Transcription
What is the current state of global assets? Will they go up or down, and at what time? When will oil prices go down, Ms. Sai? Lately, when I go live, I get asked this question very often. And people also ask, "Oh, are US stocks just a fake rally, or will they go up? When will they go down?" I want to tell you that we need to see the whole chessboard clearly. Then we won't have to ask anyone these questions anymore. In this clip, I will break it down for you: who are the players on this board? What does each player want? Then, when you see the news, you'll know if this player has gotten what they want, or if this player is losing what they want badly. Who influences which assets? In this clip, I will explain it clearly so you can see the big picture. Watch this clip, then follow the news from other sources. You will understand and be able to make your own decisions about your assets. Oh, and another thing many people like to ask is, "Ms. Sai, tell us, what's the deal with what Donald Trump said about negotiations?" I will tell you in this clip. If you think Donald Trump is crazy, let me tell you, he is not crazy. But what might be extremely crazy is money and profit. Support this clip about the state of global assets by visiting Money Monster on QR CE, or support Money Monster very easily. If you want the Monster team to continue, comment to chat with us, or save it to watch later. And what I want you to do most, if this clip is useful, is to share it with others. And please subscribe so we can see each other in the next clip. Thank you. I can tell you that what causes asset prices to fluctuate so violently, with sharp rallies and sharp drops, is not war, not even the collapse of a country or any specific place. It is the "what the heck" factor, the "what's going on?" that causes asset prices to fluctuate the most. Investors dislike unpredictability because they cannot plan. But what the world is experiencing now is that world leaders, like President Donald Trump, say we will negotiate peace for a moment, then say, "Oh, just kidding." Then say, "Hey, but we won't give up, we must negotiate." When asked about the other party, Iran, they say, "Negotiate with whom? No one is here to negotiate." So, what's going on? Once you receive this information, don't let your inner voice immediately say, "Oh, is Donald Trump doing crazy things again?" Let me tell you, as the President of the United States, when he speaks or acts, there is no "crazy." It has been thoroughly thought through and planned. What we think Donald Trump does that seems crazy, someone benefits greatly from it in terms of money. And when I say "benefits," I don't speak idly. Look at this: before the news came out that Donald Trump wanted to negotiate peace, there was a futures bet worth $1.5 billion. This futures contract was released before Donald Trump said he would negotiate peace. When the news came out, this futures contract's price surged. Whoever owned this contract made $60 million in just 20 minutes. This is what you call crazy. So, let's understand this correctly: the word "crazy" does not apply to Donald Trump's inconsistent or unpredictable words. "Crazy" is purely about profit. And if anyone asks, "Oh, will US assets, like stocks, go down further?" The answer is, it's possible. And if you ask why, is it because of war? It's possible it's because of war, but it's not just because of war. Because what has been falling so much, if the reason given is war, they have already accepted the news of war for a long time. Do governments worldwide have any hints or clues beforehand that there will be war? How could they not? Central banks have been stocking up on gold. Gold prices rose before this. This means gold prices rose before because they knew for a long time that war was likely to happen. Exactly when, they didn't know, but people knew it would be around this time. Because, honestly, I made a clip once saying that even Israel or the United States have been talking about having to deal with Iran for a very long time. But if you ask, okay, then what are the factors that will cause US stocks to fall, if not just war? We need to know this. There are five problems happening simultaneously in the world that could cause US stocks to fall. Problem number one is called Shadow Banking. It is estimated that the value of Shadow Banking is as high as $9.4 trillion. Before this, regarding private credit, UBS predicted that private credit had a 15% chance of default. That would cause the market to collapse. But private credit is only a part of Shadow Banking. Private credit is $2 trillion, and Shadow Banking is around $9.4 trillion. If you look at the figures for private credit, such as Blackstone, Apollo, or Golub, their revenues have plummeted, with losses of 30% and 50%. The problem is that these private credit companies lend money to pension funds, insurance companies, or any other financial products we buy. But they are failing because another part of it is that they lend to software companies, and the software and AI sectors are not doing very well right now. This causes companies that private credit has lent to to be unable to pay back both principal and interest, so their values have plummeted. Investors hear this news. When investors hear the news, no one is foolish enough to leave their money there. Everyone is shocked and wants to withdraw their capital. But the problem is that these lending companies have taken investors' money and lent it out, but they cannot collect the money they lent out. When investors come to ask for their money back, they have nothing to return. And if this is happening only in the private credit sector, it's bad. Imagine how much worse it would be for Shadow Banking. Problem number two is employment. Jerome Powell, the Chairman of the Federal Reserve, said that the United States is currently at a point of zero net job creation. The reason is that the economy is not doing well. In fact, with a poor economy, companies are likely to lay off employees. But companies put it in a better light, saying that they are laying off employees because of AI disruption. They are replacing people with AI and laying off thousands, tens of thousands of people. Or some companies choose not to hire anyone new. Generally, low employment rates, before the AI era, have a direct impact on the fundamental economy. Because when the economy is bad, people have no jobs, no jobs mean no money, and with no money, how can they spend? If people have no money to buy things, where will publicly traded companies get their revenue? And if companies have no revenue, their stocks must fall, right? This creates a vicious cycle, a downward spiral. And problem number three, which could cause US stocks to fall further, is the US national debt. Honestly, I read the news all the time, and I see the debt increasing very rapidly, even though it ends with "trillions of dollars." Just last week, it was $38 trillion. This week, oh my goodness, it's $39 trillion. And I think $40 trillion will come soon. This is because the US government has been spending more than its revenue for a long time. The US government budget is in deficit by 6%. You can see this from the chart. This chart clearly shows that revenue, the lighter colored part, comes from taxes and various other taxes. Trade revenue is not much, only about half of the remaining expenditure of the US government. This is a very long period, even before the US went to war. But today, with the US engaging in conflict with Iran and the Middle East, it means a significant increase in expenses. Now, investors would think, "Wow, America is spending so much, and the debt is already high. What about security?" This leads to problem number four, which is: what about security? This means credibility is decreasing. If the credibility of the United States decreases, then the debt of the United States, or US government bonds, will also have reduced credibility. When government bonds have reduced credibility, investors say, "Pay me more." This will cause the yield, or interest rate, of US government bonds to increase. And importantly, the US going to war has a significant impact. The war the US is engaging in with Iran involves a country that affects global supply chains. How could it not? Iran is located right at the Strait of Hormuz. And what Iran is doing now, everyone has seen: closing the Strait of Hormuz. 25% of the world's oil cannot be transported. Trade cannot happen. Right now, oil prices are sky-high, and we don't know how high they will go. Today, as I'm reading, in Thailand, oil prices have already increased three times. And when oil, the most fundamental energy source, increases in price, everything will become inflated. Because whether it's factories, homes, or anything else, they all need energy. And if energy is expensive, everything else will become expensive. Soon, we might see higher electricity bills, higher prices for goods, and importantly, higher food prices. Because Hormuz is a supply chain for exporting fertilizer for half the world. This means if fertilizer cannot be exported, how will rice be grown? Rice will become expensive. Even though Thailand is the "rice bowl," it is not the "fertilizer bowl." Look at this clip: it's about the food crisis from the closure of the Strait of Hormuz. This will make investors think, "Okay, America, if you want to borrow more from me, if you want to sell me government bonds, on a day when the world is on fire, as usual, if you pay more interest, the government bond curve will rise even higher." And problem number five is, as I said, the war between the United States and Iran is problem number five. Because if all the problems I've mentioned, big or small, remain separate, the Iran war will bring them all together, making things hotter and more volatile, and it could explode at any time. Whether it explodes or not depends on how long this war will last. And if you want to know how complicated this ongoing war will be, we need to know who the main players are on this board and what each player wants. Then we will know if they are getting or losing what they want. And if you want to know how complicated asset problems or wars will be, we need to know who the players are, those with enough power to be the main players on this board. Who are they? Who are their opponents? Who are their allies? Who is getting or not getting what they want? We need to know what they want and how they are trying to get it. The players with enough power on the board right now are four main players plus one hostage. Player number one, of course, is the United States. What does the United States want from this game? Why does it have to start a war in the Middle East? Why does it have to confront Iran? What the United States wants is not complicated. It wants financial and military power to remain in the United States, as it has been since 1945. What does it want? It wants every drop of oil in the world to be priced in US dollars. It wants all borrowing, trading, and commerce in the world to be based on the US dollar system as before. And it wants the profits from all trade, selling oil, selling goods, to be brought back to buy US government bonds as before. What we want is for you to love us as before. This is America. But what happened? Why is everything not the same? The United States just wants everyone to love it as before. But it cannot be the same because China is here. China has emerged. And of course, the second player with enough power to be a main player is China. And what China wants is the opposite of what the United States wants. To start with, China wants to overthrow the US dollar. The dollar is a problem for China because if the dollar is dominant, it becomes a financial weapon to control others in the world. For example, freezing money in the SWIFT system, as Russia experienced, or financial sanctions. If you cannot conduct transactions with American banks, you cannot trade with anyone. China says this is not acceptable; it makes it difficult to sell. And importantly, China is a merchant. So, what China wants most is for energy prices to be low, so its costs are low, and it can sell more goods and make more profit. Therefore, what China wants is to control energy prices to be as low as possible for its economy. And what China wants next is to set the prices of global commodities without wanting to fight anyone. It just wants to sell goods. Does it want to fight anyone? Sometimes I wonder if they are planning to invade Taiwan. And player number three is Russia. Russia is also focused on selling goods. Russia doesn't want much more than to sell the energy it has and find partners willing to buy Russian energy with money that America cannot freeze. So, Russia welcomes the Yuan wholeheartedly. President Putin is probably smiling now because, on the day the Strait of Hormuz is closed, and any country that cannot buy oil from the Middle East has Russia as the only one with supply ready. Come and buy. Even the United States is now planning to ease sanctions on Russian energy. This is a good opportunity. You can choose to buy Russian oil or gas with rubles or yuan. Player number four is, of course, Iran. What does Iran want? It wants to ensure that Iran is not attacked or invaded by anyone, whether Israel or the United States, ever again. And importantly, Iran wants compensation for the damages it has suffered. Where does Iran get the money to fight America? I've asked this question before and answered it. Iran may not need a lot of money to fight the United States. The United States needs to use expensive missiles from top US companies, right? But Iran uses much less capital for war. It only uses drones, which are not very expensive. Iran can even make them itself. Just closing the Strait of Hormuz is enough. It's not just the United States that is hurting; the whole world is. Iran's goal, as I said, is to ensure it is not attacked again. What Iran is doing is extending the closure of the Strait of Hormuz for as long as possible, long enough for America and any country in the world to beg for their lives, to achieve its goal of pressuring Iran to get everything it wants. This has led to a new indicator that can warn how critical the world is. I recommend everyone look at this graph: the graph of the volume of ships that can pass through the strait. We can see that the last line has dropped to zero. Whether it's true or not, I don't know, but the graph says zero. This means if this graph does not rise, the world will remain in crisis, and it will only get worse. And the last person, who has no power, is not a player, but a hostage tied up in the middle of this board: the people of the world. You, me, anyone who has to live and use government money, live in this country, rely on oil, still have to buy rice to eat, are all affected. Because what is happening, the prolonged war, the closure of Hormuz, everyone sees that oil prices have truly increased. The next station will be food prices. It will be increased electricity bills. And what is happening is that companies will not be able to generate revenue. Because if we don't have enough money to buy things, companies will have no revenue, stocks will fall, and companies will fall. And if the falling companies are those that provide funding to pension funds, insurance companies, and financial products that we hold, and we cannot withdraw them, then everything will fall. Everything tied up in the middle of this war board. Okay, after listening this far, I want to ask Ms. Sai, can you summarize it? When will oil prices go down? If I knew, that would be great. But I will tell you this: there are ways to observe. These ways depend on how this war ends. I will tell you that the war between the United States and Iran is just one boss level. The big picture game will not end, even if this war ends. This boss level can end in three ways. Type 1: This is the best-case scenario, a happy ending. They negotiate peace. Iran gets what it wants, all or some, I don't know. But finally, Iran says, "Okay, I'm happy. I agree to open the Strait of Hormuz." The Strait of Hormuz opens. This week, next week, or within three weeks after that, global energy prices, oil prices, will decrease. They will not fluctuate anymore. Inflation will not be such a big problem. If this situation occurs, the Federal Reserve will have room to lower interest rates if inflation is not so severe. If interest rates can be lowered, stocks will rise, Bitcoin will rise, and it will be a happy ending situation for everyone. But whether it will happen, I don't know. But as I said, even if it ends, it will only be the boss level between the United States and Iran. The big picture of economic and financial competition will not end. Because whether it's Iran, Russia, or China, they will not stop playing the dollar game. That is, petro-dollar, petro-yuan. America wants oil prices worldwide to be set in US dollars. But now, they can't help it. Iran says if you want to buy oil from me, buy it with yuan. Or Russia says, "I'm okay. You can buy with rubles or yuan." This is why a portion of the world's oil is bought with yuan. This is where the game will not end. The United States will have to find a way to obstruct and prevent this petro-yuan from happening. Otherwise, the United States and the US dollar will survive, but they will not be as strong as before. So, what happens if it ends in type 2? This will be worse, not just a little worse, but much worse. The dividing line is here: the Strait of Hormuz will be closed for more than weeks, for months. At this point, economists say everything will start to collapse. Not start, but collapse to a point where recovery is difficult. Because, as I said, if the Strait of Hormuz is closed, energy prices will continue to rise. The oil prices we use will become more and more expensive. And if oil becomes more and more expensive, for an unknown duration and at an unknown price, everything will collapse. And when it starts to collapse, there will be symptoms of inability to pay debts, bankruptcies, people not having enough money to live. Even if it's just called financial collapse, if it truly collapses, recovery will not be easy or fast. And it will start with individuals. Those without emergency reserves will collapse first. But those who have them may collapse later. Then at the company level, small companies with little capital will collapse first, followed by medium and large companies. Even governments, government bonds, may collapse. Because many countries' bond yields have already increased. Like America, right? Yields are high. Japan's yields are high. England's yields are high. And when yields are high, it means the cost of borrowing for companies increases. Companies will have to borrow more money, pay more interest, which reduces company revenue and profit. And importantly, this government bond market, not just America, but other countries too, will have to sell bonds when prices are falling to buy food and energy in their countries. This is scary. And it will be most scary for countries with high debt. So, let's say, for example, England and Japan. See, bond yields are rising. And if England and Japan have to sell assets to get money to live on, they might sell US government bonds. England and Japan combined are major creditors of the United States. And if the sequence continues, and US government bonds are sold in large quantities out of necessity, it will further increase the yield of US government bonds, and the cost of borrowing will increase even more. So, it will collapse, deeply collapse, disastrously collapse. Let's end with the last scenario, called "disease outbreak." The war drags on indefinitely. Hormuz is closed, and it stays closed. This is very scary. Because if it stays closed for just a month or two, it will be dire. We might have to start using national energy or food reserves. If it reaches that point, the government bond market will collapse because the yields or the curve I explained earlier will rise step by step, so high that even governments themselves cannot borrow money at such high interest rates. But don't worry, everything has a solution. It's just a matter of whether the solution will lead to survival or a worse collapse. Because if it reaches the point where the United States itself cannot borrow from others at such high interest rates, there is still a solution. Because at that point, there is a possibility of a "big print" occurring, a massive money printing. This is the power of the Federal Reserve, the central bank of the United States, to decide. We will see M2 skyrocket. They will print money. Why print money? Because if they cannot borrow from others due to high interest rates, they will print money to buy their own debt. There is a term for this: "curve control," like what Japan has been doing until the yen is about to collapse. And if the United States wants to do a "big print," a massive money printing, to buy its own debt, what will happen is that the value of the US dollar will decrease because the amount of money increases. The value will decrease. And if the value of the US dollar decreases, prices of goods will increase. And because the value of currencies worldwide is tied to the US dollar, it will export inflation globally. Everyone will welcome hyperinflation. And importantly, if this happens, it will be something new. It will be a "big print" that has never been done before in history. I'm not saying the US has never done a big print. They have done it many times, like during COVID, they did a big print. But they have never done a big print when global oil prices were rising. Because normally, in the past, the Fed would do a big print when oil prices were falling to help raise asset prices. But a big print when oil, food, and rent prices are rising simultaneously, this has never happened in history. I guarantee that if it happens, Gen Z will be witnesses. So, if that point is reached, energy prices rise, money inflates, food is expensive, assets will all fall because everything is expensive, people have no money to spend, companies have no revenue, companies will not hire, and if companies reduce staff, people will have even less money. The economy will collapse from the roots. The stock market, needless to say, if companies cannot make money to that extent, stocks will be red all over. That would be the worst outcome, and I pray it doesn't happen. If that's the case, the final question is: are there any signs or hopes that if this happens, what will get better? Will the US suddenly surge, or will oil prices finally go down? The answer is yes. That thing is: when there is confirmation that this boss level war is definitely over, everything will recover, provided it hasn't collapsed to the point of no return.