 Good day, fellow investors. I still hope you are doing great today, even if the past week wasn't that good in the financial markets. Today we're going to discuss what happened, what are the reasons behind what happened, and of course what will happen in the future. So stay tuned. Let me first show you that we haven't seen such a decline for 15 months, which has been the longest positive low volatility streak in the history of the SAP 500. For higher volatility, of course, you are used to stability and now this gets people scared. Last week everybody was asking how high can stocks go? We will hit 3000, 4000. Stocks can go only up, up and up. And now this weekend the question will be how low can stocks go? Should we sell? Should we stay as soon as we see panic? We see what happened on Friday and that was a 2% decline. Total decline over the week was 3.86, which is nothing important. The SAP 500 is still at 2780, which is 762, which is a huge, huge result over the past nine years. Nevertheless, the question is how low can this go? The first news from the previous week was that the US GDP was below expectations. Okay, nothing happened. As you can see, Monday there was calm. Then things started unrolling. First, we had news that the Treasury announces a refunding. This means that the Treasury will ask much more money on Treasury's auctions than it usually does. The department expects to boost the sizes of at least some auctions in February to accommodate to a growing budget deficit, thanks Trump, and the Federal Reserve's initiative to shrink its balance sheet. So the government constantly sells Treasuries in order to finance itself and refinance all Treasuries. So that gets never repaid. Nevertheless, if they need more money, if they will sell even more Treasuries because of the higher deficit, and in this case the Fed is not such a buyer anymore, the Fed is now the seller, then the question is, okay, who is going to buy those Treasuries? Higher supply. We have had some rumors that China will stop buying US debt, lower demand, a little bit fear. I'm not going to buy Treasuries now if their value will be lower in the future. And this created a spike in interest rates, in Treasury interest rates. If Treasury interest rates go higher, then the required return from stocks also goes higher, because stocks are riskier than Treasuries, and that puts a negative effect like gravity that pulls both stock prices and bond prices down. So this is what happened, and there was plenty more. Let's see. During the week, San Francisco Fed Williams says that he sees three or even four rate hikes this year. So four rate hikes, which means higher interest rates again, because the economy is overheating. And the crucial overheating moment was when the payroll report came in on Friday. So job growth up 200,000, which is more than expected. And the most important thing was that average hourly earnings increased 2.9% on an annual basis. So 2.9%, this means that, okay, we have reached a moment where companies cannot hire anymore, which tout increasing the salaries, which means that we are at that point in an economy where there is no more room for growth. In addition, an economy cannot grow that fast without increasing its productivity. And you can see that the US productivity has been going just down for the last few years. So this is what happened with the US 10 year government yield. It surged from 2.6 to 2.8, but the increase has been going on already for a few months now. Nevertheless, this spike is really what tipped stocks and bonds and the perspective on the stock market. The Fed has started selling, has been increasing the sales of how much it is selling treasuries, which means there is one less buyer that buys treasuries. Higher interest rates put a big burden on all in-depth corporations, governments and so on. So not a good thing. Higher interest rates, stocks go down. What will happen? Let's look a little bit at the fundamentals. If we look at the psychically adjusted price earnings ratio that takes in account 10 year earnings, we can see that it is higher than Black Tuesday 1929. It is much higher than Black Monday 1987. It is not as high as the dot-com bubble, but we are at extremely high levels. Robert Schiller, the one that created, not invented, but created and marketed the CAPE ratio, has said that it explains one-third of future stock market returns and the higher the CAPE is, the lower will be your stock market returns. So if you're looking from a business perspective, from analyzing businesses and a business earnings yield, then this market crash might go on for a long, long period of time. Let me show you something very interesting. How to buy stocks? Google searches in January 2018 has been extremely high as it has been in 2008. So when stocks are at its highest, people want to buy more because they fear they are missing out. As you can see, expectations from stock price increases since Bloomberg measures it, has never been so high prior to this week. Total equity inflows were extremely positive and the highest you can see here for more weeks in a row during January 2018, which is extremely bullish indicator for stocks. However, that might revert quickly. So if we look at earnings, they are very high, okay, stock market crash is okay, is possible. But there is something else I want to show you, which shows the other side of the medal. It isn't that dark. If we look at earnings from the SAP 500, 50% of the companies reported from for now and 75% have reported EPS surprises, earnings per share surprises. Further, the blended earnings growth rate for the SAP 500 is 13.4%. So those are excellent, amazing news. So stocks have seen earnings improve, have seen growth with everything is good. However, this growth accompanied with the good growth in jobs with higher prices with expected higher inflation is really what pushes interest rates higher. The Fed will try to not let the economy overheat, higher interest rates, lower earnings, later debt issues, and of course a recession. So nobody knows what will happen. Further on the earnings, Alibaba showed exemplary earnings, 56% revenue growth, which is amazing. iPhone also growth other products, especially very important other products growth, growth over all regions. Alphabet announced revenue up 22%, which is huge for such a good company. So on one side, we have fears about interest rates, higher interest rates, lower asset prices. On the other side, we have great earnings, everything is doing great. So we will see more volatility as the interest rate and the growth from stocks balances out. And we will see how the Fed will manage to keep things stable. If the Fed loses control, we might see inflation, that might be also good for stocks overheating economy, if the Fed loses control over monetary policy. So I'll make a video about what can happen to stocks tomorrow. But back to the question, what will happen from the current perspective? I think that anybody who says what will happen is lying, nobody knows what will happen. Stocks can go up and down in the next three, six, 10 months, five years, nobody knows. So what to do? The most important thing is to understand your personal financial position and to understand the risk you are taking. If you have to retire in the next two, five, 10 years, you have enough to retire to live the life you wanted for yourself and you have everything in stocks, I wouldn't do that. I would look for much more safety, short-term treasuries, whatever, where I can protect my capital. If you're young and if a crash comes, you can take out your salary, if you keep your job and buy more stocks, then you might even enjoy risk it a little bit more. So everything that will happen in the market doesn't matter. What matters is your risk, reward, position, your portfolio, how are you diversified across sectors, across other investments, where are you in your life? That is what matters. Nobody knows what will happen with stocks tomorrow, next week, in the next 10, 12 months, two, three, four, five years. Because as you can see, earnings are growing. Those companies are growing. The big companies are growing. Everything is growing. Everything is good. The Fed will try to trim it a little bit, increase interest rates, and we don't know how will that affect in the next six months. Will the Fed hike more or less? And that is what will lead stock prices. So see how that fits your requirements.