 Good day fellow investors and welcome to the traditional stock market weekly news with a fundamental twist. Today we're going to discuss Janet Yellen resigning. We're going to discuss the Fed minutes. Very important to read them at least once in your life if you haven't. Then we're going to discuss youth unemployment and human capital and the effect of human capital on the wealth of nations. Let's say on development and on future potential and of course stock market returns and then we're going to conclude with house prices in relation to stock prices to discuss a little bit how stock prices move much sooner than something actually happens and much faster than house prices which is very very interesting and then I will end with a question for you whether there are any entrepreneurs watching this video. Let's immediately start. Janet Yellen said she will leave the Fed board even if she was expected to be there until 2024. Of course I have already been discussing this 71 years old moral hazard if what she has been doing was wrong and it proves to be wrong in the next 10 12 15 years she couldn't care less. She says ask Alavista I'm retiring I'll be teaching doing some speeches and have a nice life whatever happens. So just a question just something to think about we really tend to think that the older a person is the wiser the person is thanks to experience. However somehow I come to the conclusion that the older the person is the more in a powerful position the person is just means that the person didn't make that much enemies during a lifetime. They are incredibly smart people however they think a little bit different than the majority and they would do a great job perhaps painful in the short term but great in the long term in such positions. Unfortunately such persons will never be presidents will never be politicians will never be central bank leaders because that would hurt in the beginning and that's something that creates enemies people don't like it nobody likes it. We are all wired for immediate gratification and not long-term gratification. So it's very interesting how it works who is put in which position and who makes the calls on what will happen in our lives because it's all about our future usually 60 70 year olds. I don't know if that is smart nevertheless something to focus on and something to really read if you haven't ever read are the Fed minutes it's a 10 12 sometimes it goes to 20 pages sometimes there are pictures sometimes there aren't however it's what the Fed members have discussed in their Fed meeting when they announce whether they will raise or lower the interest rate they just tell what are their conclusions in the Fed minutes they tell what are their worries what are their uncertainties and by reading those minutes you can see okay the Fed isn't that certain about what's going on there are fears there are mistakes and so so let's dig into the Fed minutes just a few points to see what you can get there and what you can learn from there that's very important for anything that will happen in the next 10 20 years. Now the big change in the attitude is that many participants observed that there was some likelihood that inflation might remain below 2% for the longer than they currently expected so now suddenly change in environment inflation might remain below 2% why because secular influences such as the effect of technological innovation disrupting existing business models that is likely offsetting cyclical upward pressure on inflation and contributing to below target inflation. And here I want to discuss reflexivity again low interest rates a lot of companies borrow at Daimler in Europe borrows at negative interest rates it means that their cost of capital is below zero it means that they can really be competitive around the world and produce cheaper cars and force other producers in the world to produce cheaper cars so everything is cheaper also thanks to interest rates I wonder why the Fed doesn't get it that there is potential correlation between low interest rates and low inflation even if economic theory would say that low interest rates would have to spur inflation higher however there's so much competition the world yes is shifting from producing goods to services where you don't have so much demand for hard goods and then of course services cars technology software everything is cheaper because cost of capital is cheaper perhaps when we will actually see higher interest rates we will also in the long term see healthy inflation however the Fed doesn't get it because those in those boards are those people who haven't pissed off anybody during the last 50 years in their careers and they have slowly slowly came to that position if you piss off somebody by saying something different by doing something contrarian you won't become a Fed member so that's life so again they are really sticking to economic theory instead of looking at new ways new things that could disrupt that economic theory one of my ideas is that low interest rates created still holding low inflation what's also very important in their comments regarding financial markets participants generally judged that the financial conditions remain accommodative many forget that but the economic environment we are living in Europe Japan United States is still accommodative is still an environment of easing if we feel well if we look at how much consumers are going to spend for black friday everywhere there is craziness about black friday netherlands where i live in the states and then nobody is worried about the economic environment because there is so much money and everything is good however people forget to realize that it is all thanks to central banks being still accommodative that's something to really remember if and when the tide turns if it will ever turn it will be a completely different ballgame however the Fed participants are a little bit worried about a potential buildup of financial imbalances thanks to high valuations but then immediately the conclusion was it was noted however that elevated asset prices could be partly explained by a low natural rate of interest which doesn't lead to potential reversal in valuations so the stock market and high valuations high asset prices are really fueling the economy because people are wealthier they feel wealthier they spend more which does well for the economy and even the Fed is now worried that a reversal in valuations would affect the economy not just the stock market but the economy and therefore we can be assured that the Fed will keep backing the SAP 500 because that's their goal as long as they can do it they will try to control it and keep stocks high which is very good for those invested and for those who know how to take advantage of the situation now something else I want to discuss today is the youth unemployment rate the youth unemployment rate if we go from the lower line 2017 now we have Germany very low close to 7 percent then we have China India below 10 percent US at 11 percent Brazil at 25 percent and Italy close to 40 percent youth unemployment measures unemployment among those looking for a job between 16 and 25 years old now why do I mention this is very important because look at Italy 40 percent of youngsters are unemployed imagine the human capital development gap that is created there because as they don't work they don't develop the skills they don't develop the competitiveness they don't develop what will lead the country in the future as we know for example Italy in 10 years 40 percent of the population will be above 65 but the young population will be unable to lead the country into better times so if you really want to invest in the long term I think youth unemployment and human capital is very very important to watch the quality of human capital how many languages people speak what is their education level what is their global competitiveness from a human capital perspective very very important if you invest accordingly you will see that you will profit in the long term I'm very happy to see that China and India are doing amazingly on that field just a quick story on human capital two countries similar countries Jamaica and Singapore both countries became independent in the 1960s 1960s free I think from the Commonwealth now Jamaica had agriculture some mining resources great position tourism position great location close to the US and decided to develop tourism take depth invest and base their economy on somebody else tourists from the US Singapore instead decided to develop human capital Singapore was smaller than Jamaica no natural resources a lot of lowly skilled immigrants from India from other Asian countries that used to work in the docks when it was under British rule and then Singapore decided okay will this develop human capital Jamaica decided we will develop tourism just to make the story short if we look what happened later Jamaica they started with a GDP per capital of five hundred dollars 50 years forward Jamaica is close to five thousand Singapore 50 years forward is close to 50 000 difference between human capital development and something else however what is very interesting if we look here from 1963 when they became independent we can see that Jamaica was leading in the first four or five years and then Singapore simply took off this is because investments in tourism yes they improved the country immediately but they like to improve the human capital which is essential for long-term economic development so really focus on human capital also on a personal note if you develop yourself continuously you have nothing to worry about recessions about stock market crashes finding a job creating a life the more you value as Buffett would say the best investment is always the one you make in yourself so not so related to the stock market but very very interesting to see how that works and how that affects the whole economic system let's go to home prices and stock market this is the home price index in blue and the stock market as you can see from 2008 the stock market crashed extremely fast the home price index was crashing at a much much slower rate okay stocks crashed from 1500 points to 750 points 50 percent the home price index just about 20 percent and there is a big difference if you look stocks bottomed in 2009 march 2009 home prices bottomed in march 2012 so there is a free year difference between the bottoming of stocks and home prices then home prices slowly started to recover following what happened in the stock market and this is very interesting because it shows how stocks react very very quickly because they are very liquid and a lot of speculators own stock a lot of people try to speculate with stocks however real estate there are different fundamentals and there really a lot of economic fundamentals are shown jobs how many people can get the mortgage what is the interest rate what is the debt burden on the community and so so it's extremely interesting to follow how stocks and the stock market anticipates what's going on and what will happen in the economy and reacts really irrationally but how home prices really rationally slow down in a recession fall and then pick up as economic activity and monitor monetary easing speeds up so it's a very interesting time difference and something to really take advantage if you're thinking about diversifying from real estate into stocks or from stocks into real estate to really take advantage of difference between the effect the economy has on different asset classes the same thing happened in the Netherlands we can see that the home price index peaked in 2008 going into 2009 and then slowly slowly declined until 2015 when you know who bought his real estate property in the Netherlands since then prices have really recovered especially around Amsterdam yay and I want to finish today with the question if there are any entrepreneurs there we are discussing on this channel stock market where I share my fundamental my macroeconomic research with some stock picks now stock market investing is not so motivating not so inspiring you don't even know but I have been teaching entrepreneurial finance for three years at university and I loved the subject the only problem was that my students didn't want to become entrepreneurs when I would ask how many of you would like to become entrepreneurs one out of 30 would say maybe so I don't know how that comes that 20 year olds 21 year olds don't want to become entrepreneurs or it was just in my school where I was teaching nevertheless if there are any entrepreneurs here I was thinking just for the motivation just to do something really positive once twice a week to start an entrepreneurship channel where I would share my personal entrepreneurship part as I convinced myself from my teachings to quit my job and become an entrepreneur what I learned being an assistant professor in entrepreneurial finance will and so share a little bit science a little bit knowledge a little bit fundamentals and then try to motivate anybody who wants to become an entrepreneur not become the next next facebook but become financially independent let me know what you think about the entrepreneurship idea just to shake a bit my life to make it positive stock market investing is mostly about risks stock market analysis and calculations entrepreneurship is all about heart so let me know if you'd like to watch videos about entrepreneurship in the comments thank you for watching click like if you like the content subscribe if you haven't yet and I'll see you in the next video