 Good day, fellow investors! The topics of today are the trade jitters, government debt, interest rates, treasuries and how that affects the long-term economy and there we're going to conclude with something that has happened in Greece but can be applied to the whole world. Let's start with the trade jitters. So over the week the S&P 500 index was pretty volatile, ups and downs, ups and downs, not a big change over the five days and we can see that year-to-date is still up 3.26%. So you might say nothing big happened there, but let me show the Chinese index. That index fell 4.47%, this week 12.6% year-to-date and about 20% from the top somewhere in January. The key here is that emerging markets, all those borderline markets are the first place that investors flee from. And everybody rushes to safety, to safe havens, which is the dollar, which makes the dollar stronger and which then changes again things in the long term because sometimes you're strong, sometimes you're weak and the economy and everything in the world always fluctuates around that. And if you can understand that fluctuation, long-term fluctuation, it's much easier to invest and it's much easier to position yourself. Apart from the stock market, trade also affects commodity prices, but look at the price of copper. It spiked in June and now it's down, but it's still around the average for the year, so that's not really paying yet there. And we'll see if paying ever comes there. But something very important and much more important for the long term is that interest rates are going up, which means that yields on government bonds also go up. Here we have the one month treasury for the United States government and you can see that in 2015, the government could borrow money at 0%, so practically no interest on the debt. However, now they have to pay 1.8% per year just to borrow money for one month, which means that A, they are riskier or the Fed has been raising interest rates, which is the case. However, higher interest rates means also that the government will be in trouble to pay so everybody will request even higher interest rates. So we will see how that evolves. Nevertheless, look at this. Since the Fed announced higher interest rates, the dollar really spiked 2014-2015, then stabilized as the market wanted to see what's going on and now again over 2018, as there is turmoil in emerging markets, the dollar is getting stronger because people are chasing those 2% yields that are safe. Usually the US government is the safest investment in the world and the dollar trend is still strong. Some stabilization, but if you look at it from a 3-4 year perspective, it really strengthened thanks to higher interest rates. Now, this is not good because of this. If you look at the US national debt, it is 21 trillion, something probably even higher as I'm filming this and it will be even higher when you will be watching this. The point is that interest rates on the government debt, the average interest rate is now 2.4%. A year ago in May was 2.2%. And you can see here on this table that the interest on the debt, the second column, has started to grow. 223 billion in 2015, 240, 263 in 2017 and 310 in 2018. Those are 100 billion added just from higher interest rates. 2019 as interest rates continue to grow. If they reach a normal historical level of around 4, we can see long-term interest debt payments from the US government to be around 600 billion, which is double what we have now. So higher interest payments to all those people that rush into buying treasuries around the world will put a burden on the US economy, on the dollar, on a lot of things. And that is how the economy fluctuates over time. Then the dollar will be weaker, something else will be stronger. Then it will again be opposite because a weak dollar will be good for the economy, more people will buy American stuff, less people will import and so on and so on. The story goes on and on and on also from the long-term. You can see the fluctuations in this long-term dollar index chart, up and down, up and down, up and down. However, this will have a burden on the economy and let's see what the Fed had to say with their last projections. So change in real GDP, you can see that 2018 the expected change in real GDP is 3%, but then it is expected to decline to 2%. This difference between the free now and the too long term is from the fiscal policy, from the stimulation Trump is giving and from the deficits. However, that's unsustainable and they hope for a 2% long-term growth. So don't calculate that the economy and everything will be as it is now. It will grow at a slower pace. It might continue to grow at free, but then it will grow at zero or will go into recession. But that's not what politicians care about. They just care that it is now 3% so that you can win the midterm elections. Unemployment rates also don't count things will look like this forever. Now it is below 4%, but the average natural, the good one should be around 4.5%. So unemployment has to go up from a natural perspective. Inflation, they hope to keep it and manage it around 2%. So higher interest rates, higher deficits, higher debt burdens, always try to keep those things in a long-term perspective and in balance. Sometimes it will be stronger, but then it will be also weaker. Don't think that what you're seeing now will last forever. It will be better, it will be worse and that's the volatility you have to accept over the long-term. Fiscal stimulus helps, but what's the next stimulus? At some point there cannot be more stimulus because you have to think about the debt. And if the situation in the US continues like this, there are many things that might prevent debt from going on, but nobody can do this. As you can see here, Greece Euro Area Creditors struck a deal to ease repayment terms. Who is going to allow the US that loans to be pushed out by 10 years with a 10-year grace period? Well, the Fed can print their own money as the ECB takes 3 months to print the 96 billion to save Greece, but it's just something to keep in mind over the very very long-term over the sustainability of the situation. So we have seen the short-term impact of the news on the stock markets and you can see how investors are fleeing emerging markets, which will create opportunities eventually in emerging markets first. We'll see how that will affect developed markets, not that big of an effect now on the SAP. Europe already a little bit. In the medium term, the dollar is getting stronger. Will it get stronger? Probably, especially as we have 3% growth. But if that 3% growth projections become 2%, 1%, then it might even get weaker as people will expect the Fed to keep rates stable or even lower. So that's the medium term. In the long term, the situation is pretty much unsustainable because you cannot pile pile pile pile and up those deficits without having to cope with it at some point in time. So future generations, my young YouTube viewers from the States, you will have to pay for the debt, pay for the burden at some point in time, be it from inflation, be it from higher taxes, be it from anywhere else. That's how the economy works and that's nothing we can do about it. The only thing is try to position ourselves to take advantage from that. Keep watching the channel for more insight into investments, love your comments, so looking forward to read them and I'll see you in the next video tomorrow when we discuss another cyclical, which is Daimler, a company that I have written about in my book. But the key is that it is very cyclical, tariffs have impacted it and I wanted to analyze the company to show you how, again, if by keeping a long term perspective you can see much, much better what's going on and invest much easier. See ya!