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Dear Fellow Traveler: Once upon a time… government assistance was embarrassing for companies… Back in 2008, executives had to sit in Congressional hearings and pretend to look ashamed while begging for taxpayer money or policy accommodations... At least there was some theater of accountability. At least there was some admission that things had gone wrong with their investments.... Well, not anymore. Now they can just rely on "trade deals" to buy them some more time… The SoftBank ProblemSoftBank has become Japan’s newest problem, compounding an economy already plagued by stagnation and demographic decline. Notice that we don’t even mention the Nikkei crash of last year… because that might spook people. For those unfamiliar with the players, Masayoshi Son is the 67-year-old billionaire founder of SoftBank Group. This is a Japanese multinational investment holding company that gained fame for making massive, high-risk bets on technology companies through its Vision Fund. It is the world's largest technology investment fund (north of $166 billion in AUM). Son's investment philosophy was simple. He invested in companies that would benefit from artificial intelligence… He would throw enormous amounts of money at them. He would then ride the wave of technological disruption. For a while, it worked… as most things do in a never-ending bull (or liquid) market. SoftBank's portfolio included stakes in Uber, WeWork, DoorDash, and dozens of other high-profile startups. Then reality - well, liquidity crunches and gravity - hit. WeWork imploded spectacularly in 2019. That implosion cost SoftBank over $10 billion, as the shared workspace company's valuation collapsed from $47 billion to near bankruptcy. Other Vision Fund investments, such as Katerra (construction tech) and Zume (pizza robots), also crashed out. They burned through billions more. The fund's reckless investment behavior became a cautionary tale for children’s campfire ghost stories about venture capital excess. Masayoshi Son now has a problem. Well… several problems. We can start with the fact that SoftBank is still hemorrhaging money. The Vision Fund segment reported a pretax loss of ¥115.02 billion ($777.7 million) in fiscal 2025, compared to a profit of ¥128.2 billion the previous year. The massive investment fund's losses roughly doubled from approximately ¥2.6 trillion in fiscal 2022 to ¥4.3 trillion in fiscal 2023 as market conditions worsened during the GILT Crisis in a higher-interest-rate environment. SoftBank then reported a surprise quarterly loss of $2.4 billion in the third quarter. Its Vision Fund investments continued to bleed red ink. Today, the market values SoftBank well below its stated net asset value. This is a way that the market tells a company: "nobody believes its books." Then, yesterday, some even worse news. SoftBank, a vocal supporter and potential financier of the so-called ‘Stargate’ AI initiative, announced in January as a $500 billion moonshot project involving OpenAI and Oracle, now finds itself on shaky ground… According to a Wall Street Journal report (dated yesterday), the venture has failed to secure a single major deal. Meanwhile, its partners are fighting among themselves… After pledging $100 billion in immediate deployment, the project has scaled back its goals to building a small data center by the end of the year. Oracle CEO Safra Catz said on the company's earnings call that "Stargate hadn't formed yet." And Elon Musk has publicly expressed doubts about whether the project has the funding to succeed. But then… here comes the surprise… A day after the Wall Street Journal exposed Stargate's struggles, Son found himself operating in a suddenly more favorable investment climate. Investment Partnership MAGICHey… It's only been 24 hours… However, President Trump has just announced a "massive" trade deal with Japan. It features $550 billion in Japanese investments in American infrastructure, semiconductors, and energy projects. We will also see reduced tariffs and streamlined regulatory processes. It's great that America is reaching these deals for critical infrastructure (and protecting the dollar at the same time). But wow… what great timing for… SoftBank. The deal reduces auto import tariffs from 25% to 15% and creates what officials described as enhanced frameworks for Japanese business investments in key technology sectors. The Japanese commitment of $550 billion would come in the form of equity investments and loans to support Japanese companies' U.S. operations. Currently, there is no direct reporting connection between SoftBank's Stargate struggles and this trade framework. Analysts have noted that portions of Japan's $550 billion commitment had already been planned, including SoftBank's existing pledges. In other words, some of the "massive new investment" Trump was announcing may have included commitments that were already in place. Whether or not SoftBank's troubled Stargate promises were mathematically part of the $550 billion total, they were suddenly operating within a context of celebrated U.S.-Japan investment cooperation. Perception, in finance and politics, is sometimes more valuable than fact. And the timing is fortunate… On July 21, Stargate was exposed as having "no major deals" and scaling back to a "small data center." On July 22, the U.S.-Japan investment frameworks were announced, creating exactly the regulatory and financial environment that could benefit struggling Japanese tech ventures seeking American partnerships. Now, let's pause for a moment. Trade deals don't typically materialize overnight like a drunk Amazon purchase. These bilateral frameworks typically require months or years of careful negotiation, diplomatic back-and-forth, and bureaucratic coordination. But this one? Accelerated at warp speed following Trump's recent tariff announcements. And it's not like SoftBank's troubles were some closely guarded secret. The company's Vision Fund hemorrhaging and WeWork face-plant have been front-page financial news for years. Anyone with a Bloomberg terminal and a pulse knew Masayoshi Son was in trouble. So when you're negotiating a 'massive' trade framework with Japan, and one of their most prominent (and most troubled) tech investors just happens to benefit from the regulatory environment you're creating... well, that's either the most convenient coincidence in modern finance, or evidence that sometimes the cavalry arrives exactly when you need it most. About 24 hours later, SoftBank is no longer publicized as a company whose flagship project has been publicly embarrassed. Now, they're operating in an era of enhanced "strategic partnership" between their home country and the United States. What a break… This is the beauty of modern corporate assistance. It doesn't need to be direct, explicit, or even intentional to be effective. And unlike traditional bailouts, it's not charity… It's designed to generate serious cash flow. Traditional bailouts required admitting failure and accepting government intervention. These new arrangements require being well-positioned when bilateral frameworks shift in your favor. This deal now provides access to revenue-generating projects that can generate millions in annual cash flows. Whether by design or remarkable coincidence, companies in SoftBank's position can benefit from:
The genius is that no government money changes hands directly. No rescue operation is declared. No congressional hearings required. Even SoftBank's scaled-back "small data center" in Ohio could lease compute capacity and AI infrastructure services, generating gobs of revenue that flows through U.S. subsidiaries… That's all… nice, wholesome policy shifts that happen to create cash-generating opportunities for well-connected international players facing challenges. The "Too Big to Fail" EvolutionWe may have quietly evolved beyond traditional "too big to fail" thinking. Companies like SoftBank aren't systemically important to U.S. financial stability (but they sure are to Japan's financial stability…) They've positioned themselves as strategically important to technological competition and international relationships. Masayoshi Son has spent years cultivating relationships with American tech leaders and policymakers, framing SoftBank's investments as essential to AI infrastructure and as a means of competing with China. When you've bet hundreds of billions on being central to the future of technology, policy environments tend to accommodate that vision… whether intentionally or not. The result? SoftBank has faced serious challenges. Luckily, this enhanced bilateral framework emerged. Not as direct assistance, but as mutually beneficial arrangements between nations that just happen to create exactly the conditions struggling but well-positioned companies might need. No taxpayer bailouts. No moral hazard admissions. No political cost. Just the gentle evolution of international commerce to support the ecosystem that major players inhabit. But wait… there's more. In May 2025, just two months before Stargate imploded and the trade framework materialized, Masayoshi Son floated another idea. His audience was Treasury Secretary Scott Bessent. The idea, according to the Financial Times, is a jointly owned US-Japan sovereign wealth fund that invests in U.S. technology and infrastructure projects.... The fund would be co-owned and co-managed by the U.S. Treasury Department and Japan's Ministry of Finance. Both would have a significant stake… It could open participation to other institutional investors and potentially even retail investors from both countries (do you think the sovereign wealth funds are going to let the institutional investors fail… if they’re invested in those same projects?) The proposed fund would require approximately $300 billion in initial capital, along with significant leverage, to be effective. Well… that’s something huh? So let's recap the timeline here:
RemarkableLook, I'm not alleging some grand conspiracy here. I'm not even claiming that SoftBank has become "too big to fail" in any traditional sense. Sometimes, the guy with his last significant chips at the casino happens to see the environment shift in his favor at precisely the right moment. Sometimes, remarkable timing is just that… remarkable… right? Maybe Masayoshi Son, after burning through tens of billions on WeWork and pizza-making robots, just happened to catch an extraordinary break. Maybe the alignment of Stargate's struggles with enhanced U.S.-Japan investment frameworks within 24 hours is a pure coincidence. Maybe this is simply how modern international commerce works in an interconnected world. But financial relief in 2025 doesn't require congressional testimony or direct taxpayer intervention. It just requires being positioned in the right international networks when trade winds shift. The next time you hear about exciting new "bilateral investment partnerships" or "strategic economic frameworks," remember: somewhere, there's probably a highly leveraged company with strong government relationships either breathing a sigh of relief…. or discovering that sometimes the most desperate bets happen to land on the right number. Although SoftBank isn't a sovereign wealth fund, it certainly has the political and financial connections —and the same strategy to generate cash flow as other funds. Financial assistance in 2025 doesn't look like a bailout… it looks like Foreign Direct Investment (FDI). You don't need to call it a rescue when it walks like a rescue, talks like a rescue, and generates the cash flows to save your balance sheet like a rescue. Stay positive (and skeptical), Garrett About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
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