 Good day fellow investors! We recently discussed the risks coming from the crazy monetary policies that have been adopted in the last eight years. We have discussed the most important economies, so please watch that video if you haven't already. Now, I want to dig deeper into the risk of the United States today. Because, yes, I said that the United States is the less risky of all, but there are always risks and it all depends on how the market will perceive what's going on. There is a big difference between a complete stock market crash and financial crisis or just a correction, which is also important and one can prepare its portfolio for that. So let's dig into what can happen in the United States in 2018. And we'll finish with a recommendation for an investment to watch during 2018 in order to protect what you have, which I think is very, very important going into 2018 and forward. And you'll see now why. Now, if you have watched my all-weather portfolio videos, you know that there are four macroeconomic environments. Economic growth above or below expectations and inflation above or below expectations. So on economic growth, there are two options. One is that economic growth in 2018 meets or exceeds expectations, which for the United States are about 2.5% GDP growth, or that economic growth falls under below estimations, which wouldn't be such a good idea and which would enable the Fed to continue with its tightening plan. Let's see how that works. It's all about money. So if you look at the U.S. monetary base, you can see how up to 2009 it was a stable growth that accompanied GDP growth. However, since then, in order to keep the economy afloat, the Fed really had to intervene and increase hugely the monetary base by increasing the bank reserves. Nevertheless, the Fed has now started to revert the situation and it's trying to lower the amount of bank reserves and increase interest rates. You can do that for a while, but sooner or later, the Fed will push the economy down. Let's see if that will happen in 2018. A very interesting chart are the delinquency rates on loans. If we look at what happened on the commercial loans, consumer loans and credit card loans, we can see that since the Fed announced the tightening, since the Fed started raising interest rates, the delinquency rates went up. Higher delinquency rates means higher costs for banks, means that the banks will be unwilling to lend as easily as they have been doing before, which can create a very, very negative effect on an economy that's based on credit. We can already see here, for example, commercial and industrial loans have been slowing down. The growth isn't as big as it was before when interest rates were close to zero. Similarly, another indicator that shows how many believe the Fed won't be able to continue with its tightening for a long time is the spread between the 10-year treasury and the two-year treasury yield. Higher interest rates should push treasury yields higher. However, that is happening on short-term bonds, but not on long-term bonds, because long-term investors know that anything can happen in 10 years. In one, two years, the risk is smaller, but in 10 years, the risk is higher that something happens that pushes yields and interest rates lower and therefore makes 10-year treasuries a better investment. If interest rates somehow fall in 2018, 10-year treasuries will increase in value. So that's a hedge if something bad happens to the economy. Something to keep an eye on during 2018 and onwards. I was really against investing in treasuries in 2016 because the yield was too low and I really expected higher yield. Higher yield brings down the value of treasuries. However, now we are already at the yield of around 2.4%, which is an interesting yield to start exposing your portfolio, to start hedging your portfolio towards potentially lower interest rates in the upcoming future. You can see here the iShares 7-10-year treasury bond ETF 5-year chart. You can see that when the yield on the 10-year treasury was extremely low, the level of the ETF was at 113.8%. Now it is around 106%. So if the yields, the interest rates go down and it falls to the lows we have seen in 2016, we can expect a 5, 6, 7, 8% increase in such an investment vehicle in addition to the 2.4 yield that you are locking in by buying bonds now. So the investment to keep an eye from now to really watch and see how that fits your portfolio risk exposure are treasuries. 2-year, 10-year treasuries to see how that fits and how that fits your portfolio. That's my recommendation. I don't know whether the economy will meet expectations or won't. Nobody knows. Therefore, as always, as I have been constantly telling on this channel, all weather protection is essential for long-term wealth creation. Think about it. Let me know in the comments what you think about owning bonds, about exposure to bonds and how much of your portfolio would you allocate to treasuries now, seeing that we can see higher interest rates in the next 6-9 months, but it could quickly revert if there is a shock. There is potentially a global shock to the economy. Trump does something crazy. North Korea does something crazy. You never know. At this moment in time, everything looks so perfect that there is a higher risk that there will be trouble than a continuation of great times. Thank you for watching. I'll see you tomorrow in the next video.