The Yen Crash And The Stakes

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The Japanese yen just crashed to its weakest level against the dollar in 40 years. Not 10 years, not 20, 40 years. And Japan's central bank just raised their interest rates to their highest level in 30 years. At the exact same time this is happening. Yet Japan's finance minister already spent 73 billion trying to stop this. But it didn't work. And now Japanese banks are cutting off cheap loans to foreign investors. The free money machine is literally shutting down, and there is somewhere between 1 to 20 trillion in borrowed Japanese money. Nobody quite knows. And that money is sitting inside your stocks right now. So when that money gets called home, it's not going to ask the permission like Master Hamish here. Nasdaq is already on track for its worst year in, actually for its worst July, apologies. In 22 years, worst July. Shocking, isn't it, Hamish? And what nobody is covering is this exact setup is also one of the biggest buying opportunities of the deck end. Yeah. Hamish just ran off to buy some stocks. So I'm going to give you a three-phase playbook, not just to survive this, but to understand it and then to potentially profit from it. My name is Felix Preen. I'm an ex-investor and banker. I've seen how the system really works on the inside. I'm also the founder of the GOAT Academy, where my retired Wall Street mentors teach regular investors' institutional strategies. We've done this over 25,000 people. And I accept no sponsors. I'm not here to sell you a fund. I'm just here to give you the financial education you deserve because I realized how incredibly unfair this world really is. Very, very few of us get taught this because we happen to get the right job. Everybody else is kind of out there trying to figure it out. So I'm going to show you today exactly what is happening in Japan, why it threatens your portfolio, and the specific moves that could turn

Three Developments Changing The Setup

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this into a wealth-building moment. But before we go any further, this video is going to be fairly information-dense, yes, health warning. To make sure it really lands for you, there is a full research report you can download. It's completely free at phelixfriends.org slash Japan. It covers even more than I can cover in this video. Hamish, of course, wrote it, he was called Hamish because he's ginger. And Hamish is a very Scottish name, and in my head, all Scots are ginger. Now that's offensive to the Scots, isn't it? It's probably not a very good idea, isn't it? They're pretty tough people. Anyway, a few months ago, I made a video warning you about Japan's debt crisis and what's known as the carry trade. I told you Japan's 30-year bond yield, interest rate, had hit the highest levels ever, literally ever. I told you the US had intervened to prop up the yen, and I told you this carry trade would unwind. And of course, most people ignored me, but here's where we are right now. What I warned you about is no longer a theory, it's actually happening, and it's gotten significantly worse since my last video. So let me give you the three developments that changed everything since that video. Every YouTube video has to say everything just changed. It's a legal requirement. So what's the item number one here? The yen is at a 40-year low, literally the weakest that's ever been against the US dollar since 1986, 40 years ago. So to put that into perspective, if you are Japanese and you own US stocks right now, what just happened? Well, if you are going to sell those US stocks and buy yen with them, you get the most amount of yen you could have ever gotten in the last 40 years. So it creates an enormous pressure to sell those US assets and bring the money home. Because now you're rich in Japan, right? So for the financial system, this isn't just a currency story. No, the yen's weakness is a symptom of the gap between US and Japanese rates. And that gap is now so wide that it's breaking things. Japan already attempted to close the gap by doing massive, massive currency interventions. So the Bank of Japan did something rather historic. They raised their interest rates to 1%, which literally just in June. And it's the highest rate Japan has seen since the 90s, more than 30 years. And I know you're thinking, 1%? What the heck's this guy talking about? Why is he mumbling on about stuff? Well, for most countries, that will be true. But Japan has basically been a zero interest economy for most of our adult lives. It was actually negative for many years. So banks were effectively being paid to borrow money. So when they went from zero to one percent in Japan, it's kind of the equivalent of the US going from a 0% interest rate to 10%. It changes the maths on absolutely everything that was built on cheap Japanese money. And a lot of things were built on Japanese money. Now, the third development you need to understand is that Japan has already burned through more than $70 billion to intervene just between April and May this year. And 70 billion is quite a lot. It's more than the GDP of, you know, I don't know, in Mexico or something, right? Is it? I don't know. The Mexicans are going to be angry now. But they literally spent that amount of money in a couple of weeks to prop up the yen. Yet the yen is still at a 40-year low. So did it work? No. It is not a money, it is not a problem you can fix

Carry Trade Explained In Plain English

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with money. And the reason for that is something called the carry trade. And nobody really understands the carry trade, but you will in about 30 seconds. It is the probably the most important thing out there that doesn't make mainstream media because it's a little bit, it's a little complicated. But let's break it down in a way that really makes sense for everybody here. Imagine you have a neighbor, and this neighbor has a piggy bank full of money, right? And he will lend you money from that piggy bank for like nothing. It's just a nice gap. Let's say he charges you 0.1% interest per year. It's basically free money. So you take the money, you walk across town, and you put it in the savings account. And that savings account pays you, say, 4.5%. So at the end of the year, you made 4.4% money, you pocket the difference, and this is pretty brilliant, isn't it? Because the money was never yours. You seem to have no risk and just making money. Now multiply this by a trillion dollars. That's the carry trade. Except instead of neighbors and piggy banks, it's hedge funds and institutional investors borrowing Japanese yen at basically zero, converting those yens into dollars, and investing in US stocks and making a lot more money. And for decades this worked very, very well. Japan kept their interest rates at zero, sometimes below zero, which meant you got paid to borrow money. Crazy, right? Now the US has always offered much higher returns in Japan. So those professional investors borrowed trillions of yen, converted them to dollars, invested everything. And it's been around for so long. Basically, the entire global financial system is actually built on this. And the estimates around this are that this is worth somewhere between $1 and $20 trillion. Nobody really knows because what's a few trillion between friends? And that money is sitting inside your 401k because it's propping up your tech stocks. It's propping up your retirement. It's keeping American borrowing costs artificially low. And that money is now being called home to good old Japan, land of the rising sun. And maybe you're sitting there going, this doesn't affect me. He's just talking loads of a dribble. Well, the Nasdaq has just had its first, its worst July in 2020 years. And no matter what portfolio you have, you will have felt that. And some of that is because cheap Japanese money is leaving US tech stocks. And it could get a lot worse because if it's really 20 trillion, it could get a heck of a lot worse. But this is the beautiful part. There is also an opportunity in this. There is a beautiful window here this summer where we can actually benefit from this, make better decisions, and potentially come out with much, much better outcomes. And it's for that very reason I'm going to teach you some. Not here, because it'll take me two hours, but if you have two hours on Saturn, and if you're someone who's sick of the pain, sick of portfolios going down and not really knowing why, and sick of missing out on the most beautiful opportunities out there again and again and again, because let's face it, that's what most people do, then go to 10xsummer.com and sign up for a live seminar with me, live, and I will teach you why the next four weeks, in my humble opinion, are the biggest opportunity of like kind of forever. And I will give you the rules, I will give you the structure, I will give you the actual stocks that I'm gonna be buying. Nothing held back. It's completely free. First time I've ever done this. And you can sign up for that at 10xsummer.com, but you've got to be there live because there'll be no replay. Uh because I know you're not gonna watch two hours of a training unless you're actually there live committed in the room with us. So let's go back to the carry drake here. And tell me in the comments if this is landing for you. Just write landing in the comments and also tell me if you're gonna come and law and write 10x summer in the comments down below, and I know he's gonna show up.

The Unwind Cycle That Accelerates

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When the Bank of Japan, the central bank, raises the interest rates like they just did, three things happen in sequence. First, the profit on these carry trade trades shrink. Because borrowing at 1% isn't as good as borrowing at 0%, right? So it starts to make sense for some of these guys to start closing their positions. Why? Because they have hedging costs to protect against the currencies changing. They also leverage their positions, which again is a cost, so the margin isn't quite as big as you think. And then when investors close those carry trade positions, what do they have to do? Well, they have to buy back yen and they have to sell US assets like US stocks and US debt. Now that means the dollar gets weakened. And then third, to buy those yen back, those US assets they're selling, well, they'll include tech stocks. They'll include US government bonds. Anything that was purchased was borrowed Japanese money. And therefore, the dollar weakens, US stock weakens, and therefore more investors will actually sell. And what are they going to sell? US assets, and those assets will fall in price, and more investors will therefore decide to unwind their trade so they sell more US assets. So this cycle accelerates. And we saw this in August 2024, if you remember. The carry trade partially unwound there just a few days, and Nasdaq dropped more than 10% in just three days. Now, the Bank of Japan blinked or was made to blink, and therefore the whole thing sort of you know got forgotten about. But it was a warning shop. And we're in the same boat again. And Japan apparently is no longer blinking. They've raised their rates. The finance minister has warned decisive action is coming on the yen. They've changed this desire to have a really, really cheap interest rate, a really cheap currency. But there is something out there that you might see on social media and on YouTube that is really going viral around this whole yen thing.

Debunking The Viral Legal Claim

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And people are sharing a claim about something that is called Article 589 of Japan's Civil Code. And they're saying it's a secret legal weapon, it's a nuclear option that'll force the carry trade loans to be recalled overnight. And I want to be very straight with you on this because that's the whole point of this community. I checked the Japanese law translation. And Article 589 of Japan's commercial code is about passenger transportation. It has nothing to do with banking, nothing to do with interest rates or the carry trade. So the viral narrative seems to be just noise, right? And I'm telling you this because making decisions based on wrong, unverified viral claims is how people lose a lot of money. And it shows you that a lot of people are getting really, really scared about Japan. That's when this sort of noise gets made up, right? When investors are genuinely frightened, they start sharing unverified claims. And the anxiety is real. Most people don't understand this, but you now do. So congratulations for watching this video this far. But underneath the anxiety, there is a real and a very significant story, which is this.

Japan Tightens Lending For Real

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Japan's banks are genuinely tightening lending to foreign borrowers. Um, not because of a civil code article, but because Japan's economic situation has changed. Japan has inflation. They have loan growth, they have a trade surplus. So they no longer need to export cheap money to the world. They want that money to stay at home and fund Japan's recovery. Japan's pension funds and insurance companies, which have been massive buyers of US debt, are finding Japanese government bonds attractive. So they're investing at home. They no longer need to chase American returns. So the free money tap is literally being turned off, not overnight, no, no. Not a single legal article nonsense on Twitter, but structurally and permanently. And when Japan stops being the world's piggy bank, the world has to find money from somewhere else. And somewhere else is definitely going to be more expensive. So

Who Gets Hurt First And Why

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who gets hurt? And then how do we benefit? Well, the assets that benefit the most from cheap Japanese money are the ones that lose when the money leaves. First is US tech stocks, Nasdaq, QQQ. They're the primary destination for carry trade money. Why? Because they offered the highest return. I mean, the carry trade money was flowing in, it pushed tech valuations to crazy levels. When the carry trade money flows out, well, those face, those valuations face reality. The Nasdaq's already on track for its worst July in 22 years. Remember that number, 22 years. It's not a bad month. It is the worst July of most people's investing lifetime. And target number two, the hedge fund. Hedge funds use cheap Japanese money, they leverage it like crazy, and they now are gonna have to refinance their investments at much higher cost or just sell. And they're gonna sell whatever is most liquid, which means US debt and US tech stocks. And then the third target are US companies that borrow in yen. Because some very large US corporations issued yen bonds or took loans directly from Japanese banks because it's so cheap, and they now face the same refinancing pressure, higher cost of debt, or maybe just spending. And as one analyst described it, this doesn't happen on day one. This happens first slowly and then all at once. If you remember August 2024, the carry trade started unwinding, but NASDAQ fell more than 10% in three days. So the pressure is not going to go away. But there is one more thing that you need to understand about why this is especially dangerous right

Why The 60 40 Portfolio Fails

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now. The classic 60-40 portfolio. You know, where you have 60% of your money in stocks and you have 40% of your money in bonds. It's meant to protect you against stuff like this, right? But you see, normally when stocks fall, bonds go up. But in a carry trade unwind, stocks go down, bonds go down at the same time. Because both were funded by the same cheap Japanese money. So there's no protection here. So your 60-40 portfolio when protecting it, you need a very, very different playbook. And if you're sitting there thinking, I don't know what to actually do with my portfolio right now. I need someone to walk me through this. Then you are like most people. You're not alone. So we're gonna do something about that. NASDAQ on track for its worst July in 22 years. And I think the next four weeks are gonna give us a big, beautiful, maybe the biggest opportunity. So join me live at 10xsummer.com. Link is down below in the description, and I will work with you through not just this situation, but any situation like this and how we can really just take advantage of this big, beautiful summer opportunity that's sitting right in front of us that most people can't see. Now, some viewers of these solar videos they enjoy the doom and the gloom and they go, it's all over, it's all manipulated, and they're gonna skip the next bit. But the next bit is the opportunity. Because here's what history tells us. Every major market dislocation, if I may use that word, has created wealth for people who understood what was happening. 2008, COVID.com, people who understood the mechanics came out ahead. Actually, 2008 is a good example because that's one thing I learned from um my banker chaps. Uh, they were like, you should buy certain bonds. And those bonds went on to almost triple in value over the next few years. Uh, and again, nobody understood that. It was never in the news, and it was a wonderful

Phase One Protect Cash And Deleverage

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opportunity. And and it helped to make me quite a bit of money at the time, which was glorious because I didn't have all that much. But let me show you the three-phase playbook here, the way I see it. Phase one is you protect your money.

unknown 18:06

Okay.

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It's about reducing your exposure to what got hits hit the hardest. I'm not saying sell everything. It's not what I'm saying at all. But if the carry trade unwinds, it hits positions with three characteristics: high valuations, US tech, and those funded by cheap debt. So the filter I use is simple. Ask yourself about each stock you own. Is this asset priced for a perfect future? Is it funded by cheap money? And if the answer is yes, well, that's your highest rate position. So we can reduce and cut back a little bit on the tech positions, buy some stuff that is in tech. So I'm not saying sell everything, right? I'm just saying look at how exposed you are to like that tech price to perfection. Don't panic, sell, do something calm and responsible. And obviously, I'm not a financial advisor, so go talk to yours. And then, second, is get rid of any leverage you have in margin. And that's honestly just my firmly held belief. Margin leverage in your portfolio is a horrible thing that will kneecap you in the worst moment possible. It can wipe you out. Get rid of it. It's not worth the upside. And then three, cash. Cash is a dirty word nowadays, but if you put it in a high-yield savings account, you get four or five percent while you wait for more clarity. That isn't actually a losing trade. It's just some optionality. It gives you an opportunity to buy something when the going gets tough. So phase one is not about timing some exact bottom. It's about reducing exposure to what is most risky and having some resources to execute phase three, which we're gonna get to next. Well, after phase two, right? I

Phase Two Gold And Defensive Sectors

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can just about count to three. Phase two is what holds value when everything is tricky? Gold. Again, I'm not telling you to buy gold, but I'm just gonna share with you my opinion here. So the picture is this the headline number might surprise you because gold went up to 5,000 something, and then it pulled back pretty harshly to where we are right now, but almost 30% down. Goldman Sachs just came out with a year-end price target for gold of 4,900. JP Morgan has a target of 4,500, which is a bit conservative, but still 10% above where we are right now. At Goldman's target, it's a 20% potential gain. Gold is also approximately 20% higher than it was a year ago. So the pullback isn't a sign that gold is broken. It's just the market that's taking a breath, and you know, the traders, the lobbies on Comex are making something. So why do I like gold here? Because gold benefits from exactly this carry trade unwind. A weaker dollar, volatility, uncertainty about US assets, and central bank demand. China's central bank added about 15 tons in June, largest single-month purchase in three years. So there is a fading trust in the dollar. Now, beyond gold, there are also defensive sectors. Healthcare utilities tend to hold up quite well in these. Not as exciting, but that's sort of the point. They give you something to hold on to while this potentially plays out. Now, phase

Phase Three Winners From A Weak Dollar

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three. Because if the carry trade really does unwind, it won't just create losers. No, it'll create very specific, identifiable winners. And the mechanism there is dollar weakness. The carry trade unwinding means investors sell the US dollar and they buy yen. So more yen buying, strength of the yen. A stronger yen means a weaker dollar. A weaker dollar is tailwind of the next 12 to 24 months for several categories. Winner number one, emerging market stocks. Yeah, they tend to outperform in these situations. And you can simply just buy some index funds listed in the US on those if you want to get that kind of exposure. And US multinationals. Companies that have a lot of international revenue from Europe, Asia, Latin America, and so on, and they convert those earnings back into dollars, and a weaker dollar makes those foreign profits worth more. Think Microsoft, think Netflix, and so on. So their business doesn't have to improve, just means the weaker dollar makes them more profitable in Wall Street's eye. And then the third went up, currency hedge Japan. And that's a bit in counterintuitive because Japan's at the center of this. So why would you invest Japanese stocks? Well, the Bank of Japan raising rates is actually good news for Japanese banks. Higher rates mean better margins for Japanese banks. And Japan's domestic economy is showing some genuine signs of strength. They have inflation again, loan growth, trade surpluses, and so on. So the Japan of now is investing in itself. But the currency hedge is the important part because a stronger yen is going to hurt Japan exporters, makes their products more expensive. But with a currency hedged Japan index fund, you can capture domestic Japanese recovery without taking on the currency risk. So you get the upside and you pay a little bit to eliminate the dollar risk there, right? A little bit more complex, but you know, interesting. And winner number four, commodities. Why? Because commodities are priced in dolls. When the dollar weakens, those commodities become cheaper for all the foreign buyers. And that increases demand, which tends to push up prices. I think oil, copper, agricultural commodities, they like a weaker dollar. And that's something that's held for many, many, many decades as a rule. And then let me give you one more. Nasdaq. This is a long-term opportunity. NASDAQ is on track, as I said, worst July in 22 years. I know you know that by now. So for a short-term trader, that doesn't feel good. For someone who's about to retire, that doesn't feel good. But for a long-term investor with a 10-year horizon, it's a very different conversation. In the long run, the Nasdaq is down 11% since it was set up in 1999. It wasn't particularly good timing, but yeah. And there have been five major bear markets.com collapse, 2008, and so on. And it's always recovered to new all-time highs. So the current sell-off is driven by carry trade mechanics rather than by a fundamental collapse of the tech companies. Then it's probably going to be temporary, isn't it? But to buy the dip, you need to have the cash and the time horizon, which is why I showed you phase one and two first. So what

Nasdaq As A Long Term Opportunity

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have we got? Let's capture this in one sentence. The yen is at a 40-year low. Bank of Japan is raising rates for the first time in 30 years. Japanese banks are tightening lending to foreign buggers. And we've got trillions in carry trade money slowly coming back home to Japan. And that puts pressure on US tech stocks. That's why we're having the worst July in the NASDAQ for 22 years. And it means the classic 60-40 portfolio will not protect you in the way you think. It means we're likely to get a weaker dollar. A weaker dollar means what? Gold, emerging markets, commodities, you as multinationals have a tailwind. So we've got our playbook. And the investors who build wealth in moments like these are not the ones who panic. They're the ones who understand the mechanics, their position before the crowd. And in my humble opinion, the next four weeks are the biggest opportunity. So join me live on the weekend at 10xsummer.com. And for two hours, I will teach you precisely what I'm doing about it, the playbook I got from more of my mentors. So come and show up for yourself at 10xsummer.com. And if you know someone who's worried about this or should be worried about this, share the link with them, 10xsummer.com or just the link to this video. And I look forward to seeing you on that live seminar.