 Good day, fellow investors. I hope you feel great today and welcome to the weekly stock market news with a fundamental twist. Today we'll be discussing the Fed's stress financial index, Leonardo da Vinci and inflation. The next big short, just shortly touched on that, will discuss the recent news about China slowing down and the terrible impact it had on commodities and other related items. China slowing down. We'll take a short look at gold and then to finish we'll discuss about insider trading and why Kimball Musk is absolutely crazy. I don't know what is he doing. So let's immediately start with the Fed's financial stress index. The Fed measures 18 weekly data series like credit liquidity for banks or interest rate spreads and then gives out an index that shows how difficult it is to get financing and how stressed is the general financial environment. And I'm sure you won't be surprised by the fact that financial stress is at historically low levels. Now for financial stress it is good when it's balanced. It's not good when things are too easy and it's not good when things are too difficult. Now things are too easy for companies and that's not good because inefficient companies manage to survive create a lot of unhealthy competition and disable the economic environment to work in a healthy way. Plus a lot of companies due to the low interest rates engage in risky projects thus make the whole system more risky in the long term. For example if we look at the US net depth to cash flow ratios and the high yield bond yields thus the junk bond yields of corporations that would probably go bust if the financial environment changes we can see a huge divergence between the corporate net depth to cash flow and the interest rates. The interest rates are continuing their decline while the corporate net depth to cash flows is increasing which means that corporations are taking more and more depth but the cash flow isn't improving. On the negative side when and if interest rates rise that corporate net depth to cash flow will rise even higher because of higher interest costs and the situation will get very very difficult. So the Fed knows that and that's why they have been very very slow in raising interest rates even if we are already eight years in a period of economic expansion. The story behind the Fed is that there is no inflation that's why we don't have to raise interest rates. However I think there is inflation and there is a lot of inflation and money is becoming worthless. If we look at the stock market it has exploded over the last eight years but there is something even more telling. This painting from Leonardo Da Vinci was recently sold for 450 million dollars. I would never put something like this on my wall but somebody was willing to pay 450 million dollars for this. So there is clearly a diverging world. Paintings, stocks, home prices, fixed assets, rich people's assets, increasing price making the rich richer. While if we look at the Bloomberg Agricultural Index we can see it sharply declining over the last five years. So inefficient companies, low interest rates, subsidies in the European Union make an unhealthy environment with low inflation for food prices alongside low energy. However both those sectors energy or food are cyclical. So we have to expect a reversal in those sectors somewhere in the future. It can also happen in the next 10 years but the impact will be huge on global central banks, their interest rates and the sustainability of the current financial systems. So we really have to think about how are we positioned in relation to what will happen in the next 10 years or if you're positioned in the short term but then you have to know okay I am positioned for short-term trading. However very few investors are positioned in the short term with their whole portfolio. Everybody has some long-term place and some short-term place. We'll discuss more about that later in the gold sector. And now the first commercial break of this YouTube channel. We have a sponsor of this video well practically of the whole channel since it began but nobody knew about it. My wife has just published her new cookbook. So if you're into healthy eating, healthy living, if you're a long-term investor and want to reach 100 with a healthy body then you really should dig into my wife's cookbook and see how to prepare healthy lunches when you go to work, when you go to school. If you have children that go to school it's better to give them a healthy lunch than an unhealthy one. In addition she has a website she's a health guide so feel free to dig into it if you are interested both the links also for the book and for the health coaching are in the description below. So even if you're not interested you can also check her website and see who is behind me and who is taking care of me. So that's it for commercial breaks let's go back to business. Now the situation in Europe is even worse than what the financial stress index in the US shows. If we just take a look at the Italian government budget deficit over the last 20 years we can see that it has been negative every year and the government's debt to GDP ratio is 120%. However nobody's scared about that. The Italian two-year treasuries are less risky than US three-month treasury bills because Italy of course has a negative yield and this again shows how it's very difficult for anybody to raise interest rates the only catch can be inflation because if Italy would have to pay a healthy interest rate of 4 or 5% it would default on its debt because it would put too much pressure on the economy on the Italian people especially since they didn't qualify for the World Cup but don't tell them. However maybe I am wrong because maybe the Italians will want to work even more especially the older ones as by 2040 28.5% of Italy will be above 65 perhaps they will be wiser and they will repay the debt later so it's a very very interesting situation definitely unsustainable so we must understand that the current financial markets are unsustainable sooner or later it will break where and when I don't know yet. Last week's news started with the China slowdown scare however let's see what it is all about Chinese industrial production rose 6.2% instead of the forecasted 6.3% it declined in relation to September retail sales also declined however I think every developed country would sign immediately for such growth rates and the funny thing is that the government is really putting breaks where it sees that it is getting too hot like depth what kind of depth what kind of lending is allowed and of course real estate so China yes it did slow down but as long as China and that's the fundamental news that I want to give as long as China grows it will have a positive impact on demand for raw materials for oil for everything that China is consuming during its growth path and so as long as it grows we are fine if it is 6% 5% 7% doesn't really matter so much in the long term it matters a lot in the short term because there are a lot of traders a lot of speculators they that play on that but in the long-term investment run it doesn't matter that much what is also important is that other Asian countries are booming Indonesia which has a population of 260 million is growing at 5% per year Bangladesh with 160 million is growing at 7% put just those two countries together and you have 420 million people so that's something very very important to look at of course there those countries are starting from a low level but when they grow and they are on a good trajectory to grow it will really change the world and how demand and supply forces in the world work now in the next 20 years so get ready for a lot of change and be prepared with your portfolio towards that change let's see what's going on with gold just a few weeks ago the headlines were like this very very negative on gold lower demand lower whatever gold prices were declining a bit and everybody was negative however in the last few days everybody suddenly turned positive because there were some issues with the US tax bill I'm mentioning this not because I care much about the short term but I like to see the volatility in the short term so some issues in the US tax bill made gold prices spike immediately now think what can happen to gold prices or what will happen to gold prices when we see actual turmoil when we see Italy getting into trouble when we see of the high yield depth getting into trouble imagine then what will happen to gold because small changes or things that are not even important impact gold and investor sentiment towards gold in the long term when something really happens something really important happens it will change everything and be ready for huge changes in gold and all the other assets that you know so be really prepared for an extreme scenario all right insider trading I always like to look at what are insiders doing are they buying all right are they selling if insiders buy stocks and they do it constantly and do do it with significant amounts in relation to what they make in relation to how rich they are then you know they have faith in the company if they are selling constantly and selling a lot like I don't know the snapchat owner sold at the IPO he sold a lot of stocks then you know okay they are not so convinced about their company if you're convinced about your company you don't sell a share Warren Buffett didn't sell Berkshire Hathaway Bill Gates didn't sell Microsoft to buy a villa or Lamborghini or something like that so to stay on the insider trading I think Kimball Musk Elon's brother is crazy because I don't know the last news I have about Tesla is from last year and the company was supposed to produce 10 000 model 3 cars per week by now so I'm sure they are managing it and the logical step is to start producing a roadster 200 000 car I'm definitely going to buy that one as soon as it is made because they're also going to make trucks electric trucks and from what I have heard with the trucks you are going to need a nuclear reactor to charge that truck so I'm going to invest in uranium because uranium is going to spike and uranium stocks are going to spike because all of the trucks Tesla is going to make so I'm going to make a lot of money there and then I'm going to use that money to buy me I think two Tesla roadsters I think it's a perfect car they are making a lot of money with the model 3 they will probably make a lot of money with the other models so Tesla will be a great investment in the long term now what I don't get or perhaps Kimball Musk doesn't get or he doesn't know finances because he's constantly selling Tesla stock and everybody in Tesla is constantly selling Tesla stock are they stupid can they see how good of a stock it is and how big of a promise what can happen how much money are they losing by selling now if we look at the insider trades we can see that Kimball Musk is selling every month is selling 2190 shares that's 1.5 percent of what he owns but slowly slowly he is selling his whole position until he gets new shares from option agreements if you go to the bottom Jarvetson Steven or however do I pronounce that executed 44,777 options at the price of 250 and immediately sold those at the price of 340 so he doesn't keep that stock he immediately sold then Musk Kimball selling selling everybody else that acquires the options they acquired the stock for zero and then immediately as they can they sell those stocks filled John Douglas bought for zero sold for 350 Bernard there is Eric bought from 181 sold for 340 so everybody in Tesla in the last few months has been selling stocks either they are crazy and they don't understand what Tesla is and how good of a company is or we have to tell the truth here they know how good the company is Tesla they know the probability there is for Tesla to succeed and they prefer to take the money now and diversify diversify from Tesla so really look at what insiders are doing they tell you a lot about not what will happen Tesla might succeed but they tell you about the risk and the reward and Kimball Musk is telling you the risk with Tesla at this price is huge while the chances for reward are very very small and that's what works in the long term in the short term anything can happen and I wish Tesla all the best and I wish Tesla to succeed because they're really disrupting the world thank you for watching have a great day and I'll see you in the next video