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Speaker 1: Let's get to our guests. Steven Innis joins as Steve

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Speaker 1: is a managing partner at s P I said management.

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Speaker 1: He joins from Bangkok, Thailand. Uh stave always a pleasure.

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Speaker 1: We're looking at the U S Treasury market. The conviction

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Speaker 1: here seems to be that we're headed for a recession.

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Speaker 1: We can debate the severity. Yesterday, Christy Lena your Gava,

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Speaker 1: the head of the managing director of the i m F,

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Speaker 1: was saying thirty percent of the world will be in

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Speaker 1: recession this year. How are you positioning for Yeah, it's

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Speaker 1: really hard to ignore all the warning signs, especially through

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Speaker 1: the bond market, that we are headed to some sort

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Speaker 1: of recession. I guess the severity is the question here.

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Speaker 1: But we're looking at disconnects between the resilience of the

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Speaker 1: US economy and twenty two and the down draft that

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Speaker 1: stocks have been experienced, and I think there's still a

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Speaker 1: lot of confusion going on there. Um is the economic

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Speaker 1: data going to catch down to the stock markets? Seems

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Speaker 1: like that's most likely answered. You're gonna hear yes, But um, well,

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Speaker 1: we have that south landing. I mean, that's really where

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Speaker 1: the decision factors are coming into play. From my view here,

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Speaker 1: I'm pretty much an index hugger. I'm really really concerned

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Speaker 1: about trying to play indexes this year simply because of

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Speaker 1: the uncertainty UH pervasive uncertainty and unpredictable market mood swings.

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Speaker 1: It makes for a very, very highly challenging environment for

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Speaker 1: U S stocks. China is a different story altogether, though,

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Speaker 1: and that's where we're most of our exposure is currently

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Speaker 1: as we enter um in terms of China, what sort

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Speaker 1: of variety of you anticipating over the next six months

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Speaker 1: or so, When when do you see things starting to

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Speaker 1: settle down, and what's your outlook for three them? More broadly, Yeah,

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Speaker 1: you know, I think the early birds of China really

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Speaker 1: sent the market of fluttering. And I'm looking at the

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Speaker 1: data because that really should eventually drive things you weakerd

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Speaker 1: pm I data for me provided a bit of reality check.

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Speaker 1: A look, you know, you're looking at today's market, it's

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Speaker 1: still can he used to go up. I'm not counting

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Speaker 1: on a US style reopening, you know, where economic activity

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Speaker 1: accelerates out of the gates. I don't think that seems

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Speaker 1: to mark matter for stock markets right now, because they're

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Speaker 1: really anticipating that reopening impulse and Q two. I think

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Speaker 1: even if we do see some classic case of investor

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Speaker 1: needing to wear some short term paint for longer term game,

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Speaker 1: I think this in China especially, you're going to be

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Speaker 1: quite shallow UM. And I think this is why stock

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Speaker 1: investors are quite emboldened right now because of you know,

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Speaker 1: just looking at the background. But we've got the PBOC

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Speaker 1: providing simulus, the government very pro growth, and I think

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Speaker 1: this sort of resonates with not only Chinese investors and

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Speaker 1: international investors also. I'm just going to throw this out.

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Speaker 1: Matt Maylee, who we speak with from time to time

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Speaker 1: over at Miller Tabac, was telling clients today China's economy

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Speaker 1: may not get the outsized, boasted people are expecting. Is

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Speaker 1: there some risk here? I mean, I know you paint

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Speaker 1: a pretty optimistic picture, but I'm wondering whether we need

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Speaker 1: to take apart of worst case scenario. Yeah, very much. So.

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Speaker 1: You know, we're looking at other economies, um in Asia,

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Speaker 1: and if we look at markets expectations, how quickly they're

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Speaker 1: pricing and kind of a rebound, there might be a

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Speaker 1: point of actualization. We use say even Thailand, or we

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Speaker 1: use our Korea. We use even in Japan is a

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Speaker 1: reopen narrative. Things didn't really bounce to aggressively. I think

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Speaker 1: Asian and Asian population tends to be a little bit

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Speaker 1: more conservative when it's dealing with these outbreaks, so we

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Speaker 1: may not see that froth you rebound that markets are

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Speaker 1: you know, pricing it the next an outlier. That's a possibility,

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Speaker 1: and I think we have to defend against that. But

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Speaker 1: right now, I think it's certain of like the you know,

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Speaker 1: everything is going up right now, and I think everybody

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Speaker 1: feels happy about getting into China, but I think you

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Speaker 1: have to be on guard for the data, you know,

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Speaker 1: differring back to the data again, the economic data not

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Speaker 1: coming out to play, and this to be one of

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Speaker 1: the things that we're going to deal with that going through.

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Speaker 1: Also the cash allocation do you have at the time,

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Speaker 1: and you considering greats arising, it's difficult to argue against

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Speaker 1: having some drive out it right now. Yeah, you know,

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Speaker 1: there's there's no problem staying mostly in cash right now.

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Speaker 1: And they'll be honest with you. Our China exposures our

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Speaker 1: greatest exposure and that's not even a huge percentage of

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Speaker 1: overall asset allocation. Look you're getting paid by the FED

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Speaker 1: right now to leave money in the bank. That's not

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Speaker 1: a bad thing. We haven't seen that in ages, so

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Speaker 1: you know, I always look at, you know, sort of

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Speaker 1: at the money puts when we're dealing with markets, and

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Speaker 1: I think cash is a really good at the money

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Speaker 1: put right now until at least we get through this

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Speaker 1: orientation uh not day and not we probably orientation month. Look,

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Speaker 1: we've got the f MC minutes coming out later today.

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Speaker 1: This could tell us what the FEDS are up to

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Speaker 1: in January. Hike, We've still got the January to deal with.

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Speaker 1: We don't know what the Feds are going to do.

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Speaker 1: I think once we sort of clear that January hurdle

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Speaker 1: as to where the Feds are taking us in the

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Speaker 1: next adventure, and I think we can probably allocate a

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Speaker 1: little bit more cash wise. He look again, being the

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Speaker 1: index hugger, I don't think it's a great opportunity, but

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Speaker 1: I'm starting to put my how should I say stock

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Speaker 1: picker hat on. I think there's some opportunities going to

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Speaker 1: develop in specific stocks, especially those strong balance sheets, and

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Speaker 1: maybe some of these really depressed dips that we're seeing

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Speaker 1: in growth assets right now that might be worth babbling

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Speaker 1: onto on the expectations. Perhaps we see a FED pivot

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Speaker 1: at some point three, however unlikely that might be of

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Speaker 1: inflation stays above trend. Well, talk about central bank pivots.

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Speaker 1: I think we have to talk about the Bank of

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Speaker 1: Japan and today, as a matter of fact, the b

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Speaker 1: o J moving into the market for another day of

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Speaker 1: unscheduled bond buying. I think it's the fourth day that

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Speaker 1: we have seen that we know that they have raised

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Speaker 1: the cap on the yield for the ten uere j

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Speaker 1: j B. I mean a lot of aggressive betting now

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Speaker 1: that maybe they will lift the cap further or maybe

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Speaker 1: even scrap it all together. Where do you stand on

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Speaker 1: on where the b o J is right now? And

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Speaker 1: in sting in Japan more broadly, Well, you know, obviously

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Speaker 1: it's a sort of double egged sword here because the

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Speaker 1: stronger uh yeend, it's actually not great for exporters. But

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Speaker 1: I think, um, we're seeing a lot of traders getting

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Speaker 1: into that mode here where we could see a possibly

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Speaker 1: material shift in the Bank of j pauliceo J policy. Now,

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Speaker 1: of course, um, you know there's huge Japan is huge

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Speaker 1: owners of foreign assets. Now, if that pivot from the

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Speaker 1: Bank of Japan. Actual pivot actually drives the repastriation flows

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Speaker 1: all over. Started to see some of that, but there's

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Speaker 1: a lot more to come on any unambiguous tightening. I

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Speaker 1: think you want to get in front of that. So

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Speaker 1: that's a positive thing. I think that could be good

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Speaker 1: for financial sectors in Tokyo and and and other outline areas.

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Speaker 1: So we have to look at this quite succinctly as

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Speaker 1: we go on there. And I don't think you want

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Speaker 1: to be like for the party, just like you didn't

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Speaker 1: want you don't want to be like to the China Party.

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Speaker 1: I think there's a lot of unique corporate maybe especially

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Speaker 1: in age of this year, that are that are presenting

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Speaker 1: themselves as decent value investing opportunities just quickly in terms

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Speaker 1: of not being late. The end is strengthening. How much

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Speaker 1: strong do you see it getting and how soon? Well

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Speaker 1: one was our target and you know we're through there. Um,

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Speaker 1: I'm sorry, I want our target for two after the pivot.

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Speaker 1: Now from here it really depends on the repatriation flows.

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Speaker 1: I don't think is out of the question. Wow eight

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Speaker 1: at the moment, Steve, always a pleasure. Thank you for

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Speaker 1: so much for being with us in Happy New Year

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Speaker 1: to you. Hope to speak to you soon. Stephen is

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Speaker 1: his managing partner at SPI SAD Management. On the line

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Speaker 1: from Bangkok,