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Steinberg: Markets Haunted By Europe

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    David Steinberg, DLS Capital, on why China’s economy matters to U.S. markets.

  • Duration 5:02
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First guess isn't concerned about the slowdown in China -- he says it's just the bump -- the road and we should be using it as a buying opportunity joining me now is David Feinberg founder and managing partner of the LS capital management.

-- let's start with China eight want eight point 1%.

You know GDP -- -- something like a dream for America but of course a lot of people still worried about this hard landing in China.

How can -- not so concerned.

It's going to be hard landing in China.

You know 8% to big number comes in seven and a half comes and -- half these are big numbers and the large economy now.

And it's not -- talking on -- why do we care so much anyway why has China become this important.

Is China is it is basically under leveraged economy -- -- per capita growth rising.

Lab vast consumer of commodities as wells are great manufacturing force -- what.

And Americans are ultimately take advantage of that in it's it's like -- -- -- great good for you guys -- what that does it do for me.

-- American -- a consumer and only continued manager -- -- low -- you know products that are coming in.

But what can we ultimately sell all the things operating about BMW is flying in Mena -- -- to me is does have some little there's these days that we got export we've got to have product we can export our commodities that we export including things like Coleman.

Metals and mining equipment and so forth all these kinds of things can go but -- of its things that they're gonna use to be competitive and productive.

And data on that note we also need someone pick up the slack from Europe nine million -- -- -- -- sanguine about Europe but -- not -- concerned there's a lot of other people even.

What Europe's -- chronic problem with their debt to gonna air every six months or so we're gonna hear about a different country different situation.

What Europe -- when investors need to see a template put out by European governments as walls ECB.

As -- how they're gonna solve these problems the real problem actually goes beyond sovereign -- it actually goes and to maintaining a solid banking system.

Does the average guy on the street in Europe can afford to be a walk in the bank -- -- at capitol.

So somewhere along wine they're gonna be other defaults or restructurings whether it's Portugal Spain and some are going to be larger some are going to be smaller.

Over time this is going to be chronic and it's gonna take a while work through the system.

They eat you say it like you know cycle walked through the park and Spain and what went bankrupt that would -- the what our markets get hammered pretty good oh absolutely this is not gonna be passed something we're going to be able to go through without you know -- in handling.

But the history of the world have been lots of countries that have gone under restructure.

And you're gonna need to plant beginning in good plan to be able actually know the -- this thing enacted this thing.

In an orderly fashion and that's what I think -- authority -- like what they're doing now with the money printing kind of stuff you know there was a lot of focus on Greece the idea was we can stop the first domino thing you won't have a domino effect.

You know it's like put your finger and India.

Okay money printing -- -- random basis currencies.

We are pretty money Euro -- -- mind -- -- in the larger of the G-7 countries.

Are pretty money hand over fist or long run that causes the basement people called inflation but it's a loss of barter value.

In terms of what Paper money is able to buy.

It depends -- -- did the the level of how quickly that begins to debase and become something that scares investors.

I'm what's yet to be seen -- right now you get balance sheets in the ECB approaching two point seven trillion dollars maybe it's two point seven trillion dollar fed grouchy so big numbers.

And yet there's still probably more of more than likely gonna continue to be quote -- quote accommodative.

Find ways to be -- -- finally some print more money because that's the only you talked about the elaborate aren't gonna get employment they're just they understand patchwork.

But -- it would get would got a minute I know there's one topic you and I talked about here.

You like -- still you still like these calls.

Yeah I start buying them at the tail end of last year and obviously little bit early but they had been down already probably 60% to follow -- 30% but since beginning the year.

-- back home away -- usually at the IEA data and so forth 80% of the future growth in plants around the world emerging markets are going to be -- We can only contract to a limited degree from this point right now as to how much coal we -- for probably near that at -- -- Might -- EPA's war on all the fact that -- -- thirtieth of all fossil fuels approved in about you know today Genesee & Wyoming put out the traffic report.

Pretty midsize -- makes it the cold front -- traffic was down 43%.

Right and that's pretty devastating stuff.

Right if it just -- these are.

These areas are local okay.

And there's been a big back -- -- -- -- unbelievably warm where you had extraordinarily low usage electric which you normalize these again you're gonna see these levels come back up.

Quickly because I'm getting the -- signal wanna talk about the name this -- specific names like no.

Alpha natural resource I would go with Alpha Natural Resources we get that cold exposure I go with Arch Coal are -- -- -- resources which is that Canada.

She also exports copper zinc and -- and have a large holding forty call which it bought a few years alright.

Davis -- to bail us capital management thanks -- -- we had a lot lot of great information there come.

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