hope that it works. That does that sound a little familiar? Have we seen this before? Yeah, because the thing about printing money, when one central bank does it, all the other central banks eventually do it too. It's sort of the race to the bottom. So, how does this work? Well, Japan prints money, their currency, the yen, weakens, and other countries now have to respond, or their exports become more expensive. So everybody does the same thing. It's a paper race to the bottom, a feared currency race to the bottom. And there's really only one thing that wins, and we'll get to that in a moment. My thoughts are hopefully coherent enough. So, what happened when right after the election? Well, the markets actually freaked out. Japan's 10-year interest rate went to 2.35%. Bear with me on some of these numbers here, because it doesn't sound like a lot, right? And in America, you've been used to you know 4% or 5% interest for a while now, thanks to the transitory inflation there. But for Japan, this is insane. This is historic. It's the highest interest rate in 27 years. How much should you care if you're in New York or Ohio or London or wherever you might be tuning in from? And let me know about you're tuning in from. Interesting to see. Um, and why does it matter to you? Look, for the last 30 years, Japan has been in the land of free money. Interest rates were a big fat null zero, sometimes even negative. So imagine if you could go into a bank and they pay you to borrow money. That's been Japan for the last 30 years. And now suddenly you actually got to pay interest. Now, the market freaked out, and the new Prime Minister Takaichi, she saw the reaction and she went into damage control. She said, uh, she used the phrase fiscal responsibility, whatever that means. So she's gonna be like, yeah, I'm gonna spend money, but I'll try not to completely blow up the financial system while doing it. So rates have calmed down a little bit, as I'm recording this, we're at 2.2 something, but that's still pretty extreme. And you might still be thinking, okay, Felix, get to the point. Why the heck should I care? Well, there is something called the carry trade. And I'm gonna try and explain it in sort of you know golden retriever terms. Imagine you have a friend who loans you money, 0% interest. It's free money, free loan. There's no strings attached. And you take that free money and you invest it into something that pays you 5% a year. You buy a US government bond. So you're making 5% on free money. It's a free profit. That's what Japan has been doing for years with trillions of dollars. So the real version is this Japanese investors borrow money in Japan at basically zero. They then convert that money to United States dollars, and then they buy US stocks, US real estate, US everything with it, and then they collect their returns, you know, their 5% or whatever. And then they pay back their 0% loan in Japan and they pocket the difference. That's been one of the biggest free money trades in the world for decades. But what's changing? Well, that 0% loan isn't no longer 0%, it's now over 2%. US interest rates have come down at the same time, they're no longer 5%, they're now 4%. So the gap, the profit margin is getting smaller and smaller. And because they have to deal with their currency risk, there is a little bit of cost there too. This trade is starting to end. Now, why is that a problem? Because if they want to unwind their trade, they have to pay back their loan in Japan because it's now too expensive. They need to sell their investments. Now, where are their investments? They're in the US, US stocks, your stocks. Now, more selling means what? Stock prices go down, and then when the stock prices go down, you kick off this whole automated selling thing that goes on with ETFs and pension funds and the leveraged funds and the margin courts, a bit like what we've seen in the silver markets, right? So Japanese investors are some of the biggest owners of US assets. When they start to sell, you're gonna feel it. We've got a preview of that about a year and a half ago, in 2024. Um, Japan said we might increase interest rates, and the US went into a bit of a mini meltdown. And that was because this trade was starting to unwind. Now, if you're thinking, well, what does that mean? Should I sell? How do I protect myself? That's exactly what I'm gonna teach you. Now, it would make this video insanely long, and I'm literally just landed here and not quite ready for it. What I'm gonna do for you instead is this coming weekend on Saturday, I'm gonna teach you Wall Street's rules on when to sell. Because the biggest mistake I see retail investors make, I've seen it thousands of times. They have these beautiful profits, something is up 20%, 30%, 80%, whatever. And then they watch it go back down to zero, maybe even negative, and they don't ever sell it. And I'm just like, I want to shake people. So we want to shake you up. And secondly, I'm gonna teach you how you protect yourself. Because what if the market actually takes a nosedive? Then what are you gonna do? You're gonna get emotional. You're not gonna know whether you should sell, should you buy, should you buy the dip, what should you do, right? All that kind of good stuff. So it walls through the three very simple rules for this. And I'm gonna teach you this. Um, it's no catch, it's just education, felixfriends.org slash training. And all I ask is you sign up for that. Maybe share it with somebody else too who might enjoy it, and come with a notepad um and take, you know, make sure you get the most out of it. But let's get back to this carry trade and Japan and how it affects you. Because there is another pile of money that we need to bring into this. And this one is controlled by the Japanese government. Japan has$1.4 trillion in foreign reserves. This is money the government holds, mostly, you know, US dollar assets. And now remember that the new PM, Takaichi, wants to spend a lot of money. Lots of it, tax cuts, stimulus, defense spending, all of it, right? But she's also promising to be fiscally responsible so that she doesn't blow up the stock market on day one. So she can't borrow endlessly and just print money endlessly. So where's she going to get the money? Well, this is the clever bit or scary bit depending on your timeline. But Japan has this thing called a special account for managing their foreign exchange. And this account just posted a surplus of about 5 trillion yen. Now, I never know how much a yen is, it seems like a very large number and it doesn't seem to be worth all that much. Um but the point is that Takaichi is eyeing the surplus fund to fund her tax cuts without borrowing more money. Now, what does it mean? She might sell US government debt to fund Japanese tax cuts. So she's sort of raiding the piggy bank that holds American IOUs. And what happens if you think this through? Look, if Japan starts selling US debt, what happens? Well, first, more as US debt for sale means the prices drop and interest rates rise. And that's never intuitive, by the way. Bonds are just not intuitive. I was very lucky, I had a bond trader sitting next to me, two chairs over, and he actually taught me this. And the next thing is that happens is when US interest rates rise, what happens? Your mortgage costs go up, your car loans go up, the financing costs for all those data centers go up because you know Google just borrowed$100 billion or whatever. So companies have to pay more to borrow money, and higher costs means lower profits, which means stock prices in the US fall. It also means the dollar gets stronger, which again hurts US exports. So it's a chain reaction. It starts with a lovely lady in Tokyo. So here is where I see this going. If Japan floods their system with stimulus money, which is I think what they're gonna do, then what's the Fed gonna have to do? Well, they'll have to keep rates even lower to avoid this debt spiral. So you've got Japan printing money, Europe is printing money to stay, I was gonna say, competitive just to, you know, not become the Soviet Union. And America is gonna keep their rates suppressed because that's what Trump wants, that's how they can keep the debt more affordable. So what does it mean for your dollars? Well, your dollars are melting slowly, right? Because when they're printing more of it, it is just worth less. It's very, very simple. So what wins? What's the thing that we should be doing right now? Well, gold wins, silver wins, thinks they cannot print wins. So why is Trump apparently being very nice to this lady who could threaten his US stock market? And he famously is promising uh the Dow index to go to, Dow Jones Index to go to 100,000 points by the end of his term. Well, Japan has promised to invest$550 billion in the United States, and Trump lowered tariffs on Japanese goods in return. They signed a rare earths deal, which is very important for tech and for defense. So this looks like kind of a win-win, right? Trump and Takaichi seem to be aligned quite a bit there. They both want more defense spending, they're both tough on their adversaries, and both believe in very strong sort of identities, national identities. So from a geopolitical standpoint, this makes sense. Plus, let's face it, Japan is essentially another colony of the United States, right? So Trump endorses her because they're politically aligned, but he's also endorsing a leader who could really, really hurt American investors. If her stimulus gets a little bit out of hand, right? If she just prints a little bit more than people were expecting, that carry trade unwinds. US stocks sell off. And if she needs to fund her tax cuts through selling debt, she's gonna be selling US debt, which makes US interest rates go up, makes the dollar go up, the opposite of what he wants. So, in my opinion, Trump likes Japan as an ally, but is also very concerned about the carry trade. Now, I'm sure the US is gonna try and put a little bit of a squeeze on Japan to make sure they don't do anything too aggressive. But just bear in mind this lady just won a supermajority. She has more than two-thirds of all the seats in the their parliament. The opposition party literally has like three seats left. So she can basically do whatever she wants, and she's gonna probably want to do that. Now, one thing I learned from my mentors, and I'm a huge believer in in learning from people who've been there, and I've got Wall Street mentors who've done this for 20 years, 30 years, 50 years, and that's who I go to with situations like this because they remember stuff from the 70s and 80s when you know I wasn't around. And what they would say to me is these kind of situations are where the real money is made and lost if you don't know what's going on there. And by the way, these these guys are exactly teaching you in our GoTo Academy if you are ever interested in joining that. But just just just come and join us for the free life training on the weekend first. But what these guys taught me is that when you see a situation with this many moving parts, it's a little hard to comprehend, right? There's a lot of stuff going on here, currencies, interest rates, you know, Japanese food. And I don't know what I'm thinking about Japanese food, it's just so good, isn't it? But what can you do? Well, you can do nothing. But if you do nothing, you're at the mercy of the forces that you don't really want to understand. That's the worst thing you can do. The second worst thing you can do is just to panic sell because you're gonna get some scary headlines and they're gonna come and just be quite late. And what's the best thing to do? Well, understanding the structure, having a framework. And that's what I always teach people is like there's always a pattern, there's always a framework. We're not reinventing the wheel. We are just following the same thing again and again and again. So, what's the golden rule here? Well, it's a bit of a literal golden rule, I'd say. My mentors taught me this that when the government starts printing, you don't fight it. You own what they can't print. And that's gold, that's silver, and that's high-quality companies with real earnings and low debt that can survive whatever companies are next, right? Zombie companies loaded with debt, no, they get crushed. And by the way, we have a zombie um company scanner now in our community. If you guys are in there, um I'll put a link down below as well to that. I think it's$27 a month. Obviously, if you're in the mentoring program, you get access to everything anyway, but uh that's that's there, and that'll literally give you a list of zombie companies, which I think is gonna be very useful, and we update that um very, very regularly. So, what does the math say right now? Well, as I say, own what they can't print. So, what do we do? First step is we always follow the money. Exactly. Follow the money. Ask yourself where is the big money moving and why, and we can track that and see that. And again, we've got tools for that. In this case, the carry trade has been flowing from Japan to the United States for decades. Now that flow is threatened. When that reverses, well, US assets get sold. So, how do we know that's gonna happen? Watch Japanese interest rates. If they keep rising, more money leaves the US. Watch the yen. If the yen strengthens, it means Japanese investors are bringing money home, right? So watch Japanese investors positioning in the US markets. And if you know where to look, Latin data, these two data points are pretty easy to find. And then if you see that happening, well, consider reducing your exposure to like rate-sensitive US stocks. And those are the highest risk stocks, right? The high debt stocks, the new tech stocks. And then number two, we want to identify what's the pressure point here. And I'm about to go for a massage because this pressure point up here is killing me. But what sectors or assets are the most vulnerable to this? Well, basically the US stocks that rely on cheap borrowing. So think your growth stocks, tech companies with lots of debt, and even the big guys are about to load up with tons of debt. Real estate, commercial real estate, that depends on low interest rates. So the US government debt itself is an issue. But that same pressure also creates opportunities. If US rates go up because of Japanese selling, US banks could benefit. The dollar strengthens and helps some companies that import goods, right? But most importantly, you want to have an exit plan. You don't want to prematurely run for the door, and that's often what people do in the same way. Oh, but Figus, you warned about this, so I sell everything. I'm like, no, no, that's not what I'm saying. I'm saying we stay invested in tech and growth stocks and all that good stuff until we see the big money starting to leave the building. And that women, I believe, we want to get out. Obviously, you've got to come to your own conclusions. So you've got to plan your exit before, you know, the merit hits the fan. So, what I would recommend you do is you sit down and you have a look at your portfolio and say, well, what of this is actually most exposed to the carry trade? What of this is most exposed to high interest rates? And then you're gonna want to automate your sell rules on those things because when stuff goes down, the emotions kick in and it's very difficult for us to make decisions. Whereas if we pre-plan it, well, it's a lot easier. And I think you want to look at the gold and silver story. Um, I would use the dips, the forced selling as uh as opportunities, personally. Again, you've got to come to your own conclusions on that. And then I would really shift towards quality stocks. And I've been doing that even the last couple of months. We've bought some really boring big companies with very, very good numbers and fundamentals and earnings and low debt and so on. And those guys have something unique. They have products so good, or customer base so loyal, so addicted, that they can raise their prices no matter what happens. So if we get more inflation, which I think we will, yes, you can be in gold, but you might also want to be in some of the greatest businesses in the world because they have the ability to simply raise their prices and go up faster than inflation. So let's try to bring this all together. Japan just elected a new prime minister. Her mandate is to spend bigly and to cut taxes, and that's push Japanese interest rates to their highest level in more than 25 years. Higher Japanese rates threaten this carry trade, which means Japanese investors may sell US assets. And it also threatens the 1.4 trillion that Japan owns in US debt, which, if sold, would push up borrowing costs in the US. So this is not a crisis yet. And you don't want to know about it when it is a crisis, you want to know about it before it's a crisis, right? It's a big, big risk that most U investors and US investors aren't even aware of. And being aware of risks before they become a crisis means you can protect your growth, your profits, your wealth. My belief is that Japan is going to print money. It's going to mean other central banks are going to print more money faster, especially the US. So it is a race. Your paper money is the loser. Your salaries, your savings are the loser. But hard assets like gold, like silver, like real estate, and like high-quality companies, I think they're going to make an absolute killing out of this. And then there'll also be the companies that are going to get some of that government spending money, right? Think defense stocks, for example. Look at Europe. What's pushed European stock exchanges up the last year or so? It's been just purely war. And that's incredibly unethical and immoral while poor sods are dying in the trenches. But would you rather be morally right but broke? Or would you rather do something that doesn't hurt anybody because it doesn't? Um, and be in a position to actually have more of an impact because you have more money and you have more time? That's a question you could ask yourself. But yeah, think about your real estate, your your gold and your silver real assets, those companies with Fortress balance sheets. Again, we've got a tool for that in the community. And just remember when governments print money, you lose us. Paper. Paper stuff, right? You can create more of anything and it becomes worth less. It's just very, very, very simple. So I hope this has been somewhat helpful for you, a bit unplanned and a bit all over the place. Perhaps apologies for that. Come and join me on Saturday. I'm gonna give you a very structured, very simple, rules-based framework of how Wall Street's been selling and selling automatically for maybe 20, 30, 40, 50 years. Uh, the same stuff that I learned from my mentors. I'm gonna give that to you as my uh gift and hope it'll make an impact and help you shift from feeling like you made a lot of money and then being disappointed that you lost it again. I think that's a that's a vicious cycle a lot of people get into. And it's not just the money you're losing, it's not just the time you're losing, the compounding you're missing out on, but it also is incredibly disheartening and therefore puts you off investing, which is the biggest problem of all, really. So join me on Saturday for some real education, FelixFencer.org slash training as a link down below. And you got some value out of this, just forward it to somebody else. That will be my only ask. Forward it to somebody else who might want to understand how this really works and what the heck just happened and why mainstream media isn't trying to scare you out of this yet. Because, well, look, they have advertisers and you know, they have they have commercial motivations. It's just one of the reasons I've never ever taken a single endorsement or advertisement or anything on this channel and never will, because I think it changes what you talk about and how you talk about those things. So I don't have to do that, thankfully, and therefore I never will. Thank you for watching and share this with people. All the best.