Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - The U.S. Economy Just Flipped (Howard Marks Explains) + Stock Market News 30 October 2025

Transcript

Felix Prehn - The U.S. Economy Just Flipped (Howard Marks Explains) + Stock Market News 30 October 2025 · Felix Nikolas Prehn's Podcast

• 0:00
  SPEAKER_00: The billionaire who predicted the 2008 crash and built a$2.2 billion fortune just issued a warning that could change everything about how you invest from here on.
• 0:12
  SPEAKER_00: Right now we're witnessing what he calls the Great Sea change, a turning point in the US economy that most investors are completely unprepared for.
• 0:21
  SPEAKER_00: And here is the slightly scary part, and this is not a doom and gloom video, I'm going to give you solutions, not scary parts here, but if you don't understand what's happening, your portfolio could be positioned for the last decade, not the next decade.
• 0:34
  SPEAKER_00: We're talking about a shift that could destroy over-leveraged companies, crush certain sectors, but also create the biggest opportunity we have seen in over 15 years.
• 0:45
  SPEAKER_00: Today, Hamish and I are going to break down exactly what this billionaire called Howard Marx sees happening by the next few years will look nothing like the last 15, and most importantly, whether smart money is positioning right now for both protection and potential profits.
• 1:03
  SPEAKER_00: Hamish is very excited about this.
• 1:05
  SPEAKER_00: My name is Felix Prien.
• 1:06
  SPEAKER_00: I'm an ex-investment banker who's seen how investment banks really work.
• 1:10
  SPEAKER_00: And I've watched institutional money managers panic.
• 1:13
  SPEAKER_00: I've seen how the big players position ahead of market shifts.
• 1:16
  SPEAKER_00: I'm also the founder of the GOAT Academy, where we have over 20,000 students.
• 1:20
  SPEAKER_00: I'm the co-founder of Trade Vision, and every single day I help retail investors like you understand what's really happening in the market.
• 1:28
  SPEAKER_00: My retirement mission is simple to cut through the Wall Street BS for everybody and give you the same information the big players use to make decisions.
• 1:35
  SPEAKER_00: So no jargon, no gatekeeping, just actionable intelligence.
• 1:39
  SPEAKER_00: Well, Hamish's intelligence.
• 1:44
  SPEAKER_00: We called him Hamish because he's obviously Scottish, right?
• 1:49
  SPEAKER_00: Now, the Scots are outraged.
• 1:52
  SPEAKER_00: Howard Marks isn't some talking head on CNBC.
• 1:56
  SPEAKER_00: Warren Buffett reads his memos.
• 1:58
  SPEAKER_00: Ray Dalio quotes him.
• 2:00
  SPEAKER_00: When he says something major is changing, you need to pay attention.
• 2:04
  SPEAKER_00: So let's dive deep into what he's seeing, what that means for your money and how to position yourself right now.
• 2:10
  SPEAKER_00: For the past 15 years, from 2009 to right now, we've lived in the most abnormal economic environment in modern history.
• 2:20
  SPEAKER_00: Interest rates were basically zero.
• 2:25
  SPEAKER_00: The Federal Reserve's fund rate sat between zero and two percent the entire time period for over a decade.
• 2:32
  SPEAKER_00: And here's what Howard Marx wants you to understand.
• 2:35
  SPEAKER_00: That wasn't normal.
• 2:36
  SPEAKER_00: That was an emergency measure that went on for 15 years.
• 2:41
  SPEAKER_00: During those 15 years of ultra-low rates, borrowing was essentially free.
• 2:46
  SPEAKER_00: Companies loaded up on cheap debt, real estate investors leveraged to the max, and the government spent like there was no tomorrow.
• 2:54
  SPEAKER_00: So asset prices inflated because money was cheap and had had to go somewhere for a return.
• 3:01
  SPEAKER_00: So we've all just had the longest bull market in history, the longest economic recovery in history, and extremely low bankruptcy rates.
• 3:09
  SPEAKER_00: But now, now we're back to normal rates.
• 3:13
  SPEAKER_00: And everyone who got comfortable with easy money is feeling the squeeze.
• 3:17
  SPEAKER_00: That is the seed change.
• 3:19
  SPEAKER_00: The easy money era is over, and the next decade will require completely different strategies.
• 3:25
  SPEAKER_00: Now, if you want Wall Street strategy, literally the exact strategies Wall Street uses to find winning stocks in any market environment, including the one that's common, check out my free training.
• 3:35
  SPEAKER_00: It's only 15 minutes long and teaches you the three core rules that Wall Street keeps using.
• 3:40
  SPEAKER_00: FelixFrenz.org slash get free, and the links in the description, and you can watch that right now or after this video.
• 3:46
  SPEAKER_00: It's honestly probably a better use of your time than watching this, because you need to have the skills so you can act on the information.
• 3:52
  SPEAKER_00: Information in itself will only ever get you so far.
• 3:55
  SPEAKER_00: Now, here is where this gets really serious.
• 3:58
  SPEAKER_00: These numbers here.
• 4:00
  SPEAKER_00: As I'm recording this, US national debt is$38 trillion.
• 4:04
  SPEAKER_00: Not a typo,$38 trillion.
• 4:06
  SPEAKER_00: Put that into perspective, that's more than the combined economies of China, India, Germany, Japan, and the United Kingdom.
• 4:15
  SPEAKER_00: Bonkers, hey?
• 4:16
  SPEAKER_00: $111,000 for every single person in America.
• 4:20
  SPEAKER_00: Now, when people tell you that US companies are really leveraged up and they've got too much debt and they can't pay for it, that's nonsense.
• 4:27
  SPEAKER_00: They got so much government stimulus and during COVID, they actually haven't really got a leverage problem.
• 4:35
  SPEAKER_00: The leverage problem is in the government.
• 4:37
  SPEAKER_00: The government took on incredible leverage to save the economy.
• 4:41
  SPEAKER_00: But there's also hidden leverage in companies that got addicted to cheap money.
• 4:45
  SPEAKER_00: So think about businesses that thrive in a zero interest rate environment, like zombie companies that were barely profitable, but could refinance cheap debt forever.
• 4:54
  SPEAKER_00: And you've got high-growth tech companies that just burn cash but could raise capital very easily.
• 5:00
  SPEAKER_00: Commercial real estate made sense at like 1, 2, 3% interest rates, but maybe not at 3 or 4 or 5.
• 5:08
  SPEAKER_00: Private equity deals were structured around cheap leverage.
• 5:11
  SPEAKER_00: So these companies and sectors are now getting squeezed.
• 5:15
  SPEAKER_00: And when their debt comes due, they have a lot to finance at much, much higher rates, and many won't survive.
• 5:23
  SPEAKER_00: We're already seeing bankruptcy filings accelerate.
• 5:26
  SPEAKER_00: So as retail investors, you need to look at any company you own and ask, how much debt do they own?
• 5:34
  SPEAKER_00: And when does it mature?
• 5:37
  SPEAKER_00: Can they service it at higher rates?
• 5:40
  SPEAKER_00: But there is the flip side, and this is where Wall Street's getting excited.
• 5:44
  SPEAKER_00: When companies struggle, distress debt investors like Mark Howard's Oak Tree Capital, well, guess what?
• 5:51
  SPEAKER_00: They make a fortune.
• 5:52
  SPEAKER_00: So there'll be opportunities to buy good companies at distressed prices or to invest in the debt of struggling companies at high yield.
• 5:59
  SPEAKER_00: So bonds are back, baby.
• 6:01
  SPEAKER_00: Here is what Howard Marx wants every investor to understand fixed income, which is bonds, is back.
• 6:07
  SPEAKER_00: For 15 years, bonds were basically pointless.
• 6:10
  SPEAKER_00: You'd get 1 to 2%, not enough to beat inflation, and obviously not worth the risk.
• 6:16
  SPEAKER_00: But today, with rates between 4-5%, suddenly bonds and various credit instruments are attractive again.
• 6:22
  SPEAKER_00: So Howard says, and I quote, if interest rates are higher, the people who invest in credit instruments are buying in at higher yields and invariably will have a higher return than they have in the recent past.
• 6:33
  SPEAKER_00: So what does this mean for you practically?
• 6:35
  SPEAKER_00: Let's break it down for retail investors because we normally shudder at the word bond or fixed income.
• 6:43
  SPEAKER_00: You can right now get 5-6% yields on quality corporate bonds.
• 6:51
  SPEAKER_00: 5-6%.
• 6:53
  SPEAKER_00: That's without the volatility of stocks.
• 6:55
  SPEAKER_00: So retirees and conservative investors, that's kind of huge.
• 6:59
  SPEAKER_00: Now, if you're willing to take more risk, you have high yield bonds, so corporate bonds with a junk rating, they will pay you 8 to 10% yield.
• 7:08
  SPEAKER_00: But there's a default risk.
• 7:10
  SPEAKER_00: And then you have the government, so even the safest of safest, the US Treasury bonds, are paying you 4% to 5% guaranteed, to the extent anything is ever guaranteed.
• 7:21
  SPEAKER_00: And here is something critical to understand.
• 7:23
  SPEAKER_00: When bond yields are attractive, money flows out of stocks and into bonds.
• 7:29
  SPEAKER_00: So why take the risk of the stock market madness when you can get 5-6% guaranteed?
• 7:33
  SPEAKER_00: That's what a lot of people are thinking.
• 7:35
  SPEAKER_00: Creates a headwind for stock valuations, especially for companies that don't generate solid cash flow.
• 7:40
  SPEAKER_00: So the stocks that'll struggle are companies that'll have, well, that just don't do as well in this environment.
• 7:48
  SPEAKER_00: Companies that need to keep raising capital, companies with weak balance sheets in maturing debt, and businesses whose valuations were based on ultra-low interest rates.
• 7:58
  SPEAKER_00: Now, who, what kind of stocks benefit from this?
• 8:01
  SPEAKER_00: Well, companies with strong cash flow.
• 8:04
  SPEAKER_00: So basically good quality businesses.
• 8:07
  SPEAKER_00: And what I'm investing in of late is mostly high-quality businesses.
• 8:11
  SPEAKER_00: I'm staying a little bit more away from the high growth risky stuff.
• 8:15
  SPEAKER_00: We're putting more money into solid businesses, little debt, debt locked in at low rates, the kind of value stocks that were ignored during the growth stock mania, financial companies that benefit from these rates, insurance companies, and so on.
• 8:28
  SPEAKER_00: But we need to also understand this.
• 8:31
  SPEAKER_00: Inflation is not fully under control yet.
• 8:35
  SPEAKER_00: The Fed's rate is 2%.
• 8:37
  SPEAKER_00: So I'm recording this word about 3%.
• 8:40
  SPEAKER_00: Doesn't sound like a huge difference, but it matters.
• 8:43
  SPEAKER_00: Well, actually, it's a 50% higher than we want it to be.
• 8:46
  SPEAKER_00: And remember, inflation data of the government is cooked as well, so it's probably much higher than that.
• 8:52
  SPEAKER_00: So until inflation gets back to 2%, the Fed is not going to be that aggressive with the rate cuts.
• 8:58
  SPEAKER_00: And that means this era of easy money isn't coming back anytime soon.
• 9:03
  SPEAKER_00: And you need to let that sink in.
• 9:05
  SPEAKER_00: Life's just going to be different compared to what it was in the last 15 years.
• 9:09
  SPEAKER_00: And if you think it's just going to magically disappear, well, the very fact that the US government is running that close to$2 trillion deficit adds fuel to the fire of the economy and likely keeps inflation higher.
• 9:22
  SPEAKER_00: So what's the bottom line here?
• 9:23
  SPEAKER_00: How do we position ourselves for this?
• 9:25
  SPEAKER_00: Of course, this isn't financial advice.
• 9:27
  SPEAKER_00: I'm not telling you what to do.
• 9:28
  SPEAKER_00: My goal is to give you some educational grounding here so you can make better decisions.
• 9:32
  SPEAKER_00: You want to learn how to pick better stocks?
• 9:36
  SPEAKER_00: Watch the free masterclass at feedixfrends.org slash get free.
• 9:39
  SPEAKER_00: But let's put this all together.
• 9:41
  SPEAKER_00: The old playbook is what?
• 9:44
  SPEAKER_00: Buy and hold growth stocks, right?
• 9:47
  SPEAKER_00: Borrow money and you'll do wonderfully.
• 9:50
  SPEAKER_00: Bonds were pointless, the Fed will always bail us out, and meme stocks and unprofitable growth stock investors get rewarded.
• 9:58
  SPEAKER_00: The new playbook, you want to be a lot more selective.
• 10:02
  SPEAKER_00: You want to focus on quality, on profitable companies, you want to focus on free cash flow, you want to focus on good balance sheets.
• 10:11
  SPEAKER_00: Be super, super careful with leverage, both personally and in companies you invest in.
• 10:18
  SPEAKER_00: Bonds are suddenly back, baby.
• 10:20
  SPEAKER_00: They're fun again.
• 10:22
  SPEAKER_00: And well, you're gonna need some risk management because the Fed won't be able to bail you out forever.
• 10:29
  SPEAKER_00: And that's just because they're becoming less and less relevant.
• 10:33
  SPEAKER_00: The government is becoming more and more relevant.
• 10:36
  SPEAKER_00: So valuations matter again.
• 10:38
  SPEAKER_00: So what's your action plan?
• 10:40
  SPEAKER_00: This is important.
• 10:41
  SPEAKER_00: Write this down, take a screenshot, whatever.
• 10:43
  SPEAKER_00: How much debt does the company you own have?
• 10:48
  SPEAKER_00: Do this for every single stock.
• 10:51
  SPEAKER_00: When does that debt mature?
• 10:52
  SPEAKER_00: When they have to then do they have to pay it back.
• 10:55
  SPEAKER_00: Is the company profitable enough so that they can actually service it with free cash flow?
• 11:01
  SPEAKER_00: I actually have a tool in our free community.
• 11:03
  SPEAKER_00: It's called Better Stocks GPT.
• 11:05
  SPEAKER_00: They will literally give you the answer to that.
• 11:07
  SPEAKER_00: They will literally tell you that it's called interest cover ratio.
• 11:10
  SPEAKER_00: We'll tell you that for every single stock out there.
• 11:12
  SPEAKER_00: So you can just use that free tool and get the answer.
• 11:15
  SPEAKER_00: If you want to get access to that, go to FelixFences.org slash resource.
• 11:19
  SPEAKER_00: I'll also put the full research doc for this video in there so you can be better informed.
• 11:25
  SPEAKER_00: So you've got to ask yourself, would I buy this stock today at today's interest rates, or did I buy it in the easy money era?
• 11:33
  SPEAKER_00: And then the second part you might want to look at, and these are guidance, it's not recommendations, not telling you what to do.
• 11:41
  SPEAKER_00: But if you are in like 80, 90%, 100% stocks because bond yielded bonds yielded nothing, you might want to reconsider that.
• 11:50
  SPEAKER_00: I'm not suggesting going back to the old 60-40 portfolio because I think stocks will outperform.
• 11:56
  SPEAKER_00: But depending on where you are in your life stages and the risk you're willing to take, having some bonds in your portfolio suddenly starts to look like not such a bad idea.
• 12:07
  SPEAKER_00: Then you're going to want to focus on quality.
• 12:10
  SPEAKER_00: Avoid this speculation, focus on profitable businesses with strong balance sheets.
• 12:15
  SPEAKER_00: But above all, you need to protect yourself from inflation.
• 12:19
  SPEAKER_00: Because inflation is above target.
• 12:21
  SPEAKER_00: It's eroding your purchasing power, it's eroding the value of your dollar.
• 12:26
  SPEAKER_00: So there are a couple of things you can do.
• 12:28
  SPEAKER_00: You can buy I bonds, you can buy tips, you can buy quality stocks.
• 12:36
  SPEAKER_00: You can also get some exposure to commodities, think gold or silver.
• 12:40
  SPEAKER_00: Now they have run up quite a lot already.
• 12:42
  SPEAKER_00: I'm still fairly bullish on them, but it might be a bit of a wobbly experience.
• 12:46
  SPEAKER_00: I think the easiest thing to do is companies with pricing power.
• 12:50
  SPEAKER_00: So what's a company with a pricing power?
• 12:52
  SPEAKER_00: It's a company with a good mode.
• 12:53
  SPEAKER_00: It's a company whose services or products can't be replaced easily.
• 12:57
  SPEAKER_00: So whoever made these glasses, someone else can make these glasses, right?
• 13:01
  SPEAKER_00: They've got zero pricing power.
• 13:04
  SPEAKER_00: Someone puts out the same product, cheaper, I'll just buy the cheaper one.
• 13:07
  SPEAKER_00: But there are many products, there is a stickiness to it.
• 13:11
  SPEAKER_00: So say you take a phone, this is a Samsung phone, right?
• 13:14
  SPEAKER_00: Once you're the Samsung phone user, it's a little bit harder for you to switch because you're used to the way that works.
• 13:20
  SPEAKER_00: So you likely want to do that.
• 13:22
  SPEAKER_00: Once you have a thing for ginger cats, you know, you're always gonna want some ginger cats.
• 13:27
  SPEAKER_00: I'm just kidding.
• 13:28
  SPEAKER_00: You just came out that color.
• 13:29
  SPEAKER_00: We've got a couple of these guys.
• 13:31
  SPEAKER_00: So with uncertainty this high, having some dry powder matters.
• 13:36
  SPEAKER_00: I would not have it in cash, by the way.
• 13:39
  SPEAKER_00: I would have it in some sort of high-yield money market fund because you're still gonna want to get some interest on that because inflation's gonna kill it.
• 13:46
  SPEAKER_00: But it gives you some optionality.
• 13:48
  SPEAKER_00: That's also your emergency fund, which is incredibly important when the markets get more uncertain so that you don't panic and bottle out.
• 13:58
  SPEAKER_00: But don't assume the Fed will bail us out if things get bad.
• 14:02
  SPEAKER_00: They have more limited tools now.
• 14:05
  SPEAKER_00: Don't ignore debt levels of companies you invest in and don't just chase yield into extremely risky junk bonds without understanding the credit risk, right?
• 14:14
  SPEAKER_00: So just don't think that rates are going back to zero.
• 14:18
  SPEAKER_00: That era is behind us.
• 14:20
  SPEAKER_00: Now, according to Mr.
• 14:22
  SPEAKER_00: Marx, he points out something that should concern every American.
• 14:26
  SPEAKER_00: Your government has a spending problem that hasn't been addressed.
• 14:29
  SPEAKER_00: Your government is running a almost$2 trillion deficit in cut economic times.
• 14:36
  SPEAKER_00: The debt to GDP ratio is over 100%, a level historically only seen in banana republics.
• 14:42
  SPEAKER_00: So there are really only a few ways that this can play out.
• 14:45
  SPEAKER_00: First, fiscal responsibility, extremely unlikely, the government say gets serious about the deficit and starts running surpluses.
• 14:53
  SPEAKER_00: That would require massive spending cuts or tax increases.
• 14:56
  SPEAKER_00: It's not gonna happen because politicians live on popularity, and so therefore this is just something you can basically forget about.
• 15:03
  SPEAKER_00: Scenario two, you grow your way out of it, which is the present Trump plan.
• 15:08
  SPEAKER_00: This is not a criticism of one politician or another as this cat is playing with my pen.
• 15:14
  SPEAKER_00: Naughty cat.
• 15:15
  SPEAKER_00: It basically says the economy is gonna grow faster than the debt.
• 15:18
  SPEAKER_00: Tax revenues will then increase naturally.
• 15:20
  SPEAKER_00: Well, it would require sustained growth of at the very least three to four percent of GDP for like a decade.
• 15:29
  SPEAKER_00: Possible, but challenging.
• 15:31
  SPEAKER_00: Why?
• 15:32
  SPEAKER_00: Because you have an aging, shrinking population.
• 15:34
  SPEAKER_00: Scenario three, which is a little bit more likely, so I would say this is pretty unlikely, you inflate away the debt.
• 15:42
  SPEAKER_00: The government allows inflation to continue.
• 15:45
  SPEAKER_00: That devalues the dollar, it devalues the debt in real terms, but it also devalues your savings and your income.
• 15:54
  SPEAKER_00: That's probably the path of least resistance because people don't understand that.
• 16:00
  SPEAKER_00: So I would give that at the very least a 50% likelihood.
• 16:04
  SPEAKER_00: I think I think this is the plan.
• 16:06
  SPEAKER_00: I think this is the 90% likelihood of what's happening out there.
• 16:10
  SPEAKER_00: Now, there is always the outlier, which would be the debt crisis.
• 16:13
  SPEAKER_00: So debt levels reach a breaking point, the bond market goes no more, they demand much higher yields, and it could trigger a sovereign debt crisis.
• 16:22
  SPEAKER_00: Now, there are models out there like Penn and Wharton's budget model basically says this happens when we get to 200% of GDP, possibly by 2040 something.
• 16:32
  SPEAKER_00: But think about this.
• 16:34
  SPEAKER_00: As investors, we don't control the government, but we can position our portfolios for the most likely scenario.
• 16:43
  SPEAKER_00: We can focus on assets that hold value if the dollar weakens, which is what we're seeing.
• 16:47
  SPEAKER_00: We can avoid getting caught in the leverage trap, like so many will.
• 16:52
  SPEAKER_00: And the beginning is understanding this.
• 16:54
  SPEAKER_00: We're transitioning from an era of emergency level, zero interest rates back to normal.
• 16:59
  SPEAKER_00: The government is massively over-leveraged and can't bail us out like before.
• 17:03
  SPEAKER_00: Inflation is above target, and that's probably intentional to devalue the dollar.
• 17:08
  SPEAKER_00: So you've got some options here.
• 17:10
  SPEAKER_00: Bonds are becoming a little bit more attractive.
• 17:12
  SPEAKER_00: The companies and the investors who get addicted to easy money, well, they're gonna have a tough time.
• 17:18
  SPEAKER_00: But remember, every major shift it creates winners and losers.
• 17:23
  SPEAKER_00: So, what do you want to do?
• 17:25
  SPEAKER_00: Well, audit your holdings, rebalance, focus on quality, keep some cash dry for opportunities, and prepare for a world where the Fed doesn't always save the day.
• 17:48
  SPEAKER_00: And then make sure you download the workbook at phelixfriends.org slash resource and come and learn how we find these better stocks.
• 17:58
  SPEAKER_00: Come and learn how we see where Wall Street's buying, because it's actually quite simple.
• 18:02
  SPEAKER_00: And you can do that at FelixFriends.org slash get free.
• 18:05
  SPEAKER_00: And if you got some value out of this, share it with somebody who isn't as prepared as you are now.
• 18:11
  SPEAKER_00: And you want them to be prepared because you're a kind, gentle salt.
• 18:15
  SPEAKER_00: So if you found this useful, share it with a friend.
• 18:17
  SPEAKER_00: I wish you all the best.