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