‘We’re dancing on the Titanic,’ observes stock-trading legend Thomas Peterffy, as Russia’s Lavrov warns against underestimating nuclear-war risk

Thomas Peterffy has some tips for investors and bullish traders amidst stomach-churning volatility and an ugly downward slope for stocks – focus on the long game.

The founder and president of Interactive Brokers Group IBKR,
He says he sees many “difficult problems” facing the market on the “immediate horizon” and warns that anyone expecting stability in financial assets in the immediate term, while the world is in a rising and bleeding inflation. clashes in Eastern Europe could be a big disappointment.

Reads: How to invest as inflation, higher interest rates and war markets

“Inflation is sweeping the world, interest rates need to rise … and that will be a shock and the consequences will be negative,” Peterffy said in an interview on Monday afternoon. “All of this is not good for the markets,” he said, adding metaphorically:

“We’re all dancing on the Titanic.”

“Thomas Peterffy.”

He noted that the increase in geopolitical tension between Russia and the US over Ukraine’s invasion of Moscow represents a source of monolithic uncertainty for markets, even if inflation declines.

Peterffy, who is optimistic about the long-term action, said Russia’s siege of Ukraine was a “serious concern” and a headwind for the appreciation of risky assets.

That conflict, which began on February 24, marks the largest military confrontation on European soil since World War II, and the anguish that Russian leader Vladimir Putin may resort to nuclear weapons is a source of consternation. .

Reads: Fed fund futures traders see a 94% chance of a Fed increase of 75 basis points in June, according to CME data

On Monday, Russian Foreign Minister Sergei Lavrov said in an interview on Russian state television that the risk of a third world war was real and said that the risk that nuclear weapons will be deployed.

“It simply came to our notice then. The risks are considerable now, “Lavrov said.

“I would not want to increase these risks artificially,” Lavrov continued. “Many would like that. The danger is serious, real. And we shouldn’t underestimate it.”

His remarks followed comments made days earlier in which suggestions were rejected that Russia would finally want nuclear weapons in its military campaign in Ukraine.

Peterffy, of Hungarian descent, said he was looking closely at the geopolitical landscape as Russia’s war against Ukraine unfolded, with particular emphasis on how it could reshape the global order.

“Where will China be?” asked the founder of Interactive Brokers. “Will the West push Russia firmly into the arms of China?” If so, he said, this “is not constructive for the markets.”

For its part, the trading platform Interactive Brokers saw its trading volume fall, along with profits and revenues, in the most recent quarter, as securities lending activity declined.

Shares of Interactive have fallen 21% so far in 2022, compared to a 7.4% drop to date with the Dow Jones Industrial Average DJIA.
an 11% drop for the S&P 500 SPX,
and a 19% drop for the Nasdaq Composite Index COMP,
during the period.

Peterffy said markets will end up rising when investors realize that despite rising inflation, stocks are the only game in town. But it is unclear when this turn will begin. “In the long run, due to inflation, the stock market will rise again, at least in nominal terms,” ​​he said.

Keep reading: US stocks ended in a manic green Monday, but intraday rebounds like this are not bullish

See: What’s next for the stock market when investors struggle with the Fed near the “peak of shakishness”

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