 Good day fellow investors and welcome to the weekly stock market news with a fundamental twist. Today we are going to discuss potential and actual GDP numbers. Then we are going to talk about Japan to see how the situation there has evolved over the last 30 years. Then we are going to look at where could that situation that unstable financial system crack first because that's very important if you want to start a hedging strategy and then we're going to finish by discussing how a YouTube video can erase 40 million in market capitalization. This means that also Wall Street is not that big as we imagine it to be. So let's immediately start with this chart here. You see the blue line is the potential GDP, what can be produced if all the inputs are used and employed. And you can see the actual GDP that goes sometimes over the potential creating inflationary pressure and is often below the potential GDP especially after recession. And we can see that now finally after eight years the actual GDP has crossed over the potential GDP. This means that every input every factor that the economy has in this case the US economy is employed which means this is the sustainable level of an economy. This also means that we are closer and closer to recession. So always remember one thing the economy nature human nature the economy always works in cycles. Don't forget about the cycle even if everything looks well everything is employed now capital labor everything looks perfect but don't forget that the economy has always been and will always be a cycle. So we will see again a recession somewhere. The only important thing is that the economy grows cyclically but it grows and that's very very important. However that's not the case everywhere there is the US which is usually discussed but there is also Japan where the situation is a little bit different. Let's see the first issue that Japan has which is of course demographics. If we look at Japan in 2010 it reached peak population with 128 million inhabitants which is expected to fall to 86 million in 2016 and it is already falling. And you can see here how the percentage of children has dropped from 40% in the 1960s to the current 18% and will drop even to 14% in the future. The working age population the 20 to 64 year olds had peaked in 1990 and has been declining ever since. However the 65, 74, 75 year population has been surging. And this is a perfect example of a country that will not grow anymore. It can grow artificially but no population no immigration no growth it doesn't lead to good times. And we can see that the Japan GDP growth rate has been anemic for the past 15 years. When there was growth it was very very slow sometimes here and there in a quarter it would hit 2% but usually it is around zero or negative. What is the Japanese government doing? They are piling, piling on debt because of course in the 1980s debt was smart because it was a growth economy. Now debt is to pay for the social securities, to pay for the elderly people, to pay for the development whatever. But if you have less people the only way is to get into debt and hoping that somebody will pay that debt eventually. But with less people it's very very difficult. So Japan is really an example of an unsustainable economy. And this is also a very interesting chart. This is the Nikkei stock index, the Japanese stock index and you can see how it was around 10,000 points in 1985 then it spiked in a bubble to almost 40,000 only to crash to 15,000 and then in 2002 to crash below again to 10,000. Then it spiked up to almost 20,000 then it crashed again in the financial crisis and now it's again from 10,000 it's touching 20-22,000. Now what is the reason behind this spiking prices? Of course the Bank of Japan has been printing money, has been buying assets, has been buying stocks, ETFs and of course the Japanese market has to go up. If we check this chart total assets of the Bank of Japan in trillions have risen about fivefold since the financial crisis. Now somebody would think okay they are printing so much money this means that their currency should fall in value because if there is so much more of a currency it has to lose its value. However if we look at the dollar and the Japanese yen index over the last 20 years we could almost draw a stable line with short-term fluctuations. The Japanese yen was lower in 2012 to 2015 but then it regained its strength. Now how come that if a bank is printing so much money if the economy is looking really bad, if the demographics are looking really bad, the budget deficits are really really terrible? How come that the yen didn't lose value? Well because the same situation is in the US, big budget deficits, central bank printing money, the same situation is in Europe so the situation is unstable in most developed countries and it all evens out in their currencies over the long term. So they are capable of printing a lot of money because all the others are doing the same. I wonder where the system will crack first? One hint perhaps I still have to analyze but it's very interesting to look at is of course Italy and the upcoming elections. Here you have the opinion polls for the upcoming elections in Italy. You have Democrats in red, let's say the right wing party in the blue and the comedians party, yes comedians party in yellow. And you can see how public opinion is very very volatile. They can lose a lot of percentages in just a few months and others gain. This means that nobody knows what will happen in Italy in 2018, 2022, 2019. Who will go into coalition? Will they want to get out of the European Union? Will they want to remain? Will the Germans want to remain in the European Union? So it's a very very fragile system there and if you look at the spread between the Italian five-year bond and the German five-year bond it is extremely extremely low. So the risk of Italy with its deficit budget with everything that's going on there, high unemployment is very close to the German risk which is of course unsustainable and unrealistic and shows again that we are living in a distorted market. When it is going to crack I don't know but there are definitely some hedging opportunities which we are going to look in deeper with time to take advantage of the situation or at least to de-risk our portfolios. So that that will be something very interesting to play with and to see how we can protect ourselves from the unsustainable financial systems out there. Now the third part of this news and perhaps the most interesting, this is again the chart of a mirror nature foods. They published their earnings on first day pre-market. We analyzed the earnings. The market wasn't so happy. There was immediate selling as the trading opened and then the stock stabilized for a while and then somewhere in the evening one hour, two hours before the market closed a video came out by yours truly and the stock dropped another dollar. So if we calculate that Amira has 40 million shares the stock dropped a dollar after the video came out so we erased with the video 40 million of market capitalization. This has led me really to think about what I do with the channel, how I do it and whether what I do is good. What I do is I look at companies, I do my research, I share my research and I share my opinion. I never thought that I could do bad with it and some I have received a lot of private messages that why did I release the video, that I should time my releases better, that I should be careful with what I do because I move markets. Then I really thought about it. Okay, I move markets but I just share my research. Is that my fault or Wall Street fault? And then I really looked at okay Amira is a small cap, the free float is extremely small and it is very easy that the stock price swings a lot. So in my next videos I will continue to share my research analysis and everything but I will really warn you when we talk about the company that has a low float or is very very volatile or a small cap because even if we think the market is efficient we have seen the impact of one video which is really really crazy. I never thought that that would be possible but when you think about it there are 40 million shares 75% owned by the CEO 10% by fidelity so there is 15% or 6 million shares in free float. 6 million shares times four dollars is 24 million dollars. If we put our money together we could buy the 24 million dollars very easily and that's why the fluctuation is there so high. So I will be more careful however I won't stop discussing I just share my opinion that's nothing illegal so I will just continue sharing my opinion I think I'm not doing anything bad imagine what would have happened if I would have been right if there would have been an improvement in revenues if Amira would have taken advantage of the improvement situation in the Basmati rice environment Amira would have had higher profits and let's say that there wasn't the issue with the receivables they would have had 75 million in cash on their balance sheet 75 million two dollars per share Amira would be at 15 so that was the positive upside okay we missed I hope we'll find better ones the downside unfortunately was there because Amira missed our expectations we say next we'll find better perhaps Amira will improve in the future perhaps the situation in India with the payments will improve so I don't know however be careful always I will try to emphasize it with small caps with the liquidity and with the issues that that can create however don't worry there will be plenty of research and what I learned is that there is one catalyst with these small caps it is cash there is no institutional coverage for Amira but there is one thing that everybody looks at and that is cash if Amira would have been able to create cash on the balance sheet the story would have been much much different so we're going to still focus on small caps and on small caps that create cash because that's the trigger that will shoot up stock prices so thank you for watching I'm looking forward to your comments this is a very very interesting topic and I'll see you in the next video