Speaker 1: Let's get to our guest. It's Steve Sosnik, chief strategist
Speaker 1: at Interactive Brokers. Steve, we also had kind of a
Speaker 1: three day delay on the statement from the G twenty
Speaker 1: and the headlines kind of cute. The guardians of the
Speaker 1: global economy have been told to buckle up. That doesn't
Speaker 1: exactly inspire all that much confidence in the immediate future
Speaker 1: for you, Steve, is that parallel opportunity over the next
Speaker 1: six to twelve months. Um, Good morning, Brian. I'm going
Speaker 1: to say both. Um. I think in the short term, UM,
Speaker 1: it's probably a bit more perilous than than than not. Um.
Speaker 1: You know, there are so many cross currents that we're
Speaker 1: having to deal with right now, and you know, uncertainty
Speaker 1: is easier to deal with when the when the monitor
Speaker 1: fiscal and monetary wins are at your back. Um, when
Speaker 1: they're in your face, it's just that much harder to
Speaker 1: deal with, and it's so much harder to protict. The
Speaker 1: reason I say that, the reason I agree that there's
Speaker 1: some opportunity, of course, is there will always be stocks
Speaker 1: that are beaten up. There's always gonna be sectors that
Speaker 1: are beaten up unfairly. Um. But you know, you're you
Speaker 1: have to do a bit of mining for those. It's
Speaker 1: not you know, you're not just gonna, you know, dip
Speaker 1: the pan into the stream and come up with a
Speaker 1: lot of gold. You're gonna have to really sift through
Speaker 1: it and find what works well. Using that analogy, you
Speaker 1: buy the shovel then don't even these but itself, don't
Speaker 1: you always That's that's who That's who makes the money
Speaker 1: and the goal in the gold mining business, right It's
Speaker 1: it's the people selling the shovels and the picks and
Speaker 1: everything else. Um, you know, and and and you know,
Speaker 1: I think right now there's so many crises that we
Speaker 1: have to get through. I think this is why going
Speaker 1: defensive UM in terms of you know, your stock selection,
Speaker 1: your your asset allocation, probably makes a lot of sense because, um,
Speaker 1: you know, there's all the things that people still need
Speaker 1: to buy. There's all the things that that are just
Speaker 1: going to be bought or sold regardless of whether the
Speaker 1: economy goes up or down. Um, And which is why
Speaker 1: I'm sort of favoring consumer staples that sort of stuff,
Speaker 1: because um, consumers still have the money to spend. The
Speaker 1: tricky thing is that the macro is still weighing heavily.
Speaker 1: And and you know, we just ran that story about
Speaker 1: Jeremy Hunt and Liz Trust. Do you think what happened
Speaker 1: in the UK kind of presages a battle between governments
Speaker 1: and central banks that no traders would be looking forward
Speaker 1: to seeing. Yeah, that that was pretty much really careful
Speaker 1: what you wish for a type of moment where you know,
Speaker 1: where the where the policies from the fiscal side were
Speaker 1: pretty much at odds with what the central bank is
Speaker 1: trying to do. Um. You know what scares me about
Speaker 1: the UK situation more than anything. You know, I'm far
Speaker 1: from the most expert on the politics of it, but
Speaker 1: what what what really bothered me was that there was
Speaker 1: this this strategy used by huge numbers of funds that
Speaker 1: it had ultimately required them to sell assets into a
Speaker 1: declining market. As someone who's you know, sort of formative
Speaker 1: market experience was the seven Crash, which was that was
Speaker 1: the these is a portfolio insurance self futures into a
Speaker 1: declining market. Any strategy that involves that on a large
Speaker 1: scale scares the heck oademy and that that's really and
Speaker 1: also Steve, with the backdrop of a declining a rapidly
Speaker 1: declining currency. Oh absolutely, rishot, I mean this was you know,
Speaker 1: this this was I hate tell we use the term
Speaker 1: perfect storm, but this was sort of everything that could
Speaker 1: go wrong? Did um? And I guess you know Mr Quartang,
Speaker 1: you know, was the scapegoat or I don't know if
Speaker 1: he was scapegoated or not. Again, I'm not the best
Speaker 1: expert on UK specific politics, but um boy, that was.
Speaker 1: You know, this is this is not the time for
Speaker 1: a major policy misstep, um, you know. And it's really
Speaker 1: not the time maybe even for bold policy moves, because
Speaker 1: it's not clear how the market is going to take
Speaker 1: any of them. Yeah, as we just mentioned what Ed
Speaker 1: was talking about Doing's speech yesterday, one thing which struck
Speaker 1: a lot of the commentators at the time was he
Speaker 1: didn't really mention COVID by name. He didn't also really
Speaker 1: say the word market or free market at all. Um,
Speaker 1: does this again, just perhaps cement what's really been the actuality?
Speaker 1: You know? I think so, I think that um, you know, COVID,
Speaker 1: the COVID policy has been in the backdrop. I think
Speaker 1: you know that they're they're continued um use of the
Speaker 1: zero COVID policy. I think they have to realize has
Speaker 1: caused some issues both economically and socially UM, and so
Speaker 1: you know, maybe this shows a little bit of easing
Speaker 1: off that policy. UM in general. I think, well, what
Speaker 1: we want to hear from him is is just something
Speaker 1: you know, will we will we be getting sort of
Speaker 1: the China of old, or will we be getting a
Speaker 1: new version of China UM a slower growing UM, somewhat
Speaker 1: more stagnant, more mature market UM more or economy UM.
Speaker 1: And I think that, you know, that's something the world
Speaker 1: has to reckon with because we've already seen that it's
Speaker 1: not particularly helpful when you have a fairly staged in
Speaker 1: China UM. And you know, I think back to sort
Speaker 1: of the you know, the aftermath of global financial crisis.
Speaker 1: Want a growing China, you know, sort of counterbalance the
Speaker 1: shrinking rest of the world. You know, right now, you know,
Speaker 1: if China is not particularly growing and no one else
Speaker 1: is UM, you know, that's not particularly helpful. And I
Speaker 1: don't know that Si Jing Ping Um you know, assuage
Speaker 1: many people UM that that that that the situation might
Speaker 1: turn around abruptly. One of the key points is that
Speaker 1: he really believes that China is UH an admired alternative
Speaker 1: model for development on the on the global stage that
Speaker 1: counters the the the US led multilateral and democratic system. Uh.
Speaker 1: Do you see many countries that will embrace this path
Speaker 1: or want to embrace this path? Um? I don't. I
Speaker 1: don't see that. I'm you know, I'm sure there are
Speaker 1: sort of there's got to be some autocratic leaders out
Speaker 1: there who would prefer the Chinese model. Um, you know,
Speaker 1: which is which is more autocratic than most of the
Speaker 1: most of the rest of the developed world. Um, But
Speaker 1: you know, I don't. I don't see that as necessarily
Speaker 1: the you know, if people are rioting for freedoms or whatever,
Speaker 1: I don't see them really rioting to adopt the Chinese model.
Speaker 1: I see that being imposed from top down. Okay, but
Speaker 1: that's you know, China itself. But you know, that does
Speaker 1: throw up a lot of other e m s out there.
Speaker 1: And how closely did you look at them? And how
Speaker 1: closely are your clients now looking at them? Given that
Speaker 1: they've been so beaten up as we've been people, people
Speaker 1: just have not been prepared to put risk on the
Speaker 1: table for any length of time. We are not seeing
Speaker 1: people really actively talking about or looking at emerging markets
Speaker 1: right now. Maybe that's a good thing. Maybe that means
Speaker 1: that if there's a complete lack of interest, it's a
Speaker 1: buying opportunity. Um. But you know, this is a difficult environment.
Speaker 1: A strong a strong dollar um, you know, is a
Speaker 1: big problem for so many emerging markets, particularly ones who
Speaker 1: borrow in dollars um. So there there's there's a lack
Speaker 1: of interest. There's sort of a very strong wariness about
Speaker 1: emerging markets right now, and it's it's probably with good reason,
Speaker 1: but you know, it echoes what I said earlier. They're
Speaker 1: not all bad. So the problem is finding which ones
Speaker 1: there are. And I got to say right now, I
Speaker 1: don't have a strong candidate to say this is the
Speaker 1: one we have to be looking at right now. I
Speaker 1: think it's gonna it's gonna reveal itself over a bit
Speaker 1: more time and require a lot more work, which which
Speaker 1: frankly I have not done to find it. I have
Speaker 1: not been able to find it yet. You mentioned that
Speaker 1: you you see opportunity as well as danger. UM. I
Speaker 1: guess the earning season will give us a really good
Speaker 1: insight into some companies that are managing through this much
Speaker 1: better than others. Do you have an inkling of where
Speaker 1: they might come from perhaps what, what sector or what
Speaker 1: type of company. I think it's gonna be a bit idiosyncratic.
Speaker 1: I think, right, you know the problem right now that
Speaker 1: that that I think we've discussed in the past is
Speaker 1: it's not a great sign. I wish I could rearrange
Speaker 1: earning season. I don't love that it starts with banks
Speaker 1: because they're very idiosyncratic. Know, nobody else's trading revenues, nobody
Speaker 1: else is that interest rate focused. Um, so we're going
Speaker 1: to really get in and see. I think the the
Speaker 1: initial tells will be Netflix is this week, and I
Speaker 1: don't think I don't know that Netflix particularly is a
Speaker 1: great bell weather in and of itself as a company,
Speaker 1: but how we react to that stock is a great
Speaker 1: bell weather because think about it January and in April, Steve,
Speaker 1: that's what we got time for. Steve Selznick, chief strategist
Speaker 1: that Interactive broke is getting his take on market prospects.
Speaker 1: This has Bemberg