 Good day, fellow investors. Welcome to the stock market news with a fundamental long-term view. Let's start by discussing what has happened over the last week and then looking at the potential triggers and actual causes of a recession or a bear market. Let's see what has happened. So over the last five days, the market is still looking for direction. We have seen a big decline on Monday, huge rally on Wednesday with the so-called Kudlow rally. But more about that at the end as it will be a funny ending. And then we have seen again a big decline, more than 2% on Friday. The market is still looking for direction. That's why there is this high volatility and this is something to get used to it. It's normal. It happens before there are some changes in trends. We don't yet know whether the trend will actually change and we'll see a decline. The trend, the nine year upwards trend is being tested. If it is tested and it passes the test, it will gain even more on the upside. If it doesn't pass the test, then the trend reverts and then finds new levels on the downside. We'll see what happens. Nobody knows. Let's see what happened around the world. So the Shanghai index was positive for the five years and you can see how it doesn't really move the same way as the SAP 500. Also trading hours are much prior. So they can only anticipate or follow what has happened. Germany is up. Of course, probably the German market closed before the decline started on the American market on Friday. And you can see that on Thursday it followed the rally the American market had on Wednesday. However, on the medium term three months, the DEX index is eight points down while the SAP 500 is five points down. The difference comes from a stronger euro, 3% stronger. So that's exactly the difference between them. This means that there is pretty high correlation in the global financial environment and you cannot really hide anywhere. Let's look at what the market says about what's going on. So stocks plummet amid rising US-China trade tensions. A while back it was South Korea before that it was China going into recession twice January 2016 and in the summer of 2016. Now it is tension amidst trade wars. So when you see the Wall Street Journal stocks plummet because of trade jitters. Perhaps stocks are plummeting because stocks have been going up over nine years. Valuations are extremely stretched. And there is another thing stocks stock markets can't stay flat. They either go up or they go down. That's the nature of our investors 99% of investors. If it wouldn't be like that the stock market would look like this. If we would be all rational the stock market would look like this. This would be the return. This would be the economic growth. This would be the interest rate average over the very very long term. There probably would be no recessions because everybody would think in the very very long term and we would see a stock market like this depends when you take the average line you see where you come out. So there are trade wars NAFTA, Mexico, Europe, Italy. All those jitters are just noise and it's important to understand the difference between what's the trigger of something and the cause of something. The best way to explain that is to look at what happened in 1914 in the First World War. So the Archduke of the Austro-Hungarian monarchy was killed in 1914 by Gavrilo Princip in Sarajevo in Bosnia and Herzegovina. This was the trigger of the war because Austria declared war on Serbia because Gavrilo Princip was an alleged Serbian terrorist and then all the other friends UK declared war on Austria, Germany declared war on them and that was the trigger of the war. However, the main causes of the war were nationalism, colonialism and alliances usually called as main militarism. Everybody was piling a military, alliances were made to prevent a war which they didn't prevent imperialism and nationalism. Similarly, we can apply that to investing. So what will be the trigger of the next recession and what would be the actual cause that will be later in the stock market or school or university books? Let's check. The trigger, it can be tariffs, it can be a war between Saudi Arabia and Iran, it can be a retaliation on tech, Amazon, Facebook, could be that the European Union lawmakers investigate what's going on, put pressure, put fines, put everything that doesn't allow those companies to be so profitable as they are. So those are potential triggers but let's look at the actual causes of the next recession and next bear market. First cause the stock market is up 25 times over the last 35 years. Do you need any other explanation? Further productivity which is the motor of economic growth in the long term and its cycles can be pushed higher or lower due to debt. So productivity is the key. Productivity growth has been very very slow over the last 10 years in the US. Manufacturing productivity growth has been even slower. So if there is no productivity growth the only way you can grow is by debt and we can see that the total public debt as a percentage of gross domestic product has increased also three times since 1982. Further valuations the price earnings ratio of the SAP 500 is 24, the K-precious is 32 all the way above historical averages and you can see that the PE ratio was this high just in 1895 even in 1929 it was lower than these levels. Another cause of course interest rates we have seen declining interest rates if we see higher interest rates well there is no other way than asset prices to go lower because that's what prices them. So there are triggers and each time you see some news think okay is this a trigger or a cause. When you start thinking in causes you can see okay would it be a trigger that will cause the cause to go into effect. Let me finish with Kudlow who said this. We'll see how this works my views do look you know I'm a growth guy I'm a Reagan supply side growth guy I think that at the end of this whole process the end of the rainbow there's a pot of gold. So at the end there is a pot of gold not dollars so be hedged be prepared looking forward to comments and I'll see you in the next video.