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If you are waiting for loan interest rates to go down. Radario disagreed because he said the flower... Loan interest rates will continue to rise and will not. Stop until the day when loans become scarce. What's worrying is that the first sign was that of the day. It has started to emerge, even though the stock is currently...
Still hitting new highs and everyone still believes in it. In the age of AI, Redario is the founder of BridgeWater Associates, one of the world's largest funds, and the author of the book "How Country Goes Broke." This conversation is from CNBC International. In early October 2026, the conversation began in Japan, which I recall...
When the Japanese economy was weak and facing a crisis... Deflation, or a condition where prices of goods decrease even though they are low. It depends on the individual; they still refuse to spend money, Japan chooses... To push money out of the country to boost its value. The cash flow weakened as that money was used for...
Buying U.S. government bonds, which means... It means lending money to the U.S. government and receiving nothing in return. The interest rate comes back from information provided by the Ministry. The U.S. Treasury is one of the holdings. US government bonds are the worst of all. For foreigners, the result is twofold.
Firstly, Japanese buyers are supporting the purchase of US bonds. Secondly, the Japanese yen weakens as a result. The Bank of Japan itself also needs to get involved. They also bought and held a large amount of Japanese government bonds, or JGBs, but... Now the pressure has reversed because of the availability of spare cash.
It was too weak, and many Japanese people lost money. From bonds held due to currency fluctuations. It has been weak for a long time, and the interest earned has been low for a long time. Therefore, there is now a strong desire to attract that sum of money. Upon returning home, he remarked that it was a difficult job.
Much because you can't fight against the current and... In summary, I view those in charge as... The Japanese did the best they could with this. I managed to do it, even in such a difficult situation. From Japan, the host discusses the Fed, or the central bank. The United States is facing the same crossroads as the banks.
The global neutrality is to keep interest rates on loans unchanged. Keep it high to maintain credibility in control. Inflation, or should we lower interest rates on loans? The answer to the question of how to keep the economy growing is... This is exactly as the textbook says when... At this point, the first thing we see is...
Real interest rates are rising, which means... This means the actual return received by the lender. After adjusting for inflation, for example, if the loan interest rate is 5% but inflation is 4%, the real return is only 1%. We're saying this is the current figure. It's moving higher, then the central bank will...
The controls are getting tight, and that's when the brakes are applied. Which means we already knew we had to go through it. This period, and the brakes being applied, means the economy is affected. They may not grow as well as before, but they still have energy. Another perspective is that companies investing in building AI systems require enormous sums of money to enter the market.
Raising funds in the capital market includes issuing bonds, which... It involves borrowing money directly from investors and then selling. A large number of shares have been issued, so the market isn't currently experiencing a surge. Only the US government wants to borrow money. Many more companies have already applied for loans.
They said the braking force would then pressure the fundraising process. This too, regarding the issue of credibility. Ray said the choice was very clear because if... If you don't hit the brakes, real interest rates will fall. And inflation will become a problem. Therefore, we are in a classical cycle.
The order of these is the real interest rate. Interest rates on short-term loans rise first, followed by higher rates. As expected, long-term loans tend to rise. You have to pay higher interest than for a short-term loan. Because lenders have to wait longer for repayment. When short-term interest rates rise.
When viewed in near-long-term fashion, this image is called a line. This is the rate of return, and this is where... The brakes started working properly, and their effects faded. Regarding other markets, especially the stock market, which is usually... Then the central bank raised interest rates on loans.
To cool down the economy but the market. The stock market now seems completely indifferent to everything. The host noted that the stock was still making upward movements. New highs, as if the stock market is rejecting the previous high. It's true that we'll have to live with high interest rates on loans for a long time, or what's called "Higher for Longer," which explains the mechanism when bond prices fall.
The interest received by bondholders will be high. It rose because the bonds paid interest. Fixed money, such as a 1,000 baht bond paying 50 baht in interest annually, if you buy it again for 900 baht and still receive the same 50 baht interest, your return will be higher. The opposite is true for stocks; when the stock price goes up, the price increases.
The expected future return will also decrease. Because you have to pay more to make a profit. These two things remain the same for companies, and they can be compared even though there are still some discrepancies. Of course, that's very much what happened. At the beginning of this cycle, stocks provide returns.
The expected value is significantly higher than bonds, by the channel. That empty space is what we call a cushion. What that means is, even if interest rates on loans go up... For some, stocks are still more worthwhile to hold than bonds. The stock market hasn't crashed yet, but when stock prices...
As bond prices rise and fall, this gap narrows. [Song] The support cushion gets thinner and thinner, and then... Now we're starting to see the credit spread wider. Where credit spread means the difference between... Private companies have to pay higher interest rates. The government, when seeking loans, often targets investors.
Concerned that the company will be unable to repay its debts. This gap will widen even further, so when the SP credit line starts to widen, it means people are starting to get scared. It means that the company will default on its debts more often. They're saying we're currently in a cycle. Interest rates on loans can still rise even when the stock market is fluctuating.
It has n't fallen yet because the company's profits are still growing sufficiently. And the expected return is still sufficient, but when... As the cushioning thins, it means we are... We are entering the final phase of the cycle. So why doesn't the interest on the loan stop accumulating? The light came on, which meant we hadn't even hit the brakes yet.
That's true because the credit spread is still narrow and still... It moved up only slightly, which means asset allocation. The belief is that it's just beginning, meaning it's a period. The amount of money that banks can lend is starting to become limited. There's enough for everyone, so the bank has to choose how much to give.
Who borrows from whom and who doesn't borrow from others, even if you agree to pay? No matter how high interest rates rise, you might not be able to get a loan. We're doing well, but we have n't reached that point yet. Therefore, we expect interest rates on loans to continue rising. This will continue until the loan allocation process begins.
It's actually happening. The host went on to point to AI, which is being compared to the Fourth Industrial Revolution, but the credit market is starting to show signs of it. Tensions are already rising, with the host citing Oracle, a giant US software and cloud company that LAR co-founded, as an example, which is now...
Oracle is investing massive amounts of money in building data centers for AI, and its CDS (Credit Default Swap) recently surged to a record high. CDS refers to the insurance fee paid by investors. To protect myself in case the company defaults. Paying off the debt is causing people to worry that the company will not have any.
The more you pay off your debt, the more this insurance will cost. It just got more expensive, and other companies started to... Seeing insurance premiums like this, it's jumped up sharply as well. The host then asked directly, "Is this a warning sign that..." Is the bubble about to burst? The answer is...
This cycle is the same every time. Great technologies emerge, but they require... Huge amounts of capital were invested, and everyone believed in it because... It can miraculously change people's lives. Just imagine the 1920s; that was a time... The first house had electricity, light bulbs, and a refrigerator.
It was the first time there was a car with a movie. Radio and, for the first time, an airplane was provided. Anyone who could sit there wanted to bet on it. These new technologies and when technology... New things emerge, but they require capital and a lot of it. However, nothing can be predicted with absolute accuracy.
Which is why they say that if you don't invest heavily... You will lose the technology war, so everyone. Therefore, we need to find funding, but it depends on everyone. I believe in technology and don't categorize it as such. Is it a good investment, or just good technology? People invested a lot of money, and even borrowed money to invest.
It increased even more because everything was predictable. Inaccuracy often leads to problems in the long run. Finance that is tied to new technology. Therefore, the mistake that Rew made throughout the interview was... The reason is that interest rates on loans still have the potential to rise because...
The brakes haven't actually been pressed yet, and there's some pressure around them. Several forces are changing the situation, including the Japanese yen. Wanting to return home, the AI company raised a large sum of money from the market and provided a safety net between stocks. With bonds getting thinner and thinner, that's where we're looking.
That the loan interest rate will go up until... Loan allocation began to actually happen and... Loans are becoming scarce, and that day hasn't arrived yet. But the first clause in the Sprad credit agreement, which was beginning to broaden, was already appearing, and the chapter... I studied back when our house just got electricity.
The problem is that people often can't distinguish between technology and other things. Good practices and good investments are two different things. This is the perspective of Reario, founder of Bridge Water Associates, if the loan had started on that day. It's rare to find one like this; do you think it's a business or a product? Which type of property will feel this braking force first?
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