Every Bond Market In The World Is Breaking — Transcript

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1. 0:00America's bond market is breaking. So is
2. 0:02Britain's, Japan's, Germany's, Frances,
3. 0:06and what used to be the safest
4. 0:07investment in the world, is suddenly
5. 0:09looking more dangerous. That's what
6. 0:11Winston just told me, who's an in-house
7. 0:13bond analyst. And the American 10-year
8. 0:16yield, which is an abstract number, I
9. 0:18get it. It just hit 5%. It's the highest
10. 0:21since 2007, which was right before what?
11. 0:24Yeah. The global financial crisis. It
12. 0:26was so terrible it got its own acronym,
13. 0:29GFC. Lots of people still talk about
14. 0:31that. And that 5% decides what you pay
15. 0:34for the roof over your head, your car
16. 0:36loan, your credit card, the interest on
17. 0:38$40 trillion of American debt. And it
18. 0:40doesn't take orders from anybody, not
19. 0:42even the Fed. And for 10 years, it did
20. 0:45something impossible. It made money
21. 0:48free. Mortgages were cheap, car loans
22. 0:51were cheap, everything was cheap to
23. 0:53finance. and a whole generation has
24. 0:55grown up thinking that was normal. It
25. 0:57wasn't and it's over. So today I want to
26. 1:00explain to you what markets are actually
27. 1:02breaking while you'll pay for it. Your
28. 1:04mortgage, your taxes, your savings, your
29. 1:06portfolio, and your retirement and what
30. 1:08you can do about it to prepare for it.
31. 1:10Not to react to it afterwards, but
32. 1:12prepare for it before it breaks, before
33. 1:14it's too late. And we'll start with
34. 1:16America because that's the one thing
35. 1:18hitting your bank account literally this
36. 1:20month. So 5% on 10-year government debt.
37. 1:25Why does that matter more than what the
38. 1:28Fed just did, more than the profits of
39. 1:30your companies, more than whatever Elon
40. 1:32just tweeted, even more than what
41. 1:34Winston digs up, you know, in the
42. 1:37garden, because it's the base price of
43. 1:40money. Every loan in the country sits on
44. 1:42top of it. Your mortgage, your car, your
45. 1:44credit card, the government's own
46. 1:45interest bill. Anytime a company wants
47. 1:48to build a new factory or a farmer wants
48. 1:50to buy a new piece of machinery, it's
49. 1:52all financed, right? So when that hidden
50. 1:54interest rate moves up, the whole
51. 1:56financial world in your financial life
52. 1:59moves with it. It's basically the the
53. 2:01thermostat in your wallet and it's
54. 2:03changing your finances whether you
55. 2:06understand this or not. So the average
56. 2:07American 30-year mortgage is now 6.7%. A
57. 2:11year ago was 6.3%. Now your house didn't
58. 2:14change, right? It's still the same roof,
59. 2:15the same neighbors, the same squeaky
60. 2:17floorboards and all that, but the price
61. 2:18to borrow the money has changed. And
62. 2:21what people get wrong is this. The Fed
63. 2:23didn't push it there. The bond market
64. 2:25did. What pushed it is much more boring
65. 2:29and much more dangerous. It's called the
66. 2:31roll over. And I know most people's eyes
67. 2:34glaze over when we talk about bonds. I
68. 2:36get that. But it's actually what's
69. 2:38running the world. The bond market is
70. 2:40bigger than the stock market. Hardly
71. 2:42anybody knows that. Now, the United
72. 2:44States owes $40 trillion, right? Took
73. 2:47five months to add the last trillion.
74. 2:48And you've heard that number, and again,
75. 2:50you're kind of immune to it by now. But
76. 2:51the part you haven't heard is this.
77. 2:53Eight trillion of it comes due in the
78. 2:55next 12 months. Debt borrowed when the
79. 2:58money was almost free. Every bit of it
80. 3:00has to get replaced. They haven't got
81. 3:02any money. So, they're going to borrow
82. 3:04to pay for the borrowing, which is like
83. 3:06right Ponzi scheme. So, they now have to
84. 3:08pay 5% for that. So, we don't need
85. 3:09anything dramatic to happen. We don't
86. 3:11need a panic. We just need these bonds
87. 3:14to reach their sort of birthday where
88. 3:17they have to get paid back. And I know
89. 3:18some people are optimists and they
90. 3:20think, well, the economy is going to
91. 3:21grow and it'll all be fine. No, that
92. 3:23actually doesn't work. You can stop
93. 3:24paying for the debt. Well, then the
94. 3:26world collapses and we'll all, you know,
95. 3:27go and live in a cave. Winston will be
96. 3:29quite happy about that. Or you can
97. 3:31choose the quiet option, which is what
98. 3:33they're doing. They're printing money.
99. 3:34They're letting the dollar slide. And
100. 3:36they're paying back the debt with
101. 3:38dollars that are worth less because they
102. 3:40just made more of them. And every
103. 3:41government history has picked this door.
104. 3:43We've done this in the 40s. We've done
105. 3:44this in the 70s. And it's happening
106. 3:46again. But you see, the bond market is
107. 3:49full of a bunch of pretty smart, very
108. 3:51dull people.
109. 3:53There used to be a bond trader sitting
110. 3:55two two seats next to me. Used to fall
111. 3:57asleep at this desk. That's how
112. 3:58interesting he was. Uh and these guys,
113. 4:01they can see this coming because I'm
114. 4:03telling you about it, right? The skilled
115. 4:05money, they know this is coming. They
116. 4:07know the money printing is coming. So
117. 4:08what are they doing? they're going to
118. 4:09charge more for those loans because they
119. 4:11know there's going to be more money and
120. 4:12it's going to be worth less. So, why not
121. 4:14charge more for loans? So, the interest
122. 4:16bill is going to grow and the economy
123. 4:18gets strangled very slowly. And again,
124. 4:21there's a country that's run this
125. 4:22experiment before. Government drowning
126. 4:24in debt, central bank holding the price
127. 4:26down and they stopped doing that this
128. 4:29year. I'm going to show you how that
129. 4:31same bill is now landing on every major
130. 4:34economy in the same month. and then I'll
131. 4:35show you where it lands on you and then
132. 4:38what you can actually do about it, what
133. 4:39I'm doing about it with, you know, what
134. 4:41I'm doing. But let me give you the fast
135. 4:43version first. And by the way, my name
136. 4:44is Felix Winston back there. I I'm an
137. 4:46economist. I used to be an investment
138. 4:48banker. And I want to show you what all
139. 4:50of this does to your money and what you
140. 4:52can do about it. And to see how this
141. 4:55pans out, we can look at Britain,
142. 4:58formerly Great Britain. Um, because they
143. 5:01ran this experiment live on television
144. 5:04and you could watch every second of it.
145. 5:06For my American viewers, before you
146. 5:08think this is somebody else's problem,
147. 5:09this bond market has the same lenders,
148. 5:11the same pension funds, the same
149. 5:13mechanics. Britain just got there first,
150. 5:15which is fairly rare. They had a brand
151. 5:17new prime minister. She was called Liz
152. 5:18Truss, and she announced a big tax cut,
153. 5:21and there was no plan to pay for the tax
154. 5:23cut. She just wanted to give money away.
155. 5:25The bond market looked at the tax cut
156. 5:27and said, "Uh, we don't like it." And
157. 5:30what happened next was one of the
158. 5:31fastest financial punishments ever.
159. 5:33Interest rate on British government debt
160. 5:36exploded. The British pound, which is
161. 5:38their currency, if you didn't know, my
162. 5:40American friends. It fell to its lowest
163. 5:42level against the dollar in history. I'm
164. 5:44just just making a joke. And then it
165. 5:46nearly took the pension system down with
166. 5:48it because British pension funds had
167. 5:50borrowed against their bonds. Prices
168. 5:52fall, they were forced to sell. The
169. 5:54selling pushed prices lower and they're
170. 5:56forced more sell. It was a doom loop and
171. 5:57it was running real time on a Wednesday
172. 6:00afternoon. So the Fed equivalent in the
173. 6:02UK called the Bank of England had to
174. 6:04walk in with an emergency rescue to stop
175. 6:07it. 7 weeks from the government
176. 6:09announcement with that big deficit, the
177. 6:11prime minister was gone, retired. So a
178. 6:13market of bond traders that nobody
179. 6:16elected looked at a government's numbers
180. 6:17and decided it couldn't trust them and
181. 6:20the government was gone in seven weeks.
182. 6:22That's what the bond market does to a
183. 6:25borrower it stops trusting. And what
184. 6:27people don't mention is that today
185. 6:29Britain's borrowing cost is higher than
186. 6:31during that crisis. Highest since 1998.
187. 6:35Now Britain had one bad budget.
188. 6:36America's $40 trillion and a fresh bill
189. 6:40every 12 months. Britain was the fast
190. 6:42version. It was 7 weeks. The slow
191. 6:44version took 30 years. And it's the
192. 6:45country whose central bank bought half
193. 6:48of its own debt to try to keep the Ponzi
194. 6:50scheme going. Well, here is how it
195. 6:52ended. It's Japan. I'm about to head off
196. 6:54to Japan. This isn't a detour because
197. 6:57what's happening in Tokyo again is going
198. 6:59to hit you. Your portfolio, your
199. 7:00mortgage, and everything else. For 30
200. 7:02years, Japan was the sensible one. They
201. 7:04barely charged interest. They kept the
202. 7:06world's cheap money flowing. Japan's
203. 7:08savers couldn't earn anything at home.
204. 7:09So, their money went where? To the US
205. 7:11stock market, into American debt, into
206. 7:13European debt, everybody's debt. Japan
207. 7:15became the largest lender in the world
208. 7:19to America. one of the foundations
209. 7:22holding everything up. How? Well, the
210. 7:23central bank bought half the
211. 7:26government's debt. It just printed money
212. 7:27and just became the lender. Government
213. 7:29said, "We need money." And they said,
214. 7:30"Yeah, I'll print some. Here, here we
215. 7:31go." But the Bank of Japan has cut its
216. 7:33bond buying in half. So, they're
217. 7:35stepping back. They've just raised
218. 7:37interest rates. Borrowing costs are
219. 7:39going up. It's at the highest level in
220. 7:4230 years. So, what does a Japanese
221. 7:43pension fund do when it can get finally
222. 7:46paid properly at home with no currency
223. 7:48risk? It goes home. In the first three
224. 7:51months of this year, Japanese investors
225. 7:53sold nearly $30 billion of American
226. 7:56government debt. The biggest sell-off in
227. 7:59years. And this month, undoubtedly, they
228. 8:01sold more. So, if a big lender walks
229. 8:03away, the borrower has to pay more to
230. 8:06tempt everyone else. A higher rate on
231. 8:08American debt feeds what? Into your
232. 8:10mortgage rate. And because the whole
233. 8:11world takes its queue from America, it
234. 8:13affects everybody. Higher interest rates
235. 8:15in Tokyo and 6,000 mi away, your
236. 8:17mortgage suddenly costs more. your car
237. 8:19loan costs more, the investment in your
238. 8:21new factory more, the AI data center
239. 8:23costs more, the farmer has to pay more
240. 8:24to pay for his, you know, combine
241. 8:26harvester. So, we have a fast country,
242. 8:28the Brits, the slow one, the Japanese,
243. 8:31but the ending is the same. Now, if we
244. 8:34zoom out for a second, the American
245. 8:36interest rate on its 30-year debt, it's
246. 8:39the highest since 2007. In Britain, it's
247. 8:41the highest since 1998. In Japan, it's
248. 8:44the highest since the bond was invented.
249. 8:46In Germany, it is the highest since
250. 8:482011. In France, it is the highest since
251. 8:512008. But we don't care and we keep
252. 8:53smoking. And in the Netherland, it's the
253. 8:55highest since 2011. Australia's tenure
254. 8:57is above 5%. All of this is happening in
255. 8:59the same few weeks. And the answer is
256. 9:02it's all to do with government debt.
257. 9:04Governments have borrowed too much.
258. 9:05Lenders got nervous. And that explains
259. 9:07America. It explains Britain. It
260. 9:09explains the Germans who are suddenly
261. 9:12rearming which is always what makes the
262. 9:14world feel really really fuzzy and warm
263. 9:15inside and inflation is back. We have an
264. 9:18oil shock. Interest rates are going up
265. 9:20and governments are trying to keep their
266. 9:22economies aloat. Governments rearming
267. 9:24like mad, right? That's what the whole
268. 9:25my humble opinion of the whole war thing
269. 9:27is about just selling drones and stuff.
270. 9:30So there's going to be more debt because
271. 9:32governments are spending more debt for
272. 9:33sale than ever and fewer buyers. So the
273. 9:36price of money goes up, the cost of
274. 9:38money, the interest rate all at once all
275. 9:40around the world. But you're probably
276. 9:41thinking, how does this affect me,
277. 9:42right? How does it affect your money?
278. 9:43Trillions of dollars and yields and
279. 9:45interest rates. It feels like, you know,
280. 9:47something on another planet, but it's
281. 9:49not. It hits you in five places. One is
282. 9:51the roof over your head. The bond yields
283. 9:53set your mortgage rates. And when the
284. 9:54bond market puts the rent up on the
285. 9:56government, your renewal is where you're
286. 9:58going to feel it. It also affects house
287. 10:00prices because maybe you've got a fixed
288. 10:02interest rate on your mortgage.
289. 10:03Brilliant. Well done. Well, some other
290. 10:05person who wants to buy a house, they
291. 10:07haven't got a fixed interest rate yet,
292. 10:08so they have to pay more. And that means
293. 10:10they effectively have less money to
294. 10:12spend on the house and therefore house
295. 10:14prices will not go up as much. So
296. 10:16therefore, maybe they even go down and
297. 10:17therefore you feel less wealthy. Two,
298. 10:20your taxes. The trillion dollar interest
299. 10:21bill comes from somewhere. So what are
300. 10:23they going to do? They're going to tax
301. 10:24you or rather they're going to do it
302. 10:26quietly. They're going to do it through
303. 10:29inflation. They're going to print more
304. 10:30money. Some countries like you know the
305. 10:32nasty people you Brits keep electing,
306. 10:34they just tax you to death basically
307. 10:36because they feel like they can get away
308. 10:38with it. And then number three, your
309. 10:40services get affected because interest
310. 10:42gets paid first and it eats the budget
311. 10:44from the top. So less comes back to you
312. 10:47from the government. And then four, your
313. 10:50savings. You kept the cash in the bank
314. 10:52like a sensible conservative person.
315. 10:54Well, inflation is basically picking
316. 10:55your pocket all the time. your salary is
317. 10:57now worth less because there now more
318. 10:59dollars around and you don't notice it
319. 11:00because you still have the same number
320. 11:02of dollars but what it buys goes down.
321. 11:04And then the last thing that you notice
322. 11:06is your job. When borrowing costs choke
323. 11:09businesses, the hiring stops, the
324. 11:11expansion stop, and the weakest
325. 11:12companies actually go under and it lands
326. 11:14hardest on the people who have nothing
327. 11:16to do with it. Right? And this isn't
328. 11:18some nasty plot. It's just governments
329. 11:20have borrowed too much money for too
330. 11:22long because it's how you stay popular.
331. 11:24And therefore, the government invented
332. 11:25something they call inflation, which is
333. 11:27not a natural law, by the way. It's the
334. 11:29direct result of printing money. It's a
335. 11:31hidden tax. And the only way not to pay
336. 11:33it is, well, do what the biggest buyers
337. 11:37on earth just did. So, let me show you
338. 11:39where they went and what you can do
339. 11:40about it. And again, I'm not a financial
340. 11:42adviser. I'm not registered as anything.
341. 11:44This is not advice. You have to come to
342. 11:46your own conclusions. But we can all
343. 11:48agree that cash isn't safe. Feels safe,
344. 11:50but it definitely isn't, right? So, yes,
345. 11:52you're going to want to have some
346. 11:53emergency fund so you can pay the bills,
347. 11:55but the rest don't want to have it in
348. 11:56cash. Second, don't buy long-term
349. 11:59government bonds because they're going
350. 12:01to really, really, really hurt. If you
351. 12:02buy short paper, a short bet, that's
352. 12:04actually fine because the price doesn't
353. 12:06doesn't change all that much. You want
354. 12:08to own stocks with pricing power. Again,
355. 12:09you might wonder what what that is.
356. 12:11Well, let me show you on screen here.
357. 12:12So, I look at highest rated stocks and
358. 12:15then you can add a bunch of things to
359. 12:16that and you can say particular industry
360. 12:18you want to look at or you know,
361. 12:19whatever. I have a record growth filter
362. 12:21on here as well, which isn't isn't
363. 12:22required. And then I can actually look
364. 12:24at like what are actually companies with
365. 12:27a great moat. By great moat, I mean a
366. 12:29moat that I score of 10. So some
367. 12:31companies have a great moat, some do
368. 12:33not. So Visa, for example, has a great
369. 12:36moat. And you can see all that data in
370. 12:37here, and you can you can pull this up
371. 12:39yourself. There's a free link down below
372. 12:40to it. It gives you a whole free month.
373. 12:41You don't like it, just cancel on day
374. 12:4229. But it actually gives you some good
375. 12:44data and if you want to dive a little
376. 12:45bit deeper into it, you can see what the
377. 12:47president's doing with it and the guys
378. 12:48in Congress and so on, you know, where
379. 12:50they're buying, where they're selling
380. 12:52and see what the insiders are doing,
381. 12:53everything else. And again, you can get
382. 12:55alerts for this as well, which is what I
383. 12:56what what I do for the stocks I'm
384. 12:58interested in. And then what that you
385. 12:59can do on top of that, you put your
386. 13:00names in here and then you'll actually
387. 13:02get to hear what actually impacts those
388. 13:05stocks every single day in like a
389. 13:07two-minute read, which is really the
390. 13:08point. Just about your stocks, nothing
391. 13:10else. the market in the minute. No
392. 13:12noise, no war, no fear, no panic, no
393. 13:16terrible stuff. Just what actually
394. 13:18impacts your investments and it's called
395. 13:21Winston daily and it's what I built
396. 13:23initially for myself and now I share it
397. 13:25with you if you are so interested. So
398. 13:27link down below, try it. It's a
399. 13:28risk-free trial. Second thing to own was
400. 13:31quality stocks, right? That can survive
401. 13:33higher prices. Now the central banks are
402. 13:35doing one more thing. Again, you can see
403. 13:36that in here we have a big metal
404. 13:37section. Gold. They're buying gold
405. 13:40right, left, and center. And again, we
406. 13:42give you all the data on what the
407. 13:43institutions are doing and so on every
408. 13:45week. But they bought more gold than
409. 13:48ever before. The speed at which they're
410. 13:50adding gold to their reserves is the
411. 13:51highest since, I think, 1997. And these
412. 13:54are the people who can print money, by
413. 13:55the way. It's kind of an interesting
414. 13:56dynamic, isn't it? But gold isn't the
415. 13:59thing that's going to make you rich by
416. 14:00next week. It's insurance. That's how I
417. 14:01see it. So, how do we put this all
418. 14:03together? Well, the world's safest
419. 14:05market is repricing in every major
420. 14:07economy in the same week. It's all one
421. 14:10story. The lenders stop being polite.
422. 14:13The buyers who never used to ask, you
423. 14:15know, whatever the price was, they
424. 14:16stopped showing up for these government
425. 14:18bonds and it's going to hit your
426. 14:19mortgage, your hidden taxes, your
427. 14:22savings. Central banks are buying gold.
428. 14:24But the important thing is that when you
429. 14:26realize the same thing is happening
430. 14:28everywhere at once, that is an important
431. 14:30signal. And we've seen this pattern
432. 14:33before. So, watch it. Share this with
433. 14:36somebody who's sitting in cash or bonds
434. 14:38or has a mortgage or has a golden
435. 14:40retriever. And I hope it's opened your
436. 14:43eyes to see what's really going on out
437. 14:45there. And my hope is it'll help you
438. 14:47make better decisions. And I'll keep
439. 14:49covering it. Get the Winston app down
440. 14:51below. We'll keep you up to date with
441. 14:52what's actually going on out there there
442. 14:54in the world. None of this is ever
443. 14:55sponsored or endorsed by anybody. And
444. 14:57that's why I can say what I actually
445. 14:58want to say, which is important to me.
446. 15:00And if you got some value out of this,
447. 15:03share it with somebody who might benefit
448. 15:04from it.