 Good day, fellow investors. Welcome to the stock market news with a long-term fundamental twist, where we discuss the news that really matter for your financial well-being. Today, we're going to discuss one of the questions many ask themselves. Why are stocks going up while the economic news is terrible? How can that be? Where is the divergence there? Why are the markets separated from the economy? We'll explain that. Then we're going to discuss the economy, the current situation, the economic outlook, and then how that transfers to our investment outlook. What should we as investors look at, care for, and how to act in this situation? This video is part of a free video series that I'll launch on Friday, same time, Saturday and Sunday. And today, we'll discuss the news. Tomorrow, we'll discuss how to actually invest and how to make a lot of money during recessions and crisis, as Buffett says, when it's raining gold, put out a big bucket. And then on Sunday, I want to discuss the importance of stock volatility, how and when to buy stocks. I get many questions, when to buy, how should I spread my money, how should I take advantage of this raining gold, the dark clouds period. And that's what we're going to discuss on Sunday, based on the current information, the current news, we're going to elaborate today. Let's start with the markets. From the bottom on the 23rd of March, the stock market, the SAP 500 in this case, is up 25%. The NASDAQ has erased 2020 losses, so it is already in positive territory. How is that possible when, if we look at the jobless claims, this is from the United States, past 20 million unemployment rates reached levels of the great recession. And similar situation is also in Europe. My brother is out of a job, but he's not recorded as an unemployed person, because the government is subsidizing his salary, so he's getting all his money even for staying at home. However, staying at home is not economic production. And therefore, the ugly numbers for the economy, for unemployment and dark clouds outlook. Similarly, China's quarterly GDP growth for a year earlier, after 25 years, 40 years, it's the first contraction that they have witnessed. They have not even witnessed the contraction in the 2009 global crisis. But the Shanghai Stock Index is going up similarly to other stock indices. So how can that happen? Well, financial markets always anticipate the economy lags. Stocks climb as US pays way to reopen economy. And therefore, the markets, given Trump's guidelines, given the stimulus that has gotten into the market, they always anticipate what's going to happen. And therefore, you see this V-shaped rebound in the markets. However, the headlines are still depressing because that's what attracts clicks. So be careful of distinguishing between the real information and the clicks hunting information. And that's why we are here. So please subscribe and click that notification bell so that you get notified also tomorrow when the more important videos come out on really how to deal with this situation. Now, Great Depression, yes, but we can't compare this to the Great Depression. This is the situation of the Great Depression from 1929 till 1943. The blue line, help wanted advertising in newspapers for United States has really been down compared to the index of 100. So really bad situation for help wanted for job and unemployment rate went from below 3% on the right axis. You have the unemployment rate went from below 3% to 24% from 1929 till 1933. And remember this date, 1933, the 5th of March, because we're going to discuss it a little bit later in this video, very important. And you'll see how that reflects what's going on now in the economy. So Great Depression, three years of ugly, really ugly, and then 12 years of bad as unemployment was between 24% and 12% but going down with another recession in the 1937-38 period. So that was the Great Depression. We can't compare it to the current situation because, okay, yes, the International Monetary Fund is predicting a decline in GDP of 3% globally. And the global financial crisis was a minor issue when it is compared to this. The cumulative output loss will be huge, 9 trillion, but okay, you see the line getting faster, steeper, improving, rebounding during 2020 as the situation reopens and improves. Emerging markets likely not to be hit as advanced economies. So there is, again, the same situation as in the global crisis. And if we go beyond on the economic outlook, we look at 2021, the world output that was forecasted to grow 2%, 3% now is forecasted to grow 5.8%. That is, again, a good, nice rebound. Advanced economies a little bit slower, 4.5% on a bigger decline due to the lockdowns, mostly in advanced economies. Now, remember the 5th of March, 1933, when the situation started changing in the Great Depression, yes, that was the intervention, Roosevelt's new deal, but that new deal came four years after the start of the depression. What is going on now, and this is very important to understand also from an investing perspective, now we have a lot of money printing, Bazookas lowering interest rates, and action is taken immediately. This is the Fed's balance sheet, big Bazooka 2009, saved the economy, saved the situation as is by printing money, by increasing the debt pile, then again 2012, 2014, even higher amounts on the balance sheet. And now also started with the repo actions in September 2019, but really exploded to help with this current crisis. And we see the Fed's balance sheet at already $6 trillion, probably go to $10 trillion. So the difference between the Great Depression and now is immediate action. Similarly, the European Central Bank, little Bazooka in euros because it's not as powerful as the Fed, because the Fed is the global reserve currency, the dollar, the euro isn't, and they have to be careful with how much money and when they can print. On top of the monetary policies, helicopter money, whatever they are doing and they will be doing, there is fiscal stimulus. If we look at the United States, how big is going to be the deficit? 2.6 trillion deficits, 3 trillion deficits. So huge deficits expected, and those deficits are expected to continue to run for a long, long time, bigger and bigger deficits to come. Bigger and bigger deficits to come means that the economy will be stimulated and therefore you see such a reaction from the markets expecting stimulus both in fiscal and monetary form during the years to come. My question is, okay, we'll have now a lot of spending, government spending, monetary spending, but why would they stop over in the future? So why would they stop printing money? Why would they stop stimulating? Once you get high on free money, I think it's impossible to get off that high. It's further government budget balances for 2020 will be negative in the double digits compared to GDP that is really big spending, similar situation in 2021. Depending on the repercussions, government debt levels will spike between 40% and 50% increase on the current debt to GDP level. So the governments are going to print, print, and print, and this is what is expected in the markets. And we have to see, okay, how are we going to deal with that as investors? So it is very likely that politics, monetary, in combination will do whatever it takes to restore the previous state of the economy, to restore the previous stability, to restore the previous unemployment level. Whatever it takes are the key three words here, whatever it takes. When somebody says that whatever it takes, when you do something whatever it takes, it means you have to sacrifice many other things. What are they going to sacrifice? Let me give you a hint. So level of unemployment, December, record lows, historical 3.5%, similarly in the European Union, Germany 3.2%, United Kingdom 3.7%, 6.2% for the whole European Union. Great numbers target that they want to put back with whatever it takes mentality. So what did you get from this? What are you thinking? Please let me know in the comments below and as you're already looking below, please click a like because it really helps the algorithm and this channel. So thank you for that. What do you get from this? Well, from an investing perspective, what are the questions we have to ask ourselves? The first question is, what is the value of money? What is the value of money is the question we have to ask ourselves because if they are printing that much money, it means that the value of money will decrease. The value of money as a store of wealth, that is the sacrifice. And as they sacrifice that, we need to find the best store of wealth to increase our wealth and protect our wealth. Those are the key investing questions we have to ask ourselves and then look for the answers. When looking for the answers, the answers can come from looking, where is the money flowing? What are they going to do? How are they going to react? And now it's still information focused on the current crisis, on the debts and situation in healthcare and everything. But in the next month, two, three months, the situation will be more focused on where is the money flowing. So when you look at treasuries, the money has flown to treasuries because everybody seeks short-term protection. However, governments are borrowing and printing trillions. Why would you own bonds when you know that the value of money over the next five, 10 years will be much lower? So they will get it, the bondholders, okay, we need to protect ourselves, our money from, let's say, perceived inflation. Just one note here on inflation, I made a video last week about inflation and everybody said perhaps we'll have deflation. Japan, yes, inflation, there is a divergence, depending on the supply and demand situation, you will have the inflation in some sectors, in some we won't have, you will have deflation. You will have inflation as there is so much money printing in real financial limited assets. And this is the divergence you have to understand. When I say inflation, I say inflation in financial assets, stock prices, real estate, depending on where, depending on the location, healthcare, and all those limited services and goods that can be increased by money printing or by an external supply with high competition. Keep that in mind, diverge between just the name inflation and separate segmented inflation. So when you compare bond yields with the SAP 500 dividend yield, the SAP 500 is pretty darn cheap. If you compare it to the earnings yield, it is even cheaper with earnings of 4.75%, the earnings yield and the bond yield 0.3%, you would be crazy to own bonds. And that is one investment outlook that is going to develop over the next years. In 1971, Nixon de-packed the dollar from gold. In the 1970s, bonds were called certificates of confiscation. Now everybody's focused short-term, when they start looking long-term, this will be a big, big issue. And then if we look at the bond market, there is 100 trillion in bonds. And that money will look for protection. And that's why the stock market might go up. The stock market, if you look at here, it's 90 trillion, almost now a little bit lower, 80 trillion, let's say. So 100 trillion will look for safety. And where can you find safety? Well, you can find safety in real assets. So the situation, yes, will get ugly, but the reaction will also be there whatever it takes mentality. Therefore, we'll see a lot of volatility in the markets. And we have to see, as investors, we have to see where is the value. And when you see a value, you have to buy that value. That's pretty much the conclusion when it comes to investing. As says Buffett, when it rains gold, bring out the biggest bucket you have. So real assets, give protection, tune in tomorrow to really discuss how to invest during a recession, a crash or other recessions, how to be prepared for those, what is the key when it comes to accumulating wealth over cycles. And then on Sunday, I'll discuss how to buy those stocks in these volatile stock markets, volatile prices that go up 50% over the last month and then down 50%, up 50%, which has been the case for many stocks. Thank you for watching. Subscribe, click that notification bell. If you want to read more of my articles and what I do my research free investment course, please check my website, swencarlin.com. Thank you and I'll see you in the next video.