 Good day, fellow investors and welcome to the stock market news with a long-term fundamental twist. Today we're gonna talk about what happened in the global stock markets around the world this week, what did the Fed's Chairman Powell testify and why did that trigger a stock market sell-off. And that was on Tuesday, on Wednesday Trump said something about tariffs and that further increased the sell-off. At the end we're going to conclude with a macro long-term perspective on what's going on in the markets and what should an investor do. But before we start with the news, I want to thank you all because yesterday I was for the first time in my life on American news. And without your support, without your views, without your likes, without your shares that would be impossible. So really I want to thank you for your support, I'm really enjoying and I will do my best to continue giving you value for as long as I can. So thank you, thank you, thank you. Let's immediately start with the news. The S&P 500 index on Tuesday, Powell made his testimony and stocks started dropping a little bit. But then on Wednesday Trump said something about tariffs completely out of the blue and that really crushed the market. A little bit of recovery on Friday, but the five-day change is minus 2.04% for the S&P 500 index. Stocks in Europe did even worse. We have seen a bigger drop on Tuesday already before Powell said something. But then when the Trump discussion spread around the world, stocks in Europe dropped even bigger than in the US and that's what the key discussion of today will be. In Canada, even bigger drop 3.44%. So Canada will be hit even harder by trade barriers. So that's the issue with what's going on. Further, as always, when there is turmoil, Canada and those border markets, if you look at these emerging markets, they also fell more than 2%, they fell 3.2%, which means that the market still perceives emerging markets even if they might be healthier from a fundamental growth demographic perspective and everything, the market perceives them as a riskier and therefore, if there is turmoil, those will drop like a rock. So the week started, let's say on Tuesday, with Powell's testimony. He was very upbeat about the economy and he says how the Fed and his board is raising expectations. So they are raising expectations about economic growth, about inflation. That would be great for stocks, right? Well, not that great, because this means also that the Fed might increase interest rates and some call it tightening. We prefer the world normalization, which increased interest rates might lead to faster normalization of the financial environment, which is something not good for most companies, thus most stocks. Higher interest rates will act like gravity on stocks, because then you expect a higher earnings yield, bonds have higher yields and everything looks much more expensive from a yield perspective. That is the first thing. Secondly, as the economies are burdened by debt, higher interest rates will lower those earnings because of higher interest expenses, less capacity to refinance, less investments, less businesses will be profitable, as it always in the medium to long term leads to a recession. So big warning bells on Tuesday. And then on Wednesday, Trump said that the steel industry in the U.S. has to be protected and deposed tariffs 25% on steel imports and 10% on aluminum imports. Bam! The news word that there will be retaliation, Europe, Canada, if a global trade war starts, and you will see inflation go to the moon, the Fed won't be able to control it, will see much higher interest rates, lower trade that will lead to recession, depressions and to a very, very disastrous dark situation. I really hope Trump is a bluff and he says oh it was just a bluff and he gets a better deal somewhere with China or whomever was the target of that bluff and that is not really that the United States go into protectionism because the United States is not in the position to do something like that, perhaps in the short term will do good and the steel industry will do good, but in the long term it isn't really very good for the United States. Let's look deeper into the macroeconomics of that and the consequences of what happened on Wednesday. Before that just to show you the probability of four or more Fed rate hikes during Powell's testimony has really jumped to above 45%, which means that four hikes that's 1% on average, 1% higher interest rates, which would push, which would pull asset values down like gravity. This is the key to tariffs. The US balance of trade looks terrible, which means that the US imports more than it exports, which means that it spends more than it produces. If we look at the current account it looks even more disastrous. So current account apart from trade includes direct payments and net income. So what does this mean? What does this negative current account and balance of trade mean? It means that the country is spending more than it is producing, which means that the difference has to be financed by debt. If there is inflation higher interest rates, debt-debt is becoming more difficult to service. Further, if there are barriers on steel and aluminum, the input costs for American producers will be higher. I don't know, Boeing, American car manufacturers and so on. Which means that imported products will be cheaper, thus it's not a benefit for the American economy and the whole. It's a benefit for steel makers and aluminum producers, not for the whole economy, because you will see okay, foreign cars cost cheaper, foreign products cost cheaper. So protectionism really protects the old instead of looking how to develop increased productivity to compete globally, which I think the US has a lot of potential to do, but such protectionism twitch the focus to other things. So when a country is dependent on debt, as long as there are creditors willing to finance debt, it is good. But if there is trade protectionism and global creditors lose confidence, then it will be difficult for the US to refinance. Yes, the history is great and backing reserve currency, everything stays there, but that might change, especially in a trade war. But those are models with millions of factors and I bet that whole Ray Dalio's team of Bridgewater is busy the whole weekend analyzing and adjusting the models. It's a lot of variables. Nevertheless, if you look at from a broad perspective, the debt is the issue and higher inflation, higher interest rates, less likelihood for lenders to give money to the US. So he really opened a Pandora's box with his statement. So we'll see how that ends. Now what should an investor do? I have been also saying my series on the riskiness of the market started on Friday, so it will continue next week with valuations with everything. The markets are really risky. And you have to see one thing. Okay, what's the maximum reward that the stock market can give me? Price turning ratio is 25, thus 4% return with the growth over the very long term. It will be 4%, 5%, 6% really would be a jackpot per year over the long term. What's the risk? The risk is if there are higher interest rates that really the stock market falls 50%. As it went up fast during the last five years, it can drop like a rock during the next year to three years if we see a recession. So that's the risk reward. And you have to see for yourself what should be your exposure in that risk reward scenario. The key when investing is to do very smart things over your life cycle. If you do smart things constantly for 40 years, you will be well off after 40 years. If you do three stupid mistakes where you lose 70% of what you have, you won't be well off after 40 years. So really what to have to do, think, okay, what do I have to do to sleep well over the next five years and say, okay, I made a lot of money, I'm happy, or oh, I can risk it, I don't have such a big portfolio, I will be a net saver if the stock market crashes. So it's up to you, it's your money, your decision. So thank you again for your support. Looking forward to your comments about this, how do you feel about what Trump said? Do you think it's good? It's bad. As always, the economy is always a two-edged sword. So we'll see how that resolves and what will be the consequences long term. I'll see you tomorrow with a video about disruption in retail, groceries, food, farmland. Thank you for watching.