Today's number, 1,654.

That's how many pounds the heaviest taco

in history weighed. It also measured 36

ft long and 34 ft wide, making it the

largest taco ever. That was until

yesterday.

Welcome to Profy Markets. I'm Edson. It

is January 22nd. Let's check in on

yesterday's market vitals. The major

indices rallied after President Trump

said he would not use force to acquire

Greenland and called off his tariff

threats. More on that later. The yield

on tenure treasuries fell. The dollar

rose. Gold dropped from record highs.

And finally, Intel shares climbed 12% to

a 4-year high amid optimism for the

company's earnings due tonight. Okay,

what else is happening?

We have had no shortage of global news

this week, but there is one story you

might have missed, and it is actually a

pretty big deal, and that is China's

birth rate just hit a record low. New

government data revealed that the

country's birth rate fell to 5.6 per

1,000 people. That is the lowest rate

since the Communist Party took power in

1949. Last year alone, China's

population fell by more than 3 million

people. The UN warned that if this trend

continues, the country could lose half

of its current population by the year

2100. So for more on China's population

problem, we're speaking with Profy

Media's very own Alice Han, host of the

China Decode Podcast and China Economist

at Green Mantle. Alice, thank you for

joining us.

>> Good to see you, Ed, and happy 2026.

>> Happy 2026. So I mean it's it's hard to

focus on China right now given what's

going on in Daros and maybe you have

thoughts on what's happening there and

if so feel free to to discuss but we

wanted to focus on this birth rate which

was just released this week. China's

birth rate hitting a record low seems

like a pretty massive deal to us. I

guess my question to you would be is it?

It's huge. And just for everyone to get

historical perspective, we've seen four

consecutive years of population decline,

uh the birth level, 7.93 million births

in 2025. That is the lowest level since

1949, the founding of the People's

Republic of China. Uh and most of that

is driven by the fact that people are

effectively having less children. Now we

can dig into the minutiae as to why but

what the fundamental takeaway from this

is that this is an inevitable change

that is going to be extremely difficult

for the Chinese government to

counteract. We actually have seen a

great degree of policy response to the

declining birth rate and declining

population issue from the Chinese

government. For instance, they're making

it uh way more uh flexible to marry. In

the past, you had to go to your uh the

place where you were born to register

your marriages. Now, you can flexibly

marry. They pay $500 a year for your

child until the age of three. They just

waved in in the autumn in 2025 free uh

preschool education for nationwide for

all Chinese. Uh and I think that they

will continue to act on this with more

policy levers to try to boost uh birth

rates. They're even putting uh back on

condoms a 13% tax to try to get people

to avoid uh contraception. So I sense

that there's a level of policy

desperation because uh Ed and as we've

discussed in previous podcasts, this is

going to be a huge demographic challenge

for China because it has massive growth

implications and massive labor market

implications. Now, economists debate

whether or not uh having a rapidly aging

population is going to be net

inflationary or net deflationary,

whether it means older people spend less

and erggo it's going to be deflationary

or uh it's actually going to tighten

labor markets and make things more

inflationary. We're actually going to

see this play out in China very rapidly.

Uh and China is doing it at a rate uh

that is far uh exceeding what we saw in

Korea and Japan and at a poor level. And

one thing that I will add just to drive

this home is that by 2035 30% of the

population larger than the size of

America's population will be above the

age of 60. So you think about what that

means for society and for the economy.

This is no joke a huge issue for China.

>> How much of this is a result of the one

child policy which I know is not in

place anymore but it used to be you

could only have one child in China. Is

this not just that? Well, that actually

did, I think, uh, respond to rather

prudently, uh, massive population surges

in China, you know, that we saw uh, from

the '60s onwards. After the cultural

revolution, we did see an upswing in

population. Uh, they brought it in in '

71. They got rid of it by 2015. So,

effectively by 2016, you could have more

more than one child. And now it's pretty

much fair game how many children you can

have. the I don't think it really is the

one child policy that has created this

big demographic challenge. I think it is

a far more structural, far more societal

and far more cultural in the sense that

people are deciding they don't want to

have kids, they don't want to marry.

We've seen marriage rates, excluding

last year when there was a bit of a

surge in the first half of 2025, largely

been on a downward trend because

millennials like you and me are deciding

I don't want to get married. What's the

point? We're getting um highly educated

women who are opting out of the marriage

market saying I can take care of myself

financially and think about the knock-on

impact of the one child policy creating

highly educated women who decide I can

focus on my career. I don't need a man

in my life. that all that elomerated has

created a dynamic in which everyday

young Chinese people of uh childbearing

age have decided to opt out of the

marriage market and opt out of the

fertility market. That I think is the

number one factor. It's the fact that

young people are deciding they don't

want to get married and they don't want

to have children even although the

government is doing everything it can to

to try to uh encourage more births. the

stat you said earlier about the the

share of the population who will be over

60 and just the implications that that

would have have on the the labor force,

what it would do to uh the the social

safety net. I mean, it sounds like all

of America's problems on steroids. Where

does this population issue rank for you

in terms of China's macro risks right

now when you look at all of the things

that China has to worry about? How big

is this one

>> in the short term? Ed, candidly, it's

not the biggest issue. The biggest issue

is going to be trade with the US uh and

with the rest of the world. Uh which is

why what comes out of Davos is going to

be interesting. What comes out of the

April meeting potentially between Trump

and she and China will be very very

important. and and what matters more in

the short to medium run is China's

technological advancements especially in

the realm of AI and whether or not that

can as the government hopes and aspires

to unlock productivity gains for the

economy because if AI is able to do this

it can to some extent counteract uh the

aging uh demographic problem because you

might have a tighter labor market but

then you have these deflationary

pressures from humanoid robots from

technology that effectively will soak up

uh some of the short shortfall in the

labor market. They could be used in

elderly care for instance, in factories,

in manufacturing, in education, in

healthcare. So, I think that the

technology issue is going to be

critical. But if we move into the medium

to long-term realm, the demographic

challenge when I think about 2035

onwards is going to be I think the top

three uh issue uh for the Chinese

government because thus far that they

they've shown I think in the last 5

years where they've really focused on

this issue that the government doesn't

have the adequate policy toolkit to

really ramp up fertility and no other

country in the world I think has been

successful. You look to Korea where the

fertility rate is even lower. You look

to Japan, you look to other countries

that are actually desperately trying to

respond to their aging demographic. No

other country, I think, has shown a

positive uh scenario or test case for

how to respond. So, I think when we zoom

out of the short term, we look to the

long term, the next decade and and more,

this is going to be a top three issue

for the Chinese government. And and here

I'm a little bit worried uh about what

it actually means uh for the labor

market. what and more importantly what

it actually means for the fiscal burdens

of local governments and central

governments because it is true that

historically we've had a very weak

pension system a very weak social

security system by western and east

Asian standards so a lot more of the

local and central government balance

sheets will need to be dedicated towards

creating a more robust social security

system for an an everex expanding

population of 60 plus year olds and they

will have to I think continue to

increase the retirement age which

compared to the rest of the world is so

low. I mean even before last year the

the female uh retirement age was only

55. Uh so if you think about that that

is as much as 10 or even more years

lower than some of the other G7

countries that I think is going to be a

lowhanging fruit for them to change as

well to try to maintain some degree of

robustness in the labor market. You

mentioned one of the risks being the

relationship with the US right now, at

least in the short term, and how that's

relevant at Daros. Just before you go,

what have you made of what we've seen in

Daros? Um, how does any or all of it

relate to China?

So I sense that after the uh rare earths

fiasco that we saw uh towards the second

half of uh 2025 that China feels very

vindicated in its US strategy. It feels

that it can continue to use the rare

earth's card if Trump doesn't play nice

with them on from their perspective on

trade talks. We've seen in response from

Trump team including Bessen I think a

far more doubbish uh approach to China

on trade talks. So from Beijing's

standpoint, they look at the unrest in

Venezuela. They look at the unrest in

other parts of the world and now the

fiasco over Greenland and they go,

"Well, this is good. This means that the

US is going to be distracted from the

China challenge. It's going to be

distracted from dealing with its own

domestic issues, which oh by the way,

keep growing." And this actually plays

into she's strategy, which is to divide

and conquer. In my view, he is using the

Carnie playbook. Connie going to China

uh and using that to effectively uh

create what the communists would call

contradictions in the west. So to divide

the G7 countries from America and and

encourage them through a degree of panda

diplomacy, you know, for instance,

lowering tariffs or or agreeing to

bilateral trade and investment flows

using that lever to try to get the

Canadians, the Europeans and the Brits

to reset their relationship quote

unquote with China. The next thing we'll

have to watch is Star's trip. It should

be at the end of January to Beijing

where it seems there are rumors that he

also wants to reset the relationship and

go back to some degree of the David

Cameron golden era relationship. Uh so I

I think this is the trajectory that

China is on and certainly right now the

more that the US focuses on Greenland

and invokes the eye of the Europeans I

think the more likely it is that the

Europeans say hey China we're willing to

uh compromise maybe further when it

comes to the EV price minimums. Maybe

we'll be more open to Chinese investment

in Europe in a way that we weren't say

even last year or a couple years ago. So

I I sense that China feels that it is

vindicated. Whether or not that

maintains as a theme through 2026

remains to be seen.

>> Yeah, it seems like if anyone's

celebrating what's happening in

Switzerland right now, it's it's China

and Xiinping.

I can't see any winners coming out of

this other than them. Lots more to

discuss another time. Alice Han, host of

the China Decode Podcast, China

economist at Green Mantle. Alice, thank

you very much for your time.

>> Thanks so much, Ed. Talk soon.

>> We'll be right back. And if you're

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>> We're back with property markets.

Japan's government bond yields surged to

record highs on Tuesday amid fears of a

looming debt crisis. The massive

sell-off came after Prime Minister Sai

Takayichi pledged to cut taxes and ramp

up spending without explaining how she'd

pay for it. The turbulence in Japan

combined with the heightened tensions

over Greenland sent US treasuries

tumbling while Japan's long-term bonds

rebounded yesterday. Analysts warned

that stability is unlikely until Tokyo

provides a credible path toward deficit

control. Okay, joining us to tell us

what is happening in Japan and how this

impacts global markets, we're speaking

with William Chu, senior fellow, deputy

director, and Japan chair at the Hudson

Institute. William, welcome back to

Profy Markets.

>> Great to be back, Ed.

>> So, last time we spoke, Japan had just

elected their new prime minister, San

Takayichi. We talked a little bit about

who she is and also the market's

reaction which was pretty positive. Here

we are 3 months later. It appears that

there's some sort of meltdown happening

in the Japanese bond market. It appears

it has something to do again with Prime

Minister Takayichi.

What is happening in Japan right now?

What is what triggered this and how did

we get here? I think what's going on

right now is that so she had uh

essentially all but declared that she

will call snap elections once the diet

comes back to session on January 23rd.

The elections are set for February 8th.

That is essentially an election to

affirm her mandate to govern. And I

think very much in terms of her

priorities is one the issue of just

building up political support and uh

focusing on issues of affordability. uh

that's obviously plaguing other

countries other than just Japan and

cutting the consumption tax right

expectation there is that it will cause

uh Japanese debt levels to rise there's

also other considerations in terms of

just in terms of her own plans on um

economic investment uh defense uh

buildup all things that will also uh put

more pressure on uh long-term Japanese

debt so I think that those are the

various uh issues at play. Uh related to

that is also I think the opposition are

trying to build up uh uh pressure in

terms of like merging two opposition

parties to create a centrist uh

opposition block. And so I think you

know that's creating more political

pressure for her to address these more

kitchen table affordability issues uh

like cutting the consumption tax.

>> Some people are calling this Japan's Liz

Trust moment. That's something we've

seen, and this is a reference to the

former prime minister of Britain, Liz

Truss, who left office. She planned this

big package of all these unfunded tax

cuts. There was this big selloff in the

bond markets. Is that an accurate

description? Should people be making

that comparison? Is this different? From

what I understand uh certainly of Liz

Truss's policies I think uh Sia

Takahichi has a much clearer policy

vision. I think in her case it's not

just you know unfunded uh tax cuts or

consumption tax cuts for no political

purpose. It it is one there is a

political purpose which is to actually

build up the ruling party majority which

she needs to push in push through some

of her other more ambitious plans and

those ambitious plans in involve

economic security. uh uh basically

investment in 17 key strategic areas

that will allow for well at least it's

designed for long-term Japanese economic

growth and innovation as well as defense

spending which obviously the China

backlash has demonstrated to Japan that

it needs to seriously invest in and

obviously there's also some pressure

from the United States for Japan to uh

spend more on defense and so I think

she's doing this for very reasonable

reasons right these are all necessary

reasons

Uh so I think for at least on the policy

side it makes sense it is it a risk?

Yes. But these are also things that she

needs to do policy-wise. So I would push

back on the sort of the Liz trust

comparison. I I think Saiaki has a solid

uh policy head on her shoulders even if

it is uh definitely running some risks.

>> There's one last question before we let

you go. Um, we've been seeing a lot of

activity up and down in the stock

market, in the wider stock market, in

the US stock market. Um, given what's

happening in Daros, all the

conversations about Greenland,

Scott Bessant said the other day when we

saw all of the selling, he said that

this isn't about Greenland, this is

about Japan. It seems like that's

probably not the case given what

happened after Trump basically tacoed

just just recently. But I guess it sort

of introduces a larger question which is

how important is the Japanese bond

market to the rest of the market? Like

why does this matter if at all to US

investors?

>> Sure. So I think the connection there is

uh there's one primary and there's one

secondary, right? One is that Japanese

bond markets have always been stable,

right? Like the the fact that Japan can

carry some of the highest levels of debt

in the world is because so much of the

debt is actually held internally in

Japan. And so, you know, they're bought

and rebought and resold within Japan.

So, that that provides a certain level

of stability that allows for the

Japanese government to essentially

function on a deficit uh as they have

for many years. uh and I think there's a

lot of appeal to foreign investors

because the Japanese um bond market and

more broadly the the political economic

system is fairly stable. So I think

that's the appeal. I think what the US

rhetoric on Greenland has done is

obviously it's you know it's certainly

created some spikes in the market and

and also in the bond

market. I think what it really does at

least in terms of connection to Japan is

it create concern in Japan about well if

the US is focused on Venezuela or it's a

focus on Iran or it's focused on

Greenland you know we the Japanese are

raising questions of like you know if

something happens with China as

especially given the recent China

blowback against Takahi over Taiwan you

know like do we have to spend more on

defense because the US might be

overstretched or it's just unable to get

around uh come come over these These are

Japanese concerns, right? Uh these are

not my own personal concerns, but that

is the way that they are voicing a lot

of these concerns through I think the

both the bond the expectations that

Japan will have to spend more on defense

and security. Hence driving the

long-term bond yields up while also

driving the stock market up because

there's expectation that there's going

to be short-term money flowing into the

security and defense sector uh both

because of its own needs uh immediately

as well as sort of like long-term trends

over US uh presence in the in the

Pacific.

>> Okay. William Chu, senior fellow and

deputy director of the Japan chair at

the Hudston Institute. William, thank

you. We appreciate your time.

>> Of course. Uh, thank you as always, G.

Appreciate it.

>> We'll be right back. And if you're

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We're back with property markets.

Well, the big news is obviously the

taco. Trump has decided to cancel the

tariffs because he has supposedly

reached a framework for a future deal

for Greenland. There's a lot there.

We'll be breaking all of it down with

Scott on our Monday episode. But before

we go here, I do want to touch quickly

on Trump's speech that he gave yesterday

at Daros, the speech that preceded the

taco. There was a lot of buildup to this

speech. It was his first visit to Daros

in six years. There was supposedly a

90-minute wait outside the conference

room. Everyone wanted to be there

because everyone wanted to know what is

Donald Trump going to say. And what

happened next was notable and that is he

didn't really say anything. The speech

was over an hour long. He clearly hadn't

prepared any notes. He rambled from one

talking point to the next. There was no

coherence. There was no message. There

was no agenda. It was basically just a

stream of consciousness. I tried to

watch it. I could barely get through it

because it was so boring. Now, the

headlines would indicate that he did say

something, specifically that he wouldn't

use force against Greenland. And that

appears to be what initially moved

markets before we saw the taco, the S&P,

the Dow, and the NASDAQ all rose more

than 1%. But let's not forget that in

that very same speech, he also confused

the country of Greenland with the

country of Iceland, not once, not twice,

but four times.

It was obvious to everyone he didn't

really know what he was talking about.

Plus, when he said he wouldn't use

force, it didn't sound like an actual

policy position, something he'd

predetermined and decided to announce.

No, it just sounded like the words were

appearing in his head. Like he realized

in real time, oh yeah, I guess using

force is a bit much. I guess I won't use

force. That was the level of intention

and the level of care with which he

delivered this supposedly breaking news.

Now, this isn't to say that he was lying

about Greenland. Maybe it's true. Maybe

he won't use force. Rather, this is to

say I'm not sure he actually said

anything. I'm not sure there was a

takeaway because I don't think even he

had one. And this would also inform the

taco decision. Just a couple hours

later, he decides he's calling off the

tariffs because of his framework for a

future deal, which of course could mean

anything. But more importantly, it

probably means nothing. And this is the

great irony of this presidency.

Most of what he says is actually

meaningless. It's basically just shower

thoughts. But because he is the most

powerful person in the world, we are

forced to make meaning out of it. and

not just podcasters but investors,

traders, politicians, CEOs, all of us.

We have to make business decisions. We

have to make investment decisions. We

have no choice but to try to understand

him. And this is a theme that has played

out constantly. We saw it with the

tariffs last year where businesses had

to spend billions trying to figure out

what the hell he actually meant. In

fact, according to one estimate from the

Fed, that cost will come out to $71

billion each year. We also saw it with

his AI chip policy, which ended up

costing Nvidia $5.5 billion only to

later be reversed. We even saw it with

the Warner Brothers deal. First, Trump

says it could be a problem. Then,

Netflix and Paramount hire an army of

Trump whisperers to negotiate with him.

Then, he decides actually he doesn't

care either way. The point being, think

of all of the time and the money and the

effort that we spend trying to figure

out what he means, what he is actually

saying. But what if he isn't saying

anything? What if that speech or his

tariff announcement actually tell us

nothing about his foreign policy or his

plans for Greenland or his relationship

with Europe or his economic agenda? You

name it. What if it's all actually

meaningless? What if it's all just a way

to kill the time? I don't know. But

regardless of what he says, tariffs, no

tariffs, invade Greenland, don't invade

Greenland, use force, don't use force,

I've seen enough at this point to know

what the real takeaway actually is. And

it's pretty simple.

There is no takeaway.

Thank you for listening to Profy Markets

from Profit Media. If you liked what you

heard, subscribe to our YouTube channel

and tune in tomorrow for our

conversation with David Solomon.