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Speaker 1: All right. Our guest is Steven Nis, managing partner at

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Speaker 1: sp I Asset Management. Stephen, I know it's been fashionable

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Speaker 1: for the bears, and I guess they're probably feeling pretty smug.

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Speaker 1: But my question to you is are they living on

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Speaker 1: borrowed time? The SP five is still above the June

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Speaker 1: lows and this has been four to five months. Is

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Speaker 1: the tide turning? I feel, you know, it certainly feels

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Speaker 1: like it. It's like almost the market saying it itself. Put.

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Speaker 1: Considers are very resilient, and I think it's backed up

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Speaker 1: by the balance sheets. I mean, I don't think we

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Speaker 1: expected consumers to still have this much money in the bank,

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Speaker 1: and I think they're using that cash to continue to

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Speaker 1: buy equities on dips, even the depressed UH tech sectors,

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Speaker 1: they're still buying matter, They're still buying other stuff when

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Speaker 1: it comes down quite lower. And this I believe it's

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Speaker 1: still supporting markets. I do believe the bottoms in, but

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Speaker 1: I think we're still going to trouble struggle on the

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Speaker 1: top side because I don't think the FED is going

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Speaker 1: to be anywhere nearest de wishes what most want would anticipate. Well,

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Speaker 1: you point out that what we see in December is

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Speaker 1: probably one of the key points that we need to

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Speaker 1: hear from the FED. And that's similar to what our

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Speaker 1: report of Mike McKay said as well. How murky though

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Speaker 1: is the outlook when you do have these recessionary fears,

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Speaker 1: you have that tight labor market and as you mentioned,

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Speaker 1: you do still have consumer spending. Yeah, you know, it's

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Speaker 1: his trade off, Juliet. We're looking at, you know, how

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Speaker 1: WI the Federal interpret recession and whether there is a

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Speaker 1: recession in the US going to happen, because data is

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Speaker 1: quite strong. Um, you know last night's Native but Joe

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Speaker 1: Saya had the I s M certainly didn't point any

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Speaker 1: recession happening. Economy is still humming along. Look, I still

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Speaker 1: think the Fed may slow the pace of the hikes,

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Speaker 1: but we're still hiking. Policy still highly restrictive. Front End

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Speaker 1: rates are probably get worse before to get better, and

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Speaker 1: we have to remember the risk of the terminal rate

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Speaker 1: going higher is still very acute. I think this is

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Speaker 1: where stock markets are going to have trouble exploding higher. Well,

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Speaker 1: the the I s M is right on the cusp

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Speaker 1: of contraction expansion. I think we're at fifty point two

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Speaker 1: and it seems like, you know, we're heading in that direction.

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Speaker 1: The next big sort of battle will be if you

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Speaker 1: go into recession and you see that companies earnings are weakening,

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Speaker 1: but but investors will be looking beyond it then because normally,

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Speaker 1: you know, sometime during the recession, the market starts to rebound.

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Speaker 1: It might be hard to do, but that's the way

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Speaker 1: it works. Yeah, I think that's a great point. I

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Speaker 1: think that's what we're seeing from other central bankers right now.

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Speaker 1: Are p A is at the bank guard of of

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Speaker 1: looking it forward to indicators as opposed to the back

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Speaker 1: data inflation CPI datas. Likewise with the Bank of Canadidan

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Speaker 1: even the ECB into this, intoed that, and I think

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Speaker 1: this is what the market's reading through as perhaps the

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Speaker 1: family start to look at these forward indicators. However, my

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Speaker 1: feeling is inflation is still too high for them right now,

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Speaker 1: and that's going to be the big problem. I think

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Speaker 1: that's where their mandate sets inflation undeployment. Until those settled down,

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Speaker 1: things are still going to be rate hiking in my view. So,

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Speaker 1: I mean, we've been talking here about the reopening chatter,

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Speaker 1: and we were talking about John lay there talking as

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Speaker 1: well in Hong Kong. You say broad and highly encouraging

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Speaker 1: about the reopening chatter, but the thing is that we

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Speaker 1: really need to see some concrete policies come through. How

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Speaker 1: much of a reversal would you expect to see in

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Speaker 1: the likes of Hong Kong and Chinese stocks listed in

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Speaker 1: Hong Kong today? Yeah, I think we're obviously we're going

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Speaker 1: to lift if we do get that reopen um a

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Speaker 1: little bit sooner than the market had expected. I think

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Speaker 1: we were sort of penciling in sometime around spring next year,

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Speaker 1: so coming in a little bit early in first quarter

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Speaker 1: would be very good for risk sentiment. Let's not beat

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Speaker 1: around the bush here, but I'm a little bit leery

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Speaker 1: that they're going to go ahead with that. We may

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Speaker 1: see some soft openings, we may see some COVID free zones,

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Speaker 1: we may see some travel bubbles, But are they going

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Speaker 1: to have a snapp reopening That I doubt and I

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Speaker 1: think the market senses that, and that's why we're not

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Speaker 1: seeing risk assets globally fly on. And there's sure there

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Speaker 1: was a knee jerk bounce higher oil and other other

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Speaker 1: stocks and commodities, but we're not really following through that

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Speaker 1: aggressively today, So I think people are sort of tampering

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Speaker 1: those expectations of touch until we here a definite of

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Speaker 1: yate or nate from China policy makers. What's interesting is

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Speaker 1: is the move uh and it just shows you what's

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Speaker 1: pent up and what's likely to happen once we get

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Speaker 1: these two major overhangs. At some point the central banks

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Speaker 1: will soften their approach. We've seen it, but we really

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Speaker 1: need to see it from the Fed, and at some

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Speaker 1: point you'll get some hints from China. The action yesterday

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Speaker 1: tells you there's some big gains ahead. I agree. I

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Speaker 1: mean the first thing, first button I pressed with oil,

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Speaker 1: I mean, I think everybody did that. Also, you know,

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Speaker 1: we're probably seeing a combination of the EU embargoes kicking

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Speaker 1: in later this early in December, which will probably eliminated

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Speaker 1: one to three million barrels of oil. And you know,

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Speaker 1: obviously pent up demand coming through China for all markets

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Speaker 1: would be spectacular, but easily see all above a hundred

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Speaker 1: dollars hundred and ten dollars again on that, and I

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Speaker 1: think this these are anticipatory moves at the market, sort

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Speaker 1: of buying into right now. Look, I don't I don't

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Speaker 1: I've always got a soft spot for equities, and I've

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Speaker 1: got a very big soft spot for China equities right now,

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Speaker 1: given how far we're depressed. And I totally agree reopening

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Speaker 1: narrative is a ticket to ride if it happens, or

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Speaker 1: patients to buy in Now, what kind what kind of other? Further,

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Speaker 1: I guess upside, are you expecting to see from Asian

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Speaker 1: equities as we head into the latter part of the year.

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Speaker 1: We always talk about this so called Santa Claus rallies,

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Speaker 1: But if you look at what we've seen in Asian

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Speaker 1: equities over the past three months, I mean it's been

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Speaker 1: quite die particularly when you look at that eight percent

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Speaker 1: rally in the SMP five hundred in October. Yeah, I

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Speaker 1: think it's all. I think we can draw a straight

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Speaker 1: line to weakening equities to China zero COVID policy. And

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Speaker 1: I think this is the big problem, um, where the

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Speaker 1: economic tumult continues to build and build and build. And

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Speaker 1: even this week we saw more dreary economic data coming

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Speaker 1: out of China. So the macro is bad. Um, they're

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Speaker 1: not really turning on the monetary taps. So it really

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Speaker 1: has to be the reopening narrative. It has to be

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Speaker 1: driven um consumer rally. You know it's going to happen,

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Speaker 1: but I think we have to be patient for it.

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Speaker 1: Whether that happens, it's we have a Santa Claus rally.

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Speaker 1: To me, it will very much depend on what the

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Speaker 1: FED does. If the FED continues to indicate they're going

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Speaker 1: to remain tight through the rest of the year, I

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Speaker 1: don't think we're going to have any semblars of site

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Speaker 1: Santa Santa rally on any market globally. The interesting thing

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Speaker 1: about whenever the FED does soften its position is that

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Speaker 1: you probably have the dollar turned down a lot. That

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Speaker 1: means the Asian currencies will turn up. So you get

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Speaker 1: an accelerator on the engine on an Asian asset if

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Speaker 1: it's priced in the local currency, if you bought it

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Speaker 1: from abroad, what's your number one call? With that kind

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Speaker 1: of thinking in mind, that's what I think, Well, that's

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Speaker 1: my basic of my trading strategies for when I when

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Speaker 1: I'm buying Asian stocks, it's solve drivenment through currency appreciated

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Speaker 1: because you're effective with devins. You've correctly pointed out branding

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Speaker 1: that double bounced currency appreciation plus dividend return to whatever

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Speaker 1: field return you're looking from your stocks, so that's the

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Speaker 1: key factor here, and I think this is what's really

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Speaker 1: dissuaded me from jumping on board here. That's because we

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Speaker 1: still see um the economies, especially the yet sporting economies,

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Speaker 1: doing quite weak, so we're not enamored to go into

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Speaker 1: those economies yet. And we're also seeing the problems in China,

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Speaker 1: so I'm still not prepared to buy the one right now.

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Speaker 1: My first call would be to buy the one, then

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Speaker 1: buy stocks, so I'm waiting for that to happen, and

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Speaker 1: then I'll probably jump more into into stocks, alright. Steven,

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Speaker 1: always a pleasure. Steven Innes is managing partner at SBI

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Speaker 1: Asset Management, on the line from Bangkok for us here

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Speaker 1: on Bloomberg Day, Brycasia