Tail Risks: Japan Carry Trade and Global Margin Vulnerabilities

Edward Dowd, Founding Partner of Phinance Technologies, a global macro alternative investment firm, and author of "Cause Unknown: The Epidemic of Sudden Deaths in 2021 & 2022,” joins Julia La Roche on episode 304. Ed Dowd argues we're already in a technical recession, with the stock market bubble driven by just seven stocks masking underlying economic weakness as housing rolls over, layoffs accelerate at Amazon and UPS, and credit markets tighten. He warns that insider selling is at unprecedented levels as institutions distribute to retail investors in classic "FOMO" behavior, while the equal-weighted S&P has gone nowhere since January. Dowd criticizes the Trump administration for gaslighting Americans about the economy instead of communicating the Biden hangover from illegal immigration and deficit spending, explains China is exporting deflation due to their real estate crisis and 20 years of excess housing inventory, and predicts a deflation scare with oil plummeting to $30 before the Fed intervenes with massive QE. He recommends raising cash and moving into treasuries like Warren Buffett, expects the dollar to rip as liquidity dries up globally, sees gold hitting $10,000 by 2030 as central banks accumulate it, and warns Bitcoin will go much lower as it's underperforming treasuries—an early warning indicator of the risk-off environment ahead.

This episode is brought to you by VanEck. 

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Links:

PhinanceTechnologies: https://phinancetechnologies.com/

US Economy Outlook 2025: https://phinancetechnologies.com/Product_USEconomyOutlook2025.htm?

Twitter/X: https://x.com/DowdEdward

Timestamps:

0:00 - Introduction and welcome

1:09 - Macro view

5:00 - Credit markets tightening, distribution phase of stock market, Trump administration gaslighting about economy

7:00 - China at a crossroads: real estate crisis going acute

7:55 - China exporting deflation, depreciating the yuan

9:00 - Tariffs are deflationary

10:00 - Risk-off environment is coming

11:00 - Dollar outlook

12:40 - Risk off environment: flight to safety into treasuries

14:20 - Three Hindenburg omens: market breadth disaster

15:00 - Gold discussion: long-term bullish, going to $10,000 by 2030

17:00 - AI bubble: momentum and administration fomenting it

22:20 - Retail FOMO buying: sign of unhealthy market

24:32 - Fed cutting but still behind the curve

27:00 - Credit markets sniffing out deflation scare

30:00 - 1970s stagflation period: inflation/deflation yo-yo

30:37 - Oil going to $30: China internal consumption plummeted

33:43 - Gaslighting about the economy: people feel the reality

35:30 - China facing crossroads and crisis starting in 2020

40:00 - Dollar liquidity issue: people scrambling for dollars

40:40 - Treasury Secretary Bessent can term out debt during recession

41:03 - Yellen front-loaded debt, significance of terming it out

42:30 - Immigration

48:40 - 100% probability we're in recession now

49:30 - How to be allocated: raise cash for flexibility

50:40 - Japan carry trade could blow up at any moment

52:00 - What makes Ed optimistic: asset prices will come down

54:07 - Where to find Ed's work and research