Speaker 1: Let's get to our guest, Steve Sosnick, chief strategist at
Speaker 1: Interactive Brokers. Steve, thanks very much for taking out some
Speaker 1: time on a Sunday evening and help us navigate through
Speaker 1: these markets. Do you feel that investors will start to
Speaker 1: turn more positive because the Fed maybe slowing down a
Speaker 1: little bit in its approach to a monetary policy, or
Speaker 1: more on the negative side because one of the reasons
Speaker 1: they might do that is that it looks like recession
Speaker 1: could be closer and we have these ongoing difficulties in China. Um,
Speaker 1: good morning, Brian. Wow, you you came ready with a
Speaker 1: good question there. Um. The I look at it this way,
Speaker 1: the bond market in the stock market are telling us
Speaker 1: two different things. The bond market is clearly sending a
Speaker 1: recession signal. So you know, again, let's let me just
Speaker 1: sort of stipulate. If the markets are telling me two
Speaker 1: different things, I tend to trust the bond market over
Speaker 1: the stock market. That said, I think investors have gotten Um,
Speaker 1: they've gotten a bit more mellow in terms of what
Speaker 1: they're looking for. First, we're looking for a FED pivot
Speaker 1: that wasn't coming from Powell. Then they were hoping for Um,
Speaker 1: pause that didn't come. Then they were hopings. You know,
Speaker 1: now they're just sort of okay with okay at the
Speaker 1: pace of rate hike slows that's good enough for us,
Speaker 1: and that that kind of boiled us up um earlier,
Speaker 1: you know, early last week. UM, it's not clear to
Speaker 1: me that that is a great way to go through life. UM.
Speaker 1: I think that's a little I think they've gotten a
Speaker 1: little ahead of themselves. And so we'll see what happens
Speaker 1: whether the data, which which side the data is really
Speaker 1: favors over the coming days and as phycifically at the
Speaker 1: moment that people living for next month when we see
Speaker 1: the latest earnings come through. But you know, how important
Speaker 1: and how seriously are people taking earnings in your view,
Speaker 1: Steve Um, let me say your cho there, always take
Speaker 1: it seriously. But sometimes I think they may not be
Speaker 1: discounting enough going forward. UM. I think you know, we
Speaker 1: we saw some great reactions from a wide range of retailers.
Speaker 1: It's not clear to me whether that was just because
Speaker 1: they liked the numbers or because they were sort of
Speaker 1: caught wrong footed by okay numbers. But as we get
Speaker 1: into next year, I was kind of expecting that, Um,
Speaker 1: we might see some more revisions from analysts in terms
Speaker 1: of next year's numbers, and they're not really coming through
Speaker 1: with those. So we're reasonably fairly valued, you know, and
Speaker 1: actually maybe slightly undervalued if the if those earnings that
Speaker 1: are still being predicted come through, but if you're expecting
Speaker 1: more of a recessionary scenario, UM, then then I think
Speaker 1: we're still a little bit we may we still have
Speaker 1: some downside then potentially, And some investors had taken some
Speaker 1: positive signs from China over the past couple of weeks,
Speaker 1: thinking that perhaps if not in actual name, but in practice,
Speaker 1: some of the COVID restrictions would be retreating. But we
Speaker 1: see a very different story now. And then these protests
Speaker 1: add a lot to it too, because that raises added
Speaker 1: concerns I suppose about governance. Oh absolutely, this this has
Speaker 1: become you this has become an issue with US. Investors
Speaker 1: really jump on the bandwagon anything anything that seems positive
Speaker 1: out of China. They get very excited about. We saw
Speaker 1: a tremendous amount of call buying in UM you know
Speaker 1: f x I, which is you know, sort of a
Speaker 1: China related ETF and a lot of the you know,
Speaker 1: the the usual sort of names like Ali Baba and stuff. Um.
Speaker 1: And this has to put a little bit of a
Speaker 1: damper on it in the short term. So last week
Speaker 1: was a bit money because of the Thanksgiving holiday and
Speaker 1: the partial trading day on on Friday, So we've got
Speaker 1: a proper said trading week and culminating, of course with
Speaker 1: the non farm payrolls report. How important is that in
Speaker 1: the context of the verbiage we've had out of the
Speaker 1: Federal Reserve of late Um. I think the non farm
Speaker 1: payrolls is sort of taking a back seat right now
Speaker 1: because I think we can more or less check off
Speaker 1: the full employment portion of the feds dual mandate. Remember
Speaker 1: it's you know, full employment and stable prices. We can
Speaker 1: pretty much say that full employment if not here, it's
Speaker 1: awful close. Um And we're and the FED is basically
Speaker 1: said that they're going to sacrifice employment at the at
Speaker 1: you know, if it means getting stable prices. So I
Speaker 1: think these are always important numbers, um And I think
Speaker 1: people will read into it if it's an outlier, but
Speaker 1: I think it more or less comes in in line.
Speaker 1: It doesn't change much of the FED narrative that people
Speaker 1: are looking for. Yeah, it's a tricky time when you
Speaker 1: think that actually recession may be part of the game
Speaker 1: plan for the FED. Uh So it puts you in
Speaker 1: a in a funny position and you you seem to
Speaker 1: express Steve a little bit of frustration in the first
Speaker 1: part of our interview with you know this run over
Speaker 1: four thousand for the SMP when it wasn't really much
Speaker 1: news to justify. So my question to you is is
Speaker 1: that actually a good sign or a bad sign. A
Speaker 1: bad sign would be, well, maybe it's this complacency being shown.
Speaker 1: But a good sign is maybe they see and feel
Speaker 1: some underlying strength. Yeah, I mean it. This is the
Speaker 1: problem is it's very hard to unpack. My my gut
Speaker 1: kind of tells me it's a little bit of hopium,
Speaker 1: you know, just sort of everybody being hopeful that that
Speaker 1: something is going to turn around. You know, do have
Speaker 1: the seasonality of the end of the year. Um, if
Speaker 1: you get a little bit of positive momentum into November December,
Speaker 1: the institutional investors want to stay invested because they want
Speaker 1: to ride that momentum higher um. And so I think
Speaker 1: you can you can get a kind of run where
Speaker 1: the market just has enough to justify it its actions
Speaker 1: without necessarily being a real causative UM story, and that's
Speaker 1: I think that's I think kind of the situation we're in.
Speaker 1: It's a bit of momentum, it's a bit of good feelings.
Speaker 1: People feel okay being invested, but but it's you know,
Speaker 1: longer you know, and then we'll sort of wait until
Speaker 1: next year and see what happens. That could be a
Speaker 1: little bit tricky, Steve, when you look at you know,
Speaker 1: your your clients, and you look at what's been happening
Speaker 1: in the crypto space. But what's your take from what
Speaker 1: they're asking you? How badly damaged has this whole indeed ecosystem,
Speaker 1: I mean by what happened with the ft exident, the
Speaker 1: rippling effect from it. How many hours do we have
Speaker 1: for the short answer is you know. I think that
Speaker 1: that people if you're a believer in crypto, you kind
Speaker 1: of remain a believer in crypto UM. I think people
Speaker 1: are encouraged by the fact that it hasn't sold off.
Speaker 1: I do think that that is more of a function
Speaker 1: of a lot of small investors really just can't sell
Speaker 1: because they don't have access to their accounts UM depending
Speaker 1: on which firm they're invested at. UM. I don't think
Speaker 1: this does anything toward to you know, the institutional adoption
Speaker 1: of crypto. I can't see a lot of you know,
Speaker 1: major asset allocators saying, oh, you know, let's get into
Speaker 1: crypto now. There's still so many unanswered legal questions about who,
Speaker 1: you know, how the accounts are going to be um
Speaker 1: separated out, um, you know, custody and things of that nature.
Speaker 1: It's a big mess. I think those who those who
Speaker 1: believe in it remain believers. You know, a lot of
Speaker 1: the a lot of the so called whales are in
Speaker 1: at levels where they're you know, even a fifteen thousand
Speaker 1: down from sixty thousand, there's still up huge if you're
Speaker 1: in a five or a thousand dollars or something like that.
Speaker 1: So it's you have this really bifurcated market right now.
Speaker 1: Um And I think for the most part, people are
Speaker 1: just sort of hanging tight, sort of hopeful that and
Speaker 1: and happy that it hasn't collapsed more. But there's not
Speaker 1: a great investment thesis to it right now. You know,
Speaker 1: as I've been saying all along, it's it's a crypto
Speaker 1: has never existed in an environment where there's been sustained,
Speaker 1: monitor restrictive monetary policy. UM, and that's what we're seeing now.
Speaker 1: And so you know, there's a bit of reckoning going on.
Speaker 1: UM And I just hope it's not more painful. It's
Speaker 1: been painful for a lot of people already, UM, and
Speaker 1: I just hope we can kind of get our way
Speaker 1: through it. But in terms of you know, customers, I
Speaker 1: think those who love it love it. Those who don't
Speaker 1: UM are certainly not dipping their toe in now. Steve
Speaker 1: real pleasure having on the program as usual, Steve Solsnick
Speaker 1: that you strate is an interactive broke is getting his
Speaker 1: take on the market actions are just getting his take
Speaker 1: on what's going on with regards to the crypto space
Speaker 1: as well.