00:00:01 John Daub: It is crazy to think that the exchange rate is now getting very close to 160 to the dollar again, 160 yen to 1 US dollar. We're getting close to that because there's so many different factors going on here. Usually when it gets to 160, the Japanese government will intervene. They haven't ruled that out. So this is a pretty good exchange rate. If you're thinking about changing your money, I don't think it's going to get too much higher over 160.

00:00:33 John Daub: But what do I know? This is such a hard thing to predict, but there are reactions, there are responses, ripple effects as a result of the yen getting to this weakness, which we've been seeing over the last several years. So in this episode, I want to talk about this a little bit in particular with the gas prices here because gasoline is getting really high. Everybody knows what's going on in the Middle East. And over the last few weeks it's been in the news quite a bit.

00:01:07 John Daub: When the gas prices rise, so does everything as a result of that. So let's take a look. What is the national average price of gasoline in Japan? I thought this is such a fascinating topic from January. Let's start at the beginning of 2026. It was 155.8 yen per dollar. So it's a dollar per gallon. What is that? Like about $3.75 a gallon, which actually sounds pretty high. But when you compare that to other countries, it's fairly reasonable.

00:01:38 John Daub: I think that was less than the U.S. The U.S. got it down to under $2 a gallon, apparently. So Japan is going to be always a little bit more because it is Japan. Everything is imported from far away. But you can see the prices were kind of going down and then we got prices kind of hovering around the middle of the 250s. When I got to Japan, I think it was under 100 yen. So it was pretty cheap then. Now it's gotten quite, quite pricey.

00:02:10 John Daub: But now we've seen over the last couple of weeks the prices are really starting to get much higher. Plus 3.8 yen, plus 3.3 yen week over week, and then rising for this week is probably going to go up. But Japan is now releasing its oil reserves to keep the price down. But Japan has been subsidizing this for a very long time. In fact, it's about, since 2022, about I don't know, seven or eight hundred dollars per taxpayer that subsidizes the price to keep it stable for oil in Japan.

00:02:45 John Daub: So it's interesting to look at that. Let's take a look here. For those in the US, it's right now 161.8 per liter, which is actually 613 per gallon. So that's what it would be for us. If you're looking at it, it's approximately $4.10 right now. And going up, which is a lot less than some places in the US. We've seen it go up three times right now. So I think the government subsidizing the industry as well as the reserves now being released has a lot to do with that.

00:03:19 John Daub: How long it stays stable, I'm not really sure. It's hard to tell in Tokyo. If you look, this is a gas station just down the street here. They don't even have the prices outside. I thought that was really curious. Not all the gas stations put the prices out there. You just got to— you're going to pay what you're going to pay anyways. This one I guess more prioritizing some of the services for the cars because we are in central Tokyo, but they do have gas pumps.

00:03:52 John Daub: I'm guessing it's about 4 or 5 yen above the average because it's in the city there. But it's funny to see that the gas stations here don't actually have prices listed outside. I don't know. We're in Tokyo. So things change here. But that is very interesting when you look at the gas subsidies. Japan has paid year on year here about 3 trillion yen. It was about last in 2024, 2.7 trillion yen. And so far we're seeing it's exceeding a trillion already.

00:04:26 John Daub: So these subsidies are keeping the prices lower for everybody and thus keeping inflation lower. Because we all know gas rises, inflation rises, everything costs more. So that price is slightly lower in Japan. It's very similar to a lot of the other countries having the same issues. So there you go. That's what the price of the gasoline is like here. Cars in Japan are typically smaller. If you look behind me, you can see the cars going by.

00:04:58 John Daub: A lot of people wrecked. And we actually have robots going by here. So we have robots delivering packages. That's a Rakuten robot, which is like the equivalent to Amazon for Japan, right there. He's going on a run delivering a package. I'm not kidding. There are dozens of these robots going back and forth delivering packages. The package is inside and I guess when they get close, they notify the person to come out and get it.

00:05:30 John Daub: I don't know how it works. It's very interesting. So the cars you can see behind me, they're much smaller than in the U.S., so the efficiency, the gas efficiency is really good. Here in Japan, people just don't drink as much gas in their vehicles as they do in the United States. That's for sure. But they don't have to go as far either. Typically Tokyoites don't have to drive too far to get from one place to the other.

00:06:03 John Daub: You're mostly waiting in traffic. Even the buses are smaller. There's a lot of hydrogen fuel buses. Hydrogen fuel has been Toyota's response to using hydrogen rather than using batteries. There's also the hybrids. A lot of cars are hybrids now these days. But these K trucks, there's a couple of them passing you there, they just don't take a lot of gas. They're really small engines and they get around just enough.

00:06:33 John Daub: Everybody's paying more. I paid—Kanae writes in here $5.70 US per gallon in Southern California right now. Thank you for chiming in, Catherine. $5.70 per gallon. First of all, it's California. Everything's going to be more expensive in California, but here in Japan, we're paying less. That doesn't make sense. Over $6 a gallon in San Francisco. Yeah, California. We expect that there's going to be taxes on just about everything, yet don't we?

00:07:05 John Daub: But the sunshine is hard to beat. You can't beat the Californian sunshine, right? Everything is going up here. And we could see with the yen going up now, 159.50. It's sure to go to 160 with everything going on here. And the reaction is— well, I wonder what Jay writes in here. He's from India. What's the price per liter in India? I wonder from where you are, if you want— you can the live stream, the chat here could be really good.

00:07:36 John Daub: Good resource. Write in the gas price and where you live, what country and what city. And this will help everybody kind of figure out the gas prices worldwide. This would be really interesting. We have our audiences all over the place. Here's the reaction. What's going to happen as a result of the higher yen and why it's going higher right now. So right now the interest rate gap is the biggest in a very long time. For example, the US pays a much higher interest rate on money than Japan.

00:08:11 John Daub: This is such— we're seeing more YouTubers talk about this, but it's not being talked about enough. This is kind of a big deal here. The US interest rate is about 5%, and Japan is 0.75%, which is actually a big deal because it was actually zero for like decades. So what does that mean? That means it's very cheap to borrow money in Japan with 0% and then invest that money in the US. So Japan has more money invested abroad?

00:08:41 John Daub: Of course. Because why would you invest the money in Japan when you're getting no money in return? So Japanese were investing in the United States where their interest rates are quite good, buying treasury bonds and all sorts of investments. Right. So they would sell yen, buy dollars, invest in US bonds. Japan imports most of its energy. We're seeing that. That's why I'm talking about oil prices first. Japan needs more dollars, which increase the demand for USD and weakens the yen.

00:09:16 John Daub: Japan needs the dollars to buy the gas. Recent Middle East tensions and oil volatility have added pressure. Now there's more pressure to sell those holdings in US dollars. What will that mean? The Bank of Japan is still cautious. BoJ is always cautious. The conservative nature of the BoJ is one reason why when the world is in turmoil, people invest in Japan. All right. By the way, here comes the robot again. There's an—

00:09:46 John Daub: Is this another robot? Check it out. The robots walk amongst the people here. Check it out. I'm not joking. Look at this. Let's just put the— see how he stops when people are there just to make sure it's safe. And he's on the move again. Look at him. He just on his way. Look, he's chugging. Somebody came close, so he stopped a little bit. How does he know it's a green light? Wait a second. Was he gonna— is he gonna cross the street?

00:10:18 John Daub: Dude, are you gonna cross the street? No, no, don't do it. It's a red light. How do you know it's a red light? It's red across the street. The robot knows it's red. It's got some sort of sensor on the top, I guess picks up color or position. Triangular eyes. Yeah. That's fascinating. Let's— I want to see this robot cross the street. I think this is— what do you guys— you guys— who's in— who's in on this?

00:10:48 John Daub: Let's just observe this robot for a second here, because this is really interesting. How's it gonna— does it know? All right, we got about 10 seconds, 5 seconds before the light changes. Does he know? Because all the people are going to start walking. Hold on a second. We'll get back to the topic at hand. This is really fascinating. Yeah, it's walking with the people. Maybe it senses the people around it so it doesn't get smashed by cars.

00:11:21 John Daub: Look at that. The robots walk amongst us. That is so fascinating. That's so cool. China has a lot of these on the roads, most of the time. Well, in Japan we could not have that. All right, let's— let's go back to the chart here. This is all— the back of Japan is always cautious. So that means when the world is in turmoil, people invest in the yen. Historically because they're so conservative, they're not loose with the monetary policy.

00:11:55 John Daub: Well, not these days. The yen is really weak. So traders are betting on a weaker yen right now. So they're not really investing in it. Basically the carry trade. And this is something you're going to see more on YouTube. This is going to hit the news probably in the next couple of weeks, if it hasn't already. I'm just surprised that people aren't talking about this more yet. Catherine writes in— cool robot. Thanks, Jeff.

00:12:26 John Daub: So look, the global trade's been like this for a long time. There's places where you can get cheap revenue, cheap money. It's in Japan because it's at 0% interest. So you borrow cheap yen, you convert it to dollars, you invest in higher yield assets. So we have trillions and trillions of dollars in the US economy from Japan because Japanese have been putting the money in the US because they want to get money for their money.

00:12:57 John Daub: Right. You don't just want to sit there with zero percent interest. It's crazy. So as long as a cheap rate gap exists, the trade keeps pressure on the yen. However, that cheap yen is going away. Interest rates are going up in Japan and they're going to have to raise them again. They're gradually doing it. The Bank of Japan is very conservative, but they will. And if the yen is no longer cheap, let's say they raise it to 2%, people are going to bring that money back home.

00:13:32 John Daub: And what if they need that money now? Does that investment— because they don't have any money in Japan, they're going to repatriate the money and take the money out of the US economy. And if they take the money out of the US savings and the treasury bonds and the dollar crashes, world goes dark. Japan is so invested in the United States, you have no idea. Frank, the tank is here. Long time no see. I arrive in Japan on Wednesday.

00:14:03 John Daub: Thanks for the updates. I'll be in Kyushu. Well, you're coming in a wonderful time, especially for the US dollar, but I see you've got— you got Aussie dollar, so it might be still pretty good too. I'll be in Kyushu first and we'll try to spot you on the streets in Tokyo. Please do. Frank, it'd be nice to meet you on a trip here. It's nice to see you, buddy. Yeah. So basically because Japan needs that money now, especially with energy costs now skyrocketing and the taxpayer in Japan no longer really able to subsidize it, there's political pressure.

00:14:44 John Daub: When politics gets involved, well, they'll do it carefully and they'll do it slow and they'll do it cautiously, right? Cautious, careful and slow. That's the way that they'll start repatriating the money. But it's going to happen because they need to have— one Aussie dollar to 111 yen. That's a far cry from what the US has, but that's still not— it's still pretty good. It's better than 100 yen, so that's not too bad.

00:15:15 John Daub: I do worry what will happen if Taiwan is taken. Yeah, there's a lot of geopolitical stuff happening right now, but I think with the Strait of Hormuz tied up, it feels highly unlikely that that would happen because China's not getting the flow of oil through. So it really does impact what's happening in the Chinese economy. And we— it's hard because there's no free press to really understand what's happening inside of China.

00:15:46 John Daub: We get some ideas, people make guesses. Experts are out there. I don't know. We'll see what happens. I'm keeping my ear to the ground and listening to the rumblings and watching Japanese news and sort of looking behind the scenes on where this goes. It's really fascinating and a bit concerning. I know there's a big podcast— what is it, Diary of a CEO— had some guy talking about the Iran war.

00:16:17 John Daub: I checked into his background and he's kind of like a Showa era thinker. My take on it is that US military probably has lasers. I bet you they start using those lasers soon. They got lasers. They'll probably start— they don't want to show it. I bet you— I got a feeling they got lasers now. We're in the next things. And that's— that's scary. Space lasers. Ship lasers. Japan's got a rail gun. Google that. There's some stuff going on that the old school academics, people who study this stuff, they just— they don't know. So they get freaking—

00:16:47 John Daub: They got freaking lasers on the sharks. Yes. I get a feeling they got lasers now. Lasers are faster, more precise, AI guided. They do the job at— I think it was like three or four dollars per— instead of three, three or four million dollars per missile. It's three or four dollars per for the energy for the laser. So. And Japan has Gundam. So we're okay here. We've got the railgun and Gundam. And Japan has quietly been placing the Gundam mobile suit robots all over the country in disguise as tourist attractions. They do become active. They get freaking lasers on the Gundams.

00:17:50 John Daub: Right? Gundam. I never know how to pronounce it. I think Patrick Galbraith pronounced it Gundam— gun— Gundam. So I do it like that. Japanese would be Gundam or no Gundam. I don't know. But they got freaking lasers. All right. Don't mess with the country that's got freaking lasers on the sharks. Okay. It's a tough time in the world. I think that we'll have some conclusion to this. I'm sure it's a political thing. We're not going to be mired in war. Gosh, I hope not. Anyways, I know this is a concern of a lot of people in Japan.

00:18:25 John Daub: The economy is fragile and I think we're going to be okay. Just looking at the gas prices, we are seeing them despite being subsidized, which is about I'd say like $200 a tax— each taxpayer is paying about $200 a year to subsidize the gas so it stays at a rate. The government's been paying the subsidies for a very long time. That's about $4.10 a gallon right now. And I'll keep you up to date because it's fascinating to see what the prices are in Japan.

00:18:57 John Daub: I drive a little bit now, but it's getting more expensive, so prices are going to go up even for the tourists. I think we're seeing dual pricing and a lot more stuff. And I'm going to do another episode on this. But the dual pricing system has gained some traction and we're starting to see more dual pricing in food, in ticketing, in a lot of things around the country. And I introduced this about three years ago and people said if Japan does that, they're going to lose the tourists.

00:19:32 John Daub: Actually they're not. They've done it slowly and it's quiet and they do have— they do have Kirkland fuel, precio. But you need a Mast in Japan. You need a MasterCard. I got— I don't have a MasterCard. I think in the US it's a Visa, but in Japan it's a MasterCard. You need a MasterCard. I don't have it to get the gas, so wish I could at the Costco. It is a little bit cheaper. It really is. Even as a tourist, I don't actually mind the dual pricing support.

00:20:03 John Daub: Yeah, it's usually not a lot— it's not a lot more. But I'm gonna be honest with you, all right. Residents are just not— Tokyo residents are just not going out to Shibuya, Harajuku, Asakusa to eat anymore. And the restaurants to balance this just raised the price. I saw a 2,000 yen bowl of ramen. I've never seen that. And the whole line was tourists. I didn't see any locals eating there. I'm guessing they might have local prices at certain times, but tourists don't eat 2,000 yen bowls of ramen.

00:20:39 John Daub: They just don't. Japanese don't eat it. All right. It's just a rip off. Japanese news showed a 250 yen bowl of ramen in Ibaraki prefecture where I was the other day, but not a twenty dollar bowl of ramen. It's just crazy. So quietly a tourist attraction. Places like Shibuya have risen the prices. Locals don't eat there really. And they probably have a regulars menu for foreigners. It's happening and I'll talk about this in a live stream a little bit more detail.

00:21:12 John Daub: I'll try to take some pictures of some menus and then do this in a very thorough way. But yeah, the gas station prices, they're not even listed anymore. I thought they had put it up on the next to the sign here. But they don't even put the gas prices anymore on the ones in Tokyo. It's just— yeah, 2,000 yen is $13. It feels like $20 to us Japanese despite it saying 2,000 yen, it's a hundred yen feels like a dollar.

00:21:44 John Daub: You know, if you're paying in yen, 2,000 yen is like— it feels like it's $13 to Americans, but it's— it feels like a twenty dollar bowl of ramen to Japanese. So Japanese aren't going to pay that, but tourists will. And that's— that's the whole thing. No one's gonna— I think a bowl of ramen, 1200 yen. Okay. Actually, there's a place called— just make sure I didn't get my bicycle ticketed. I want to go see. Let's go see what the cost is if the signal holds.

00:22:17 John Daub: So not far from here is a tsukemen shop that I've gone into. We're just gonna check it out really quickly if the signal holds. Tsujita is a tsukemen shop that's really popular. So let's go take a look at the menu. But again, between the taller buildings, the signal kind of gets a little weak here. Here's Tsujita. Let's look at the price if you can. If you can't see, just— it's 680 yen. Yeah. You can see here. It's really nothing ridiculous.

00:22:49 John Daub: The most expensive one is— that's a lot of food right there. The normal tsukemen is— yeah, about 13— 1200 yen. You can get a bowl of it for 1000 yen. Bowl of ramen, 1000 yen? Yeah. So it's— WRXR WRX Turbo is in the house. Nice to see you, buddy. Yeah. So you can get a bowl of ramen for a thousand yen at the Tsujita here. It's— that's a chain. You can— there's a bunch of them, so you can get a good bowl. So if you're seeing a 2,000 yen bowl of ramen, that's just off the charts.

00:23:23 John Daub: That place is for tourists, and tourists are lining up there. So you can see why they would charge 2,000 yen. It just makes a lot of sense to charge that much. If you can get it, do it right. If you're coming from California or London, where a bowl of ramen is $25, you don't mind paying $13 or 2,000 yen. And certainly it's good for the ramen shop owner because he needs to keep the doors open. He's relying more on tourists than he is on locals.

00:23:55 John Daub: So the dual pricing system is working, but not in the ways that perhaps we expected. So just to sum up here, because we're at the end, gas prices have been steadily rising in Japan, but the Japanese gasoline prices are subsidized by the government. Each taxpayer pays about I don't know, like $200. Something around $200 a year to subsidize the cost to keep them low. And Japan has released these strategic gas reserves right now, just like a lot of countries have, to fill in the gaps because the oil is not coming into here.

00:24:33 John Daub: And we'll see some changes, I think, over the course of the next couple of weeks. And if it does, we're going to see some selling off of that carry trade where Japan is holding a lot of US treasury bonds, a lot of the US dollars. If they start repatriating it, there's going to be something happening soon and you're going to see more of it, and we'll talk about it. But keep your eye on that. The carry trade and the repercussions of this being such an issue over the last I don't know, 20 years, people just borrow cheap yen and then invest it in the US and make so much money.

00:25:15 John Daub: Can't do that anymore because they're raising the interest rates. And the Japanese need the dollars now. They need their money back. And there's a cost to it. It's gonna— it just could be a bumpy year. Let's see how it goes. All right, guys, take care. Thanks for— I don't mind paying more. Yeah, I think a lot of people feel that way. Go Bucks. How dare you even mention that. School up north, we love the rivalry. I'm a Midwest guy right here.

00:25:46 John Daub: All right, guys, take care. I'll see you in the next episode. We'll talk more tomorrow and take another area of the country real soon.