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Speaker 1: Let's get to our guest, Stephen inn Is, managing partner

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Speaker 1: at SPI Asset Management. Stephen, sometimes when you get good news,

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Speaker 1: it's hard to figure out whether it's good news or

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Speaker 1: whether good news is bad news. And then sometimes when

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Speaker 1: you're trying to figure out if it's good news, like

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Speaker 1: the China reopening, you're wondering whether it's really good news

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Speaker 1: because although there's growth, there might be inflation. What shall

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Speaker 1: we be doing in our market action at the moment?

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Speaker 1: I love that analysis, Brian, That's exactly how I feel

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Speaker 1: right now. Um, the China reopening is definitely a double

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Speaker 1: legs sort when it comes to inflation. But while the

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Speaker 1: China reopening could provide a much needed untimely boots to

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Speaker 1: the global or commy, I think it's going to come

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Speaker 1: with some big sort limit rephrase that some biguous students.

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Speaker 1: I think, uh, you know, China's typical supplier of low

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Speaker 1: cost goods globally and using the bottlenecks UH supply chain

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Speaker 1: bottlenecks is going to be quite positive for inflation. Still,

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Speaker 1: the bad news is growth accelerates through Q one China's insation.

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Speaker 1: The demand for raw materials and all things energy is

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Speaker 1: it could punt those prices up, and this is what

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Speaker 1: the FED needs c be are worried about. And I

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Speaker 1: think it's this revolving negative loop of inflation we find

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Speaker 1: ourselves always returning to again for China itself. Stephen, is

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Speaker 1: it a buy with the reopening of its borders? Unquestionably yes.

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Speaker 1: I mean, I think the low valuations were very attractive

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Speaker 1: for people to get in on the initial waves, and

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Speaker 1: I think any dips were going to see whether it's

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Speaker 1: caused by spikes and COVID cases, are worries about the

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Speaker 1: health care system are going to be bought. I think, um,

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Speaker 1: you know, the outlook for stocks is a lot different

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Speaker 1: from from other assets where you've been a longer time

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Speaker 1: view to really consider those moves. And I think, you know,

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Speaker 1: when we look at long term investing, it's not a

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Speaker 1: one or two month investment plan, really a multi year

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Speaker 1: investment plan. So I think signs here beyond COVID that

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Speaker 1: the PBOC and other policy makers are actually going to

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Speaker 1: be stimulating the economy, specifically driving money into platform tech

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Speaker 1: platform technologies and also about trying to um abate some

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Speaker 1: of the angst and the property and markets. These are

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Speaker 1: very positive signposts that investors are going to clock to.

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Speaker 1: So nobody's been going to China and Hong Kong is

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Speaker 1: right on you know, right right on the southern tip here,

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Speaker 1: and uh, it's got to be a good thing for

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Speaker 1: Hong Kong. But the tanks in index has just past

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Speaker 1: twenty thousand, coming up from fourteen thousand and change. I

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Speaker 1: know it's a long way from what we fell from

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Speaker 1: thirty one and change. But has a lot of this

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Speaker 1: already been priced in? I think a lot of it,

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Speaker 1: the early part has been priced in. I think it's

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Speaker 1: the way you see mode right now, because we're still

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Speaker 1: not really clear mobility rebounds during the next few months.

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Speaker 1: Um and we're and as we could see by what's

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Speaker 1: happened with Teslama extending their lockdown there, they're shut down

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Speaker 1: there because of the increase in COVID. It's some clear

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Speaker 1: what how corporations for incorporations and also households are going

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Speaker 1: to direct the next COVID regime. How thinks you're going

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Speaker 1: to react that before we're going it's still a little

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Speaker 1: bit uncertain. This could weigh on growth throughout the early

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Speaker 1: stages and possibly even into greater part of If you

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Speaker 1: take a step back and look at the broader markets,

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Speaker 1: global stocks. They've fallen as rates climb, Um, what assumptions

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Speaker 1: are you making about where they'll head next year set

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Speaker 1: to full father, especially bearing in mind that they fell

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Speaker 1: from massively elevated levels. You know, we're looking at sticky

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Speaker 1: inflation um encompassing through the planner right now. And this

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Speaker 1: is still going to be a problem. And I think, Um,

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Speaker 1: although everybody was rounding their inflation outlook in two where

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Speaker 1: they thought it would subside, I think we could have

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Speaker 1: the same problem again in three, and this could be

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Speaker 1: actually as spirit and by this trying to reopen, and

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Speaker 1: it couldn't bolden the fats to heighten interest rates even

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Speaker 1: I wouldn't be surprised if we're still talking about rate

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Speaker 1: hikes at the end of three. And this is a problem.

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Speaker 1: Um that that that we're facing right now is fed

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Speaker 1: is basically told us UM that they're going to hurt

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Speaker 1: the economy. Is that a good time to be owning

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Speaker 1: assets of any kind, let alone long duration access, which

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Speaker 1: seemed to be the favorites of the markets. I don't

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Speaker 1: think so. I still gonna still think cash is probably

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Speaker 1: the best at the money put you could have right now,

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Speaker 1: And I started remaining in cash at least sitting a

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Speaker 1: few hands out in the early stages of to one

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Speaker 1: to see how the cards fall before really jumping in

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Speaker 1: with any dust. So I don't know what other people

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Speaker 1: are thinking, but I'm taking a little bit of a

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Speaker 1: defensive approach to toe reopening narrative. And what would be

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Speaker 1: a sign that would get you to change your mood, Well,

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Speaker 1: inflation dropping, you know, I mean that would be we

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Speaker 1: just went through the PC inflation, and we in the

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Speaker 1: US and we had provisions higher for October. This is

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Speaker 1: a bit of a problem here. I didn't really give

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Speaker 1: that all their sign that we were saying that the

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Speaker 1: inflation is dropping. Look, we're still miles away from from

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Speaker 1: from the FEDS target mag ma view. Here, it was

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Speaker 1: quite easy to come from nine to seven. Moving from

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Speaker 1: seven to five could be a little bit tricky, but

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Speaker 1: certainly moving for five down to two percent where the

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Speaker 1: Fed's target is going to be very difficult. I think

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Speaker 1: the FEDS just have to keep into its rights high

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Speaker 1: if that's what their ultimate goal is. Both to bring

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Speaker 1: down that bring down this a strong employment case and

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Speaker 1: also to drive inflation out of the economy. Is going

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Speaker 1: to be a challenge. As you said, Stephen, top of

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Speaker 1: mind for tunnel banks are tightening, what could still break

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Speaker 1: in the financial system that's so used to low rates

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Speaker 1: and cheap money. Are the risks to financial stability? Yeah,

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Speaker 1: there is. I mean we always look at for internal

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Speaker 1: plumbing effects, and primarily that revolves around what the big

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Speaker 1: big items are in the US and FEDS lending system,

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Speaker 1: and how the Fed, you know, will operate in the

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Speaker 1: fact amongst this evolving bond market is yield start going

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Speaker 1: up again. These are things that we have to really consider.

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Speaker 1: We're also coming into where we've got situations for government

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Speaker 1: issues that are going to permeate in the US because

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Speaker 1: of the divided House. We have lots of policies that

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Speaker 1: we're getting implemented may not actually get put forward because

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Speaker 1: if we pushed back from the republics. Of course, we're

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Speaker 1: running into the refinancing period. And this is always going

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Speaker 1: to be a bolivari for markets to share. Whether whether

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Speaker 1: whether the US said det ceiling actually comes comes into

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Speaker 1: a reasonable ordering. I don't think it will because the

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Speaker 1: differences that have in the House right now. This is

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Speaker 1: going to be a big problem that the markets are

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Speaker 1: going to have to deal with going forward. So Stephen,

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Speaker 1: if as an investor, if my biggest concern was recession,

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Speaker 1: the reopening of China probably makes me more confident. If

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Speaker 1: my biggest fear was inflation, then the reopening of China

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Speaker 1: probably makes me nervous. Is it as simple as that

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Speaker 1: or are there's so many other factors that this is

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Speaker 1: really just one out of ten. Well, you know, my

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Speaker 1: view here going into three was what we're going to

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Speaker 1: move out of inflation. There are worrying about, you know,

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Speaker 1: the lag effects of what the FED is going to

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Speaker 1: do with the global economy. Obviously it's going to hit

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Speaker 1: the US economy h and whether that spreads the global economy. Now,

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Speaker 1: given the fact that everything is still standing from inflation, UM,

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Speaker 1: sticking close in the PC. More inflation on coming down

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Speaker 1: the pipe lightly from China, UM, but we're still waiting

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Speaker 1: waiting to see on that. But I think it's going

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Speaker 1: to happen through the commodity channels. So I think we're

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Speaker 1: going to be in that very very similar environment. UM.

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Speaker 1: I think a good asset right now is to look

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Speaker 1: at is oil for instance, right now, where we're stuck

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Speaker 1: in this sort of ambivalent environment right now, we're we've

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Speaker 1: got these tight supplies and recession fears pulling traders in

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Speaker 1: different directions. I think we're going to have this inflation

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Speaker 1: and this inflation narrative, slow growth narrow pulling investors in

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Speaker 1: different directions next year. And this is what I'm concerned about,

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Speaker 1: at least at the early stages of So what assumptions

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Speaker 1: are you making about all prices in three and in

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Speaker 1: that vein Along that vein commodities which have been the

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Speaker 1: outperformer this year. Well, I think we have to really

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Speaker 1: be cautious about, you know, looming recessions and these are

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Speaker 1: never ever good for commodities, and they won't be good

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Speaker 1: for oil prices and not the one concern that we had.

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Speaker 1: But then we have the counter arguments getting made by

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Speaker 1: the likes of Golden Sacks about the under investment and

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Speaker 1: all market and this suggests to me that all prices

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Speaker 1: are going to remain high. But we're going to see

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Speaker 1: a hundred dollars pre barrel again, I don't think so.

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Speaker 1: I think we're going to see as a happy spot

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Speaker 1: between seventy five and eighty five, and I actually think

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Speaker 1: we're near the top of that range right now, and

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Speaker 1: all markets going into UH three. The reason why I'm

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Speaker 1: looking at this is, first of all, we're not sure

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Speaker 1: how mobility is going down fold in China. Look, we

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Speaker 1: know there's going to be a lot of psychological angs

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Speaker 1: to come back out of your house after pet locked

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Speaker 1: in for three years. People aren't going to come out

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Speaker 1: and be jumping for joy right away. So that's the

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Speaker 1: delay the reopening, you know, the reopening enthusiasm for six months.

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Speaker 1: But right Stephen, we have to live in there. Stephen

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Speaker 1: in his managing partner SBI Asset Management,