1 00:00:00,080 --> 00:00:03,080 Speaker 1: Let's get to our guest, Steve Sosnick, chief strategist at 2 00:00:03,200 --> 00:00:06,680 Speaker 1: Interactive Brokers. Steve, thanks very much for taking out some 3 00:00:06,680 --> 00:00:09,400 Speaker 1: time on a Sunday evening and help us navigate through 4 00:00:09,440 --> 00:00:13,080 Speaker 1: these markets. Do you feel that investors will start to 5 00:00:13,119 --> 00:00:17,680 Speaker 1: turn more positive because the Fed maybe slowing down a 6 00:00:17,760 --> 00:00:21,200 Speaker 1: little bit in its approach to a monetary policy, or 7 00:00:21,239 --> 00:00:23,840 Speaker 1: more on the negative side because one of the reasons 8 00:00:23,920 --> 00:00:27,240 Speaker 1: they might do that is that it looks like recession 9 00:00:27,280 --> 00:00:31,920 Speaker 1: could be closer and we have these ongoing difficulties in China. Um, 10 00:00:31,960 --> 00:00:34,479 Speaker 1: good morning, Brian. Wow, you you came ready with a 11 00:00:34,520 --> 00:00:38,960 Speaker 1: good question there. Um. The I look at it this way, 12 00:00:39,200 --> 00:00:41,120 Speaker 1: the bond market in the stock market are telling us 13 00:00:41,159 --> 00:00:43,600 Speaker 1: two different things. The bond market is clearly sending a 14 00:00:43,640 --> 00:00:46,720 Speaker 1: recession signal. So you know, again, let's let me just 15 00:00:46,760 --> 00:00:49,199 Speaker 1: sort of stipulate. If the markets are telling me two 16 00:00:49,240 --> 00:00:51,839 Speaker 1: different things, I tend to trust the bond market over 17 00:00:51,880 --> 00:00:56,600 Speaker 1: the stock market. That said, I think investors have gotten Um, 18 00:00:56,640 --> 00:00:58,800 Speaker 1: they've gotten a bit more mellow in terms of what 19 00:00:58,840 --> 00:01:01,240 Speaker 1: they're looking for. First, we're looking for a FED pivot 20 00:01:01,440 --> 00:01:05,160 Speaker 1: that wasn't coming from Powell. Then they were hoping for Um, 21 00:01:05,400 --> 00:01:07,800 Speaker 1: pause that didn't come. Then they were hopings. You know, 22 00:01:07,840 --> 00:01:09,800 Speaker 1: now they're just sort of okay with okay at the 23 00:01:09,840 --> 00:01:12,679 Speaker 1: pace of rate hike slows that's good enough for us, 24 00:01:12,680 --> 00:01:15,720 Speaker 1: and that that kind of boiled us up um earlier, 25 00:01:15,800 --> 00:01:18,600 Speaker 1: you know, early last week. UM, it's not clear to 26 00:01:18,680 --> 00:01:22,399 Speaker 1: me that that is a great way to go through life. UM. 27 00:01:22,400 --> 00:01:23,920 Speaker 1: I think that's a little I think they've gotten a 28 00:01:23,920 --> 00:01:26,480 Speaker 1: little ahead of themselves. And so we'll see what happens 29 00:01:27,120 --> 00:01:30,319 Speaker 1: whether the data, which which side the data is really 30 00:01:30,360 --> 00:01:33,959 Speaker 1: favors over the coming days and as phycifically at the 31 00:01:33,959 --> 00:01:36,600 Speaker 1: moment that people living for next month when we see 32 00:01:37,160 --> 00:01:40,480 Speaker 1: the latest earnings come through. But you know, how important 33 00:01:40,520 --> 00:01:43,160 Speaker 1: and how seriously are people taking earnings in your view, 34 00:01:43,240 --> 00:01:47,320 Speaker 1: Steve Um, let me say your cho there, always take 35 00:01:47,360 --> 00:01:50,520 Speaker 1: it seriously. But sometimes I think they may not be 36 00:01:50,720 --> 00:01:54,400 Speaker 1: discounting enough going forward. UM. I think you know, we 37 00:01:54,400 --> 00:01:58,840 Speaker 1: we saw some great reactions from a wide range of retailers. 38 00:01:59,160 --> 00:02:01,040 Speaker 1: It's not clear to me whether that was just because 39 00:02:01,080 --> 00:02:02,920 Speaker 1: they liked the numbers or because they were sort of 40 00:02:02,920 --> 00:02:06,480 Speaker 1: caught wrong footed by okay numbers. But as we get 41 00:02:06,520 --> 00:02:09,520 Speaker 1: into next year, I was kind of expecting that, Um, 42 00:02:09,639 --> 00:02:12,600 Speaker 1: we might see some more revisions from analysts in terms 43 00:02:12,600 --> 00:02:15,519 Speaker 1: of next year's numbers, and they're not really coming through 44 00:02:15,560 --> 00:02:19,440 Speaker 1: with those. So we're reasonably fairly valued, you know, and 45 00:02:19,520 --> 00:02:23,320 Speaker 1: actually maybe slightly undervalued if the if those earnings that 46 00:02:23,360 --> 00:02:26,480 Speaker 1: are still being predicted come through, but if you're expecting 47 00:02:26,480 --> 00:02:30,399 Speaker 1: more of a recessionary scenario, UM, then then I think 48 00:02:30,400 --> 00:02:33,480 Speaker 1: we're still a little bit we may we still have 49 00:02:33,600 --> 00:02:37,040 Speaker 1: some downside then potentially, And some investors had taken some 50 00:02:37,120 --> 00:02:41,000 Speaker 1: positive signs from China over the past couple of weeks, 51 00:02:41,200 --> 00:02:45,320 Speaker 1: thinking that perhaps if not in actual name, but in practice, 52 00:02:45,919 --> 00:02:48,200 Speaker 1: some of the COVID restrictions would be retreating. But we 53 00:02:48,240 --> 00:02:50,960 Speaker 1: see a very different story now. And then these protests 54 00:02:51,000 --> 00:02:54,160 Speaker 1: add a lot to it too, because that raises added 55 00:02:54,200 --> 00:02:59,120 Speaker 1: concerns I suppose about governance. Oh absolutely, this this has 56 00:02:59,160 --> 00:03:01,880 Speaker 1: become you this has become an issue with US. Investors 57 00:03:01,919 --> 00:03:06,200 Speaker 1: really jump on the bandwagon anything anything that seems positive 58 00:03:06,240 --> 00:03:08,720 Speaker 1: out of China. They get very excited about. We saw 59 00:03:08,720 --> 00:03:11,880 Speaker 1: a tremendous amount of call buying in UM you know 60 00:03:12,080 --> 00:03:13,560 Speaker 1: f x I, which is you know, sort of a 61 00:03:13,639 --> 00:03:16,240 Speaker 1: China related ETF and a lot of the you know, 62 00:03:16,280 --> 00:03:19,440 Speaker 1: the the usual sort of names like Ali Baba and stuff. Um. 63 00:03:19,480 --> 00:03:20,720 Speaker 1: And this has to put a little bit of a 64 00:03:20,760 --> 00:03:23,359 Speaker 1: damper on it in the short term. So last week 65 00:03:23,440 --> 00:03:25,720 Speaker 1: was a bit money because of the Thanksgiving holiday and 66 00:03:25,760 --> 00:03:27,960 Speaker 1: the partial trading day on on Friday, So we've got 67 00:03:28,000 --> 00:03:30,799 Speaker 1: a proper said trading week and culminating, of course with 68 00:03:30,840 --> 00:03:33,840 Speaker 1: the non farm payrolls report. How important is that in 69 00:03:33,880 --> 00:03:35,920 Speaker 1: the context of the verbiage we've had out of the 70 00:03:35,920 --> 00:03:40,280 Speaker 1: Federal Reserve of late Um. I think the non farm 71 00:03:40,360 --> 00:03:42,920 Speaker 1: payrolls is sort of taking a back seat right now 72 00:03:43,040 --> 00:03:45,400 Speaker 1: because I think we can more or less check off 73 00:03:45,520 --> 00:03:49,040 Speaker 1: the full employment portion of the feds dual mandate. Remember 74 00:03:49,080 --> 00:03:52,200 Speaker 1: it's you know, full employment and stable prices. We can 75 00:03:52,240 --> 00:03:55,400 Speaker 1: pretty much say that full employment if not here, it's 76 00:03:55,440 --> 00:03:58,600 Speaker 1: awful close. Um And we're and the FED is basically 77 00:03:58,600 --> 00:04:01,880 Speaker 1: said that they're going to sacrifice employment at the at 78 00:04:02,000 --> 00:04:04,480 Speaker 1: you know, if it means getting stable prices. So I 79 00:04:04,520 --> 00:04:07,720 Speaker 1: think these are always important numbers, um And I think 80 00:04:07,720 --> 00:04:10,240 Speaker 1: people will read into it if it's an outlier, but 81 00:04:10,320 --> 00:04:12,120 Speaker 1: I think it more or less comes in in line. 82 00:04:12,480 --> 00:04:15,200 Speaker 1: It doesn't change much of the FED narrative that people 83 00:04:15,240 --> 00:04:17,719 Speaker 1: are looking for. Yeah, it's a tricky time when you 84 00:04:17,760 --> 00:04:20,720 Speaker 1: think that actually recession may be part of the game 85 00:04:20,720 --> 00:04:22,839 Speaker 1: plan for the FED. Uh So it puts you in 86 00:04:22,880 --> 00:04:25,839 Speaker 1: a in a funny position and you you seem to 87 00:04:25,960 --> 00:04:28,599 Speaker 1: express Steve a little bit of frustration in the first 88 00:04:28,600 --> 00:04:30,839 Speaker 1: part of our interview with you know this run over 89 00:04:30,880 --> 00:04:34,520 Speaker 1: four thousand for the SMP when it wasn't really much 90 00:04:34,600 --> 00:04:37,560 Speaker 1: news to justify. So my question to you is is 91 00:04:37,600 --> 00:04:39,840 Speaker 1: that actually a good sign or a bad sign. A 92 00:04:39,839 --> 00:04:43,320 Speaker 1: bad sign would be, well, maybe it's this complacency being shown. 93 00:04:43,560 --> 00:04:45,960 Speaker 1: But a good sign is maybe they see and feel 94 00:04:46,000 --> 00:04:50,719 Speaker 1: some underlying strength. Yeah, I mean it. This is the 95 00:04:50,760 --> 00:04:53,120 Speaker 1: problem is it's very hard to unpack. My my gut 96 00:04:53,200 --> 00:04:55,000 Speaker 1: kind of tells me it's a little bit of hopium, 97 00:04:55,120 --> 00:04:57,640 Speaker 1: you know, just sort of everybody being hopeful that that 98 00:04:57,839 --> 00:05:00,359 Speaker 1: something is going to turn around. You know, do have 99 00:05:00,400 --> 00:05:02,880 Speaker 1: the seasonality of the end of the year. Um, if 100 00:05:02,880 --> 00:05:05,840 Speaker 1: you get a little bit of positive momentum into November December, 101 00:05:05,920 --> 00:05:09,840 Speaker 1: the institutional investors want to stay invested because they want 102 00:05:09,839 --> 00:05:12,800 Speaker 1: to ride that momentum higher um. And so I think 103 00:05:12,839 --> 00:05:15,520 Speaker 1: you can you can get a kind of run where 104 00:05:15,520 --> 00:05:19,520 Speaker 1: the market just has enough to justify it its actions 105 00:05:19,560 --> 00:05:24,240 Speaker 1: without necessarily being a real causative UM story, and that's 106 00:05:24,279 --> 00:05:26,680 Speaker 1: I think that's I think kind of the situation we're in. 107 00:05:27,040 --> 00:05:29,160 Speaker 1: It's a bit of momentum, it's a bit of good feelings. 108 00:05:29,160 --> 00:05:32,960 Speaker 1: People feel okay being invested, but but it's you know, 109 00:05:33,040 --> 00:05:34,719 Speaker 1: longer you know, and then we'll sort of wait until 110 00:05:34,720 --> 00:05:36,600 Speaker 1: next year and see what happens. That could be a 111 00:05:36,640 --> 00:05:39,320 Speaker 1: little bit tricky, Steve, when you look at you know, 112 00:05:39,360 --> 00:05:42,320 Speaker 1: your your clients, and you look at what's been happening 113 00:05:42,320 --> 00:05:45,080 Speaker 1: in the crypto space. But what's your take from what 114 00:05:45,120 --> 00:05:51,760 Speaker 1: they're asking you? How badly damaged has this whole indeed ecosystem, 115 00:05:51,800 --> 00:05:53,560 Speaker 1: I mean by what happened with the ft exident, the 116 00:05:53,600 --> 00:05:56,680 Speaker 1: rippling effect from it. How many hours do we have 117 00:05:56,800 --> 00:06:01,719 Speaker 1: for the short answer is you know. I think that 118 00:06:01,720 --> 00:06:04,880 Speaker 1: that people if you're a believer in crypto, you kind 119 00:06:04,880 --> 00:06:07,480 Speaker 1: of remain a believer in crypto UM. I think people 120 00:06:07,520 --> 00:06:10,040 Speaker 1: are encouraged by the fact that it hasn't sold off. 121 00:06:10,080 --> 00:06:12,000 Speaker 1: I do think that that is more of a function 122 00:06:12,040 --> 00:06:14,200 Speaker 1: of a lot of small investors really just can't sell 123 00:06:14,600 --> 00:06:17,680 Speaker 1: because they don't have access to their accounts UM depending 124 00:06:17,720 --> 00:06:20,400 Speaker 1: on which firm they're invested at. UM. I don't think 125 00:06:20,440 --> 00:06:24,560 Speaker 1: this does anything toward to you know, the institutional adoption 126 00:06:24,600 --> 00:06:26,479 Speaker 1: of crypto. I can't see a lot of you know, 127 00:06:26,560 --> 00:06:29,120 Speaker 1: major asset allocators saying, oh, you know, let's get into 128 00:06:29,160 --> 00:06:33,800 Speaker 1: crypto now. There's still so many unanswered legal questions about who, 129 00:06:33,920 --> 00:06:36,599 Speaker 1: you know, how the accounts are going to be um 130 00:06:36,839 --> 00:06:40,320 Speaker 1: separated out, um, you know, custody and things of that nature. 131 00:06:41,000 --> 00:06:43,839 Speaker 1: It's a big mess. I think those who those who 132 00:06:43,880 --> 00:06:46,599 Speaker 1: believe in it remain believers. You know, a lot of 133 00:06:46,600 --> 00:06:48,520 Speaker 1: the a lot of the so called whales are in 134 00:06:49,320 --> 00:06:51,839 Speaker 1: at levels where they're you know, even a fifteen thousand 135 00:06:51,920 --> 00:06:54,320 Speaker 1: down from sixty thousand, there's still up huge if you're 136 00:06:54,320 --> 00:06:57,320 Speaker 1: in a five or a thousand dollars or something like that. 137 00:06:57,720 --> 00:07:00,800 Speaker 1: So it's you have this really bifurcated market right now. 138 00:07:01,400 --> 00:07:03,520 Speaker 1: Um And I think for the most part, people are 139 00:07:03,560 --> 00:07:05,720 Speaker 1: just sort of hanging tight, sort of hopeful that and 140 00:07:05,880 --> 00:07:09,280 Speaker 1: and happy that it hasn't collapsed more. But there's not 141 00:07:09,360 --> 00:07:12,200 Speaker 1: a great investment thesis to it right now. You know, 142 00:07:12,240 --> 00:07:14,679 Speaker 1: as I've been saying all along, it's it's a crypto 143 00:07:14,720 --> 00:07:17,760 Speaker 1: has never existed in an environment where there's been sustained, 144 00:07:18,040 --> 00:07:22,000 Speaker 1: monitor restrictive monetary policy. UM, and that's what we're seeing now. 145 00:07:22,080 --> 00:07:25,080 Speaker 1: And so you know, there's a bit of reckoning going on. 146 00:07:25,640 --> 00:07:27,760 Speaker 1: UM And I just hope it's not more painful. It's 147 00:07:27,760 --> 00:07:30,520 Speaker 1: been painful for a lot of people already, UM, and 148 00:07:30,560 --> 00:07:33,000 Speaker 1: I just hope we can kind of get our way 149 00:07:33,000 --> 00:07:35,320 Speaker 1: through it. But in terms of you know, customers, I 150 00:07:35,360 --> 00:07:37,360 Speaker 1: think those who love it love it. Those who don't 151 00:07:38,120 --> 00:07:42,560 Speaker 1: UM are certainly not dipping their toe in now. Steve 152 00:07:43,000 --> 00:07:45,840 Speaker 1: real pleasure having on the program as usual, Steve Solsnick 153 00:07:45,920 --> 00:07:48,120 Speaker 1: that you strate is an interactive broke is getting his 154 00:07:48,240 --> 00:07:51,280 Speaker 1: take on the market actions are just getting his take 155 00:07:51,320 --> 00:07:55,440 Speaker 1: on what's going on with regards to the crypto space 156 00:07:55,640 --> 00:07:56,080 Speaker 1: as well.