 Good day, fellow investors and welcome to the weekly stock market news with a fundamental twist. Today, we'll discuss what's going on with the Fed, the new chairman, the productivity in the US, what's going on in China with their consumption, expected consumption, extremely important for the long term. Just touch on Greece a little bit and then we'll discuss what's going on with two interesting stocks, Sketchers and Treehouse Foods that everybody expects me to talk about as it declined more than 25% last week. Let's start with the Fed, what's going on, Trump announced Jerome Powell as the new Fed chair. This won't change anything, so don't worry, who is the Fed chair doesn't matter that much now. Also, Janet Yellen didn't increase interest rates as was forecasted last Wednesday, but everybody expects the Fed to continue to increase interest rates in December and then slowly continue to increase them over the long term. However, what the Fed has been doing over the past 10 years, buying a lot of bonds and putting a lot of liquidity into the market, has lower returns on bonds, savings returns and pushed people to invest in stocks in chains of higher returns. Most people invested in passively managed index funds and ETFs. This has led to actively managed funds losing share and passively managed and ETFs gaining a huge share of the market. And here you can see what the Fed, the ECB and the Bank of Japan have done. You can see the SIP500 in the dotted line has followed the quantitative easing of central banks. They have been at 2 billion in 2008 and now their balances are around 12 billion, so they have increased it by 4 to 6 times depending on the bank. Consequence is that even the active managers that are supposed to bring balance to the stock market have their hands tied because if you sell your stocks you are stupid because there is so much passive investments that buys everything that you are going to lose if you are in cash or if you sell. Therefore, even active managers have stopped selling, which means that there is no more correcting force in the markets and the markets just continue to go up. When it will blow up, will it blow up? I don't know, but it's very interesting why the stock market continues to go up. Because there is one thing, sure, it's stupid to sell now because the trend is that strong. Another recent election 2 weeks ago, Shinto Abe was re-elected in Japan, which means the politics will continue, which means that the Bank of Japan will continue to buy ETFs and push the stock market higher. If you look at the Nikkei index, everybody expected Abe to win and then the stock market just continues to go up. I'm thinking about just putting my money in the Nikkei index and let the Bank of Japan make me money over time. It's not inherent to my investing style, but I think perhaps it's even the smartest thing to do. In the last year, the Nikkei index went up 31.54%, incredible. For me it's incredible, there is no inflation, people are printing money, buying everything, pushing stocks higher, everybody is happy and I really hope nobody breaks the party. I am also enjoying the party, so I can't complain. However, what's very interesting is that US productivity. Productivity, remember, contributes two-thirds of GDP growth over the long term. In the short term, GDP can grow on credit, but most important factor is productivity. US productivity is at the lowest levels in the last 40 years. This is really important, a little bit growing now, positive trend, but still extremely low over the last 40 years. This will have severe implications for future growth, future GDP growth, because the current GDP growth is all based on credit. Another very important thing is that people are not saving. Why would you save when the saving rate is close to zero? So it doesn't pay to save, everything will be good, there's plenty of money you don't need to save and the personal savings rate is again declining as it was the case in 2005 to 2007. So no more savers, which is not that good again for the economy. As long as the Fed prints money is good, let's hope this inverts with higher interest rates. As I mentioned, China, and this is a very important trend to invest in the long term. Just found this chart, however, you can see that personal consumption is expected to double in the next 15 years in China. So if you invest in a companies that are exposed to personal consumption in China, you know what to expect. Much different situation than the retail environment in the US. Going on to Greece, it's very interesting how the 10-year Greek bond went to 5%. For a country that has defaulted 8 times over the past 200 years, an interest rate of 5% on 10-year nodes is crazy. However, the situation in Greece is improving. In the 2019 election, we expect a new government, a right-wing government that's pro-business, which means again an improvement in Greece, that will probably make the reforms that the current left-wing government isn't doing. And Kyle Bass is also heavily invested in Greek banks. So if you want to turn around the story, if you want to invest in a risky country that's doing better and that's taking advantage of the low interest rate trend in Europe, Greece is definitely an interesting play. Now let's go to the two stocks I wanted to mention, Skechers and Treehouse Foods of course. What's very interesting about Skechers is that it was sued by past investors who want renumeration for their losses because they say that the CEO was too positive in 2015. Of course, these lawsuits I agree with the management are frivolous, but nevertheless they every lawsuit impacts the stock price. And if you read Skechers 20F you will see a lot of lawsuits, I believe they have 800 lawsuits with all companies, with everybody in the world. However, just one lawsuit can really negatively impact the stock price and in this case was 1.12%. Usually the lawsuits are discarded because when you invest in the stock market you know what the risks are. And the risks are shown everywhere, so you cannot sue the management for everything because that would destroy the market and no judge will give you the right. But again, the negative sentiment creates a drop in price. This shows how people don't really attach right probabilities and weights to what's going on around the company. Again, Skechers after a few weeks good performance, good earnings, strong growth, everything good lost 5% in the last week. Why did Skechers lose 5%? Well, because it is in the retail sector and there is so much negative sentiment in the retail sector and most people are invested through ETFs and when you invest in an ETF and people start selling ETFs, the ETFs have to sell everything, thus also the good stocks like Skechers that have had great results. And that is the force that's pulling Skechers down. How low it can pull it, I don't know. But it's very interesting how the market works. Another company in a very negative sector with negative trends is Treehouse Foods. The stock price dropped 38% in the week and is also 48-40% lower from when I analyzed the stock and issued a recommendation that it is a goodbye. Oops, I apologize. But that's the risk of the stock market. You never know what will happen. Now what's very interesting here is the stock price drift after the bad results. So first the stock price dropped to 52. So somebody could have sold immediately at 52 only to drop during the day as there was more selling, selling, selling to a low of 40 and now close as 42.16. So it's very interesting how the stock price didn't drop immediately to 42 and stabilize, but first to 52 and then down, showing how markets are inefficient. Let's see what happened. So again to show how the market works in tandem, no matter what the company does, it's most important in what sector it is. So all food companies have declined when Treehouse posted results. Again investor pushed Treehouse Foods to multi-year low because they lowered estimates from 0.91 to 1.01 versus 1.28 for what was the consensus in Q4. After the stock price has already fallen, I don't know how much in the last year, then there is a downgrade from William Blair to market perform from outperform. Be careful with those downgrades because analysts mostly downgrade the company after the bad events have happened. So very interesting situation. Then another terrible news, CEO resigned after only 100 days. That's really terrible news because nobody knows what happened there. Nevertheless the key takeaways are still good. They lowered their adjusted earnings per share guidance from 3.3 to 2.7, which is a significant blow to earnings, but they authorized a 400 million share buyback program. The cash flows will be around 300 million, which is $5.6 per share, which means that the company is still healthy, however private label is also still healthy. They have showed modest but steady volume growth, despite strong headwinds elsewhere. They still expect strong sales, however they lowered their margin guidance and that's terrible. When you lower your margin, lower earnings, lower everything, that's not good. So to conclude about Treehouse, it is all about what will the management do? Will the management be able to revert the negative trends to increase the margins and increase profitability? As soon as that happens, Treehouse will return to previous levels. If that doesn't happen, then we will start to see private equity funds travel around, but I don't know whether the stock price will go up or down now. For me I'll still wait a little bit, perhaps there will be more negative news, an impairment or something like that and then Treehouse could really become interesting. Now it is also very interesting, so you have to see how that fits your risk reward portfolio. However if the management delivers on what they are promising, again the 300 basis point improvement in margins by 2020, Treehouse by 2020 might be a great stock. However we have to look into the private label sector, what's going on with the bidding, how much supply there is, how much demand and see how that will affect the company. If you wanna dig deeper, please dig deeper, share with us your knowledge and tomorrow there will be a video about catching falling knives, which Treehouse obviously is. And I'll try to give you 10 rules about how to catch them and you'll see if you can do that with Treehouse or not. Thank you for watching, hope you enjoyed the video, looking forward to your comments and I'll see you in the next video.