Speaker 1: Hi, my Boris, And this is straight Talk Chris Joey
Speaker 1: walking back to the straight Talk mate. Lots happening since
Speaker 1: I last said you like you're hearing what March March
Speaker 1: March this year and we were talking this is sort
Speaker 1: of trade war announcement, sort of period pre trade war,
Speaker 1: pre trade war. Okay, so it was pre liberation Day,
Speaker 1: that's right, preliberation day, so called liberation day. So he
Speaker 1: announced and you know, you were predicting rate cuts, and
Speaker 1: we've got a recut in may RBA recut and then
Speaker 1: we're probably going to get a rate cut again in July.
Speaker 1: But we'll come back to that in a second. Just
Speaker 1: if we just peel back though, because you know, with Trump,
Speaker 1: you know, doing what he's doing, and with the world,
Speaker 1: the volatility is crazy. But sometimes we sort of tend
Speaker 1: to forget what has happened before, Like we just sort
Speaker 1: of concentrated what's happening now. And we will talk about
Speaker 1: Israeli run. But if we just go back to that
Speaker 1: March discussion, just remind us what you were saying in March,
Speaker 1: pre trade war. Trump.
Speaker 2: Yeah, so I said, I thought you were s equities
Speaker 2: would fall forty percent and that it was going to
Speaker 2: be really bad, and he was really serious on tariffs,
Speaker 2: and no one was prepared for this very hawkish Trump
Speaker 2: on tariffs, and that it was basically going to get
Speaker 2: pretty ugly. And what happened was the SMP five hundred.
Speaker 2: US equities fell twenty two percent post Liberation Day YEP,
Speaker 2: and the Nasdaq index fell twenty seven percent. And that
Speaker 2: was through to nine April. So two April was Liberation Day,
Speaker 2: and then Trump, being the increasingly consummate iterator, backflips on
Speaker 2: nine April. He says, Okay, I've scared the shit out
Speaker 2: of markets. I've kind of declared a forever trade war
Speaker 2: on everyone. I'm going to focus on China, but everyone
Speaker 2: else I'll do a deal with. So he's sticking true
Speaker 2: to his plan. He's decoupling from China. That's happening. He's
Speaker 2: going to bring all that manufacturing home. That's going to
Speaker 2: be super positive for US growth in the medium term.
Speaker 2: But he's doing trade deals with everybody. Markets loved it.
Speaker 2: The day he backflipped, the US sequity market jumped nine
Speaker 2: and a half percent. We on that day bought one
Speaker 2: point seven billion dollars of bonds.
Speaker 1: And then we've been Colby.
Speaker 2: Yeah, the firm I run, we run fifteen billion, and
Speaker 2: then from nine April to thirty April we bought four
Speaker 2: point six billion of bonds and we thought, so we were.
Speaker 1: Super bearish March. He bonds between about global wares y.
Speaker 2: Yeah, US banking, so he banks. But on the show
Speaker 2: last time.
Speaker 1: I was, you know, the uber bear.
Speaker 2: But we flipped one hundred and eighty degrees when we
Speaker 2: saw him basically shift from being an ideological trade warrior.
Speaker 2: So basically this hyper zealous guy which was Trump from
Speaker 2: the election to nine April to suddenly becoming a market whisperer.
Speaker 2: Our judgment was on nine April he was going to
Speaker 2: do everything he needed to do to plicate markets, and
Speaker 2: therefore it was a super attractive buying opportunity. And at
Speaker 2: the same time he's still running some pretty serious intensive
Speaker 2: warfare with the boss of the Fed Power.
Speaker 1: Yeah see that.
Speaker 2: And interestingly, and I think this is genius.
Speaker 1: Because because his term is coming up to yeah next year.
Speaker 2: But the genius trade that Trump looks like I think
Speaker 2: he's going to affect is he's going to pre announce
Speaker 2: his successor I think.
Speaker 1: Soon announce power successor, Yeah, which.
Speaker 2: Is just genius, so he will undermine power and anoint
Speaker 2: his success who's dubbish. And the Federal cut rates this
Speaker 2: year and pretty aggressively, I think, because they can, and
Speaker 2: because rates are very high in the US, so they
Speaker 2: are around four and a half percent here ast with
Speaker 2: three point eight four And as you said on the
Speaker 2: show last time, we said that the RBA would cut
Speaker 2: in May. They cut in May, They're going to cut
Speaker 2: in July. There will be three more cuts this year,
Speaker 2: so five cuts. In title last time we spoke about
Speaker 2: the fact that, you know, we were very bullish on housing.
Speaker 2: Sydney house prices started rising and Melbourne started rising in
Speaker 2: February and they're.
Speaker 1: Climbing quickly off the back of the eight in the
Speaker 1: February cut.
Speaker 2: Yeah, and so we call that cut in December, and
Speaker 2: basically of the view that the housing market would turn
Speaker 2: in February. It's actually notwithstanding we expected. It's quite amazing
Speaker 2: how inch straight elastic the market is and Sydney prices
Speaker 2: and Melbourne prices going gangbusters.
Speaker 1: When you mean lest you get to a most sensitive
Speaker 1: so how the market responds quickly excuse me to either
Speaker 1: asset classes, particularly housing just explained something to our listeners.
Speaker 1: When you go off and buy global bonds, which were
Speaker 1: whether it be issued out of the US or Australia wherever,
Speaker 1: how do you make money in these markets? How does
Speaker 1: Coolibar make money for its clients or for its basic investors.
Speaker 2: Firstly, our yield's really attractive right now. So we're earning
Speaker 2: interest rates on our bond portfolios of around seven to
Speaker 2: eight percent, which.
Speaker 1: Is much higher than people would get if they put
Speaker 1: in the bank, for example.
Speaker 2: So our yield's really attractive. And then when we buy
Speaker 2: and sell bonds, we trade about half a billion to
Speaker 2: a billion a day, and we make money eighty ninety
Speaker 2: percent of the time.
Speaker 1: Because other people would like to buy those very attractive
Speaker 1: interest rates from you because they're not getting it anymore.
Speaker 2: Correct, and they pay you a capital gain correct exactly.
Speaker 2: So we might buy a bond paying five point one
Speaker 2: percent and sell it for a year to five percent,
Speaker 2: and that lower yield to give us a bit of
Speaker 2: price appreciation, and that capital gain augments our total return.
Speaker 1: And the reason you make cable gain because you don't
Speaker 1: buy one bond at five point one as eleven five
Speaker 1: of you buy thousands of millions.
Speaker 2: Yeah, and they're trading like you know, up to a
Speaker 2: one to two billion a day, right, And you know
Speaker 2: I've got the fifty sixty super smart guys and girls
Speaker 2: that work for us, much smarter than me. I'm the brawn,
Speaker 2: they're the brains. I'm the window dressing and and but yeah,
Speaker 2: crazy smart team. I mean lots of university medalists and
Speaker 2: PhDs and super smart dudes.
Speaker 1: How do you find these people?
Speaker 2: We actually find I like to call us like the
Speaker 2: odd bods. Like our guys are always just you know,
Speaker 2: that crazy smart guy, a girl who's sitting inside a
Speaker 2: big organization, who's not political. He's probably been stiffed on
Speaker 2: camp a few times and wants to be part of
Speaker 2: a big team.
Speaker 1: Stan they missed out on a commission that they're expected
Speaker 1: to get or get a bonus or something like that.
Speaker 2: But they're not political, but they are the smartest guys
Speaker 2: in the room, and they want to play a team sport.
Speaker 1: Basically, I don't appreciate it. Underappreciated.
Speaker 2: Yeah, and all of our guys are pretty idiosyncratic, a
Speaker 2: little eccentric, but they're all team players and cool of
Speaker 2: bar as a team sport. Like you know, we're fifty
Speaker 2: sixty very talented guys and girls, but it's it's like
Speaker 2: a machine. It's not one person making decisions. Where ninety
Speaker 2: eight percent of our trading is driven by models, so
Speaker 2: financial models, and there's no rock stars, there's no heroes
Speaker 2: that billionaire a day. That way, trading is quantitative.
Speaker 1: So when when when the RBA does its modeling And
Speaker 1: most people think that you know, the RBA just sits
Speaker 1: around there and they will put their hand UPBA or NA.
Speaker 1: There's actually the the people within the RBA. The people
Speaker 1: work there as opposed to the board. They make submissions
Speaker 1: as to what should happen. But the RBA is continually
Speaker 1: doing modeling. I mean they they run off I think
Speaker 1: one of the model models of the al models users
Speaker 1: called Martin I think, or.
Speaker 2: Something along the model of that.
Speaker 1: And there's another one to do GSC. I don't know
Speaker 1: what it stands for. But in any event, what are
Speaker 1: your guys doing relative to analytics around what the RBA
Speaker 1: is doing, because you know, like I just get this
Speaker 1: feeling though most people out there think that we're just
Speaker 1: sort of saying, well, you know that number coming out
Speaker 1: of the AUSTRAMI your statistics was a bit low or
Speaker 1: it was a great two point one is a great
Speaker 1: headline inflation rate, two four is a great trim million,
Speaker 1: and therefore we should just reduce interust rates. No, the
Speaker 1: RBA has got all these variables, so they stick into
Speaker 1: their models and we'll come back to the model in
Speaker 1: a second. But they're sticking to the models, and that
Speaker 1: spits out a result. And there's lots of variables, like
Speaker 1: there's millions of them, not millions, there's a lot anyway,
Speaker 1: And then they build different scenarios for sensitivity. What do
Speaker 1: you guys do do you do work around that stuff
Speaker 1: too with your team I'm.
Speaker 2: Talking about yeah, So, I mean most of our modeling
Speaker 2: is pricing the right interest rate for CBO, RAINS or
Speaker 2: NAB to pay us on their.
Speaker 1: Debt so on a bond that U motorable from them CORET.
Speaker 2: So we're lending money to everyone in the world Google, Apple, JP,
Speaker 2: Morgan Gold and Sacks, CBA. And what we do is
Speaker 2: pricing interust rates better than anyone in the world, we believe,
Speaker 2: and we require a huge amount of tech to do that.
Speaker 2: So we have like eighty models that we use around
Speaker 2: the world. We also more or less let the models trade,
Speaker 2: so we have our goes that trade alongside our humans
Speaker 2: basically like a proper count. Yeah, like ninety eight percent
Speaker 2: of our trading is quantitativele.
Speaker 1: When sentiment gets involved and the cont doesn't understand it.
Speaker 2: Yeah, so that's where the two percent comes in, right.
Speaker 2: You know, it's just not a cookie cut of trade.
Speaker 2: It might be April or you know, there might be
Speaker 2: a trade war, or it might be Trump backflipping, and
Speaker 2: then the team step in and saying, okay, we'll wait
Speaker 2: a second. The models are saying things are cheap, but
Speaker 2: we also think there's a regime change here the personality. Well, yeah,
Speaker 2: Trump's shifting course and that's really important for future pricing.
Speaker 2: So in addition to pricing every bond of the world
Speaker 2: all day every day, we also run a ton of
Speaker 2: modeling to try and predict what the RBA and the
Speaker 2: fair are going to do. Not because we punt interest rates,
Speaker 2: so this is a little bit confusing. We don't bet
Speaker 2: on the direction of the RBA before they make a decision, correct,
Speaker 2: we never do that with price bonds. But we want
Speaker 2: to understand what the RBA is going to do and
Speaker 2: what's the what the Fed will do before anyone else
Speaker 2: so that we can better trade the bonds.
Speaker 1: So just to take it back a step, just like
Speaker 1: you're very technical, super bright, I'll just try to put
Speaker 1: that into mark speak. So when you buy the bonds,
Speaker 1: you buy the word of the shoe prices, as you know,
Speaker 1: whoever's issue in the bonds will be whatever it is.
Speaker 1: And what if the shoe prices and the rate they're
Speaker 1: offering you ines rate they're offering you. But what you're
Speaker 1: talking about is when you do do this analysis or
Speaker 1: your team does this analysis in a quantitative sense using
Speaker 1: perhaps software or the systems doing it for you, just
Speaker 1: put aside the qualitative stuff and a set We'll come
Speaker 1: back to that beause I want to talk about Trump.
Speaker 1: You're trying to get a sense of what the RBA
Speaker 1: is going to do, so you know whether to get
Speaker 1: ahead of it by doing a trade in relations to
Speaker 1: what you already hold.
Speaker 2: Correct. Yeah, So the way I describe is that we
Speaker 2: don't trade macro like the RBA or what they're going
Speaker 2: to do almost all the time. However, once or twice
Speaker 2: a year, once every couple of years, macro is really important.
Speaker 2: Macro is super important in March and April. So because
Speaker 2: of our macro modeling, and our macro guys were saying
Speaker 2: Trump's going to be crazy hawkish on trade and that's
Speaker 2: going to blow up equities. We'd hedged twenty five to
Speaker 2: fifty percent of all of our skin March before Liberation Day,
Speaker 2: and we'd sold a lot of our bonds. And then
Speaker 2: because of our macro analysis in mid April and the
Speaker 2: ninth of April, we thought that there was another regime
Speaker 2: and that he was going to be much more of
Speaker 2: a guy that tried to assuage market concerns and manage markets,
Speaker 2: and that this would be risk positive. So our macro
Speaker 2: influenced the one point seven billion of buying we did
Speaker 2: on the ninth of April. And you know, to talk
Speaker 2: a geopolitics, I mean that's been very important for our
Speaker 2: trading as well. I mean I was sitting last week
Speaker 2: or soo two weeks ago in Zuri at the airport,
Speaker 2: and I think we've developed quite a good capacity to
Speaker 2: read Trump and to discern his tails.
Speaker 1: He's got clear tells. Can you talk about that? Yeah?
Speaker 2: So, like when he came out and said just before
Speaker 2: Israel launched it's onslaught against Iran, he came out and
Speaker 2: made this really strong statement.
Speaker 1: He said thirteen fifteen days ago.
Speaker 2: Yeah, and he said there is no risk of Israel
Speaker 2: attacking I run imminently, but they might do it. So
Speaker 2: at some point internally we were of the view that
Speaker 2: he was engaging in subterfuge and that there was a
Speaker 2: good chance that actually Israel was about to strike immediately.
Speaker 1: And that's exactly what happened.
Speaker 2: And in that Zime and I wrote about this actually
Speaker 2: in the AFI and the reason being, So, the reason
Speaker 2: being is he just can't help himself. He's a massive
Speaker 2: front runner of inside information. So whenever Trumpy has the
Speaker 2: good oil, which he as president of the United States
Speaker 2: and leader of the free world, ostensibly he gets the
Speaker 2: juice all the time, something cooking well. He always knows what,
Speaker 2: he knows what everyone's going to do right, all the time,
Speaker 2: and he can't help himself. He wants to be man
Speaker 2: in the middle. He wants to be the center of attention.
Speaker 2: And so I thought he was being I said to
Speaker 2: my guys, he's come out bizarrely and said there's no
Speaker 2: chance of an Israeli strike, but Israel's going to do
Speaker 2: what Israel's going to do. They're an independent sovereign. Say yeah,
Speaker 2: that will be influenced by him. But it's kind of
Speaker 2: bizarre that he's taken away that sort of sovereign right
Speaker 2: and that decision making he would front run whether they
Speaker 2: would and wouldn't strike, because he's also taking.
Speaker 1: Away there.
Speaker 2: To capitalize on strategic surprise. Why would you do that?
Speaker 2: It doesn't make sense. So I said to my guys,
Speaker 2: I actually think they're going to have a shot, because
Speaker 2: this is Trump playing games. He's trying to manipulate global
Speaker 2: perceptions of what they will won't do. And subsequently, apparently
Speaker 2: he was all in on it, and he said that
Speaker 2: to mislead the Iranians. But the really interesting thing was then,
Speaker 2: So I was sitting in Zurich airport, I guess almost
Speaker 2: a week later, and I was catching a flight to Dubai,
Speaker 2: and I had a conference call with my traders in London,
Speaker 2: New York. And as I'm talking to them, I'm reading
Speaker 2: this article that says that Trump's come out and said
Speaker 2: that he's going to give Iran basically two weeks, that
Speaker 2: he'll make a decision on whether to strike Iran in
Speaker 2: approximately two weeks time. And I said to my guys,
Speaker 2: I think he's going to go. I think he's going
Speaker 2: to go this weekend. I wrote this in the Financial
Speaker 2: you as well. I said on the Friday before he
Speaker 2: bombed Ran, I said in the AFR, I think he's
Speaker 2: going to have a shot this weekend. And so we
Speaker 2: sold about three to five hundred million dollars of bonds
Speaker 2: in that phone call, just because I wanted to de
Speaker 2: risk and dude. I then jump onto the Emirates flight
Speaker 2: and I wake up in the middle of the flight
Speaker 2: and the whole planes I can feel the g forces
Speaker 2: pushing me back into the seed, the planes kind of
Speaker 2: switching direction in an unusually sort of rapid way. I
Speaker 2: hit the in flight map. We're right on top of Baghdad,
Speaker 2: like literally right above Bagdad, flying through Iraqi air space.
Speaker 2: And then I go to my phone and I look
Speaker 2: at my Bloomberg chat and there's a headline that the
Speaker 2: guys have put up missile sighted in Iraq heading towards
Speaker 2: Iran from Israel. And then I chatted my guys and said,
Speaker 2: what's going on? Any more headlines? And then they hit
Speaker 2: me with a stream of headlines. And so as we
Speaker 2: were over Baghdad, the Israelis had launched their wall and
Speaker 2: fired three hundred and thirty missiles at Iran and we
Speaker 2: were evacuating the air space and I opened my window
Speaker 2: shade and looked at the window. I don't know what
Speaker 2: they were, but it was a very clear night sky.
Speaker 2: I could see Bagdad below us, all the lights, the
Speaker 2: city lights, and I could see about five different things
Speaker 2: moving at great pace through the sky, whether our cruise
Speaker 2: missiles fast jets, I don't know. And that the Iraqi
Speaker 2: air space within an hour would be a no fly zone.
Speaker 2: And so that was pretty discombobulating. And then we arrived
Speaker 2: in Dubai and I'm like, holy shit, like, you know,
Speaker 2: get me help, Yeah, game on. And then, of course,
Speaker 2: you know Trump he himself bombs aren't so so this
Speaker 2: to answer your question, you know, fund managers and investors
Speaker 2: sometimes say things like stock because we'll say I pick stocks,
Speaker 2: I don't do macro, and I think that's all shit.
Speaker 1: I think you got to do everything. And that's what
Speaker 1: we try and build. We try and bring to.
Speaker 2: Bear unrelenting intellectual horsepower in every conceivable vector, whether it's
Speaker 2: pricing the bonds, predicting what the IBA is going to do.
Speaker 2: So we run a ton of quant models that are
Speaker 2: solely geared towards trying to forcus what the feed is
Speaker 2: going to do with the IBA is going to do,
Speaker 2: not because we're trading it day to day, but once
Speaker 2: a year it might be relevant and also doing a
Speaker 2: ton of geopolitical work. So you know, we built AI
Speaker 2: models that for the first time in history, we've published
Speaker 2: research on this. You can go to our website predictingwar
Speaker 2: dot com we published years ago.
Speaker 1: Go to your website cool and look on the tab
Speaker 1: predicting war dot com.
Speaker 2: And there's actually a separate website called predicting water coom.
Speaker 2: We've created at about seven eight nine years ago, and
Speaker 2: we built AI models to predict military conflicts between nation
Speaker 2: states using two hundred years of military conflict data in
Speaker 2: the University of Michigan data set. But we wanted to
Speaker 2: show you could put a probability on these things if
Speaker 2: you look at you know, what nation states are saying
Speaker 2: about one another, if you look at the development of
Speaker 2: their military capability, their power projection capacity, if you look
Speaker 2: at their demography, their economics. The models are quite accurate,
Speaker 2: and you know, for example, they put a forty nine
Speaker 2: percent of the US and China being involved in some
Speaker 2: sort of conflict over the next ten years, and we
Speaker 2: published research on it none had ever done, but none
Speaker 2: it ever put empirical probabilities, predictive probabilities on the prospective
Speaker 2: military conflicts before it. I wanted to show that data
Speaker 2: can give you a lot of insight on this. So
Speaker 2: so yeah, so I think we got the you know,
Speaker 2: we did a good job of anticipating the initial Israeli strikes.
Speaker 1: And that allowed you to de risk.
Speaker 2: No, we actually didn't do anything in response to that,
Speaker 2: so we didn't monetize that insight. But we then definitely
Speaker 2: did monetize the second event when we anticipated that Trump
Speaker 2: would strike over that weekend and bomb ran with the
Speaker 2: B two stealth bombers and the GBU fifty seven mop
Speaker 2: bombs of twelve thousand ton bombs.
Speaker 1: That the two thousand pounds. Yes, yeah, that he.
Speaker 2: Dropped on Fedora and the Tance and the third nuclear
Speaker 2: side and so we did risk ahead of that, and
Speaker 2: then when he executed that mission, we then so after
Speaker 2: that he basically announced the world, our bombers are out
Speaker 2: of Iraqi Iranian airspace. No American souls have been hurt.
Speaker 2: We've obliterated these nuclear targets. We actually put all the
Speaker 2: risks back on immediately and started to have continuously added risk,
Speaker 2: and our view was yeah, continuously brought billions. And that's
Speaker 2: because our view was a few things. We think Comedie
Speaker 2: is dead. We think his son's dead. We've been arguing this.
Speaker 2: You still think that, Yeah, I think, I mean, I
Speaker 2: don't know, but we've thought for about a week or
Speaker 2: so that Comedy is dead.
Speaker 1: I think it's very haven't seen him.
Speaker 2: We haven't seen him. We haven't heard from him.
Speaker 1: You've seen the foreign minister or.
Speaker 2: His successor, which is his son. They're all am I A.
Speaker 2: And so we think either community is dead and his
Speaker 2: son's dead, which I think is very very likely, or
Speaker 2: there's been some sort of regime change that we don't
Speaker 2: know about yet. But I think the Iranians are going
Speaker 2: to reveal whatever they reveal in due course. And it
Speaker 2: looks like there's six hundred kilos of enricher iranium was
Speaker 2: inside for door. You remember there was all this reporting
Speaker 2: that oh, they evacuated with it, but I think the
Speaker 2: intelligence suggests it was actually sitting inside for Door.
Speaker 1: And it's been buried in there.
Speaker 2: And the kind of mainstream media claims that they did
Speaker 2: no damage to Fedora absolute horseshit, Like all the damage
Speaker 2: assessments from the Iranians, from Israelis and now from the
Speaker 2: CIA say that you know, this stuff was very very
Speaker 2: seriously damaged and has put the program back many many years.
Speaker 2: So yeah, so macro is important, mate, as you know,
Speaker 2: like you, I do it all grow your whole life.
Speaker 1: But but I mean, what I find extraordinarily interesting is
Speaker 1: working out the tell based on language. And it's not
Speaker 1: just based on words, but it's based on timing. There
Speaker 1: are probably a number of elements in these things. And
Speaker 1: we look, we used to sort of do this with
Speaker 1: the Reserve Bank and the Geroe Powells. Well he used
Speaker 1: to always trying to sort of second guess what he
Speaker 1: or she's going to do, and you know, set your
Speaker 1: interest rates for example, and in my case at mees
Speaker 1: rates ahead of a rate reduction, trying to get ahead
Speaker 1: of her and get market share. It's a bit more
Speaker 1: difficult today, but it's interesting in terms of the trades
Speaker 1: that you do that you look at your user comp models,
Speaker 1: but then you go off and you do your sort
Speaker 1: of you know, your reasonable inness assessment, your overall assessment
Speaker 1: based on what you see and where you see what
Speaker 1: you hear? How many other things leading up to that?
Speaker 1: And I'll get off this and see but this intreaues
Speaker 1: me how many other things for example, for example, when
Speaker 1: Trump was not available to talk to Albanizi and sort
Speaker 1: of the meeting of the G seven, what it was
Speaker 1: when Albanzi turned up, Trump sort of made himself unavailable.
Speaker 1: Do you look at those things and also say, hang on,
Speaker 1: something is big going on.
Speaker 2: Yeah, this signal with the noise wasn't just that. It
Speaker 2: was the key for me where I thought, Okay, this
Speaker 2: is really on. So we thought he'd bomb them that weekend,
Speaker 2: even though he'd set the world up to think it
Speaker 2: was two weeks away. Because he can't help himself again,
Speaker 2: he wants to be a man in the middle. He
Speaker 2: wants to be smarter than everyone else. And he is
Speaker 2: freaking smart. Like he is serially underestimated. Like I'm one
Speaker 2: hundred percent certain Trump is crazy smart guy. He's never drunk,
Speaker 2: he's never done drugs. Yes, got all these hyperbolic and
Speaker 2: other sort of you know for many people on savory characteristics,
Speaker 2: but this dude is he's an absolute weapon.
Speaker 1: Can we just get into that a little bit? Like,
Speaker 1: as I I'm waiting before we did.
Speaker 2: Let me answer your question, h because there was something interesting.
Speaker 2: So he bolts from the G seven for his emergency
Speaker 2: national security meetings. He has multiple multiple meetings over the
Speaker 2: course of the weekend. But the thing that was really
Speaker 2: interesting for me where I thought, Okay, we've really got
Speaker 2: this right, was he's always giving presses, so he's always
Speaker 2: talking the media. Every time he's in Force one, he's
Speaker 2: giving you basically a doorstop interview, and on this occasion,
Speaker 2: to the National security meeting and from the National security meeting,
Speaker 2: he refused to talk to the media, and I thought,
Speaker 2: that's different. So the accumulation of evidence, the fact that
Speaker 2: he once again tried to mislead the world about the
Speaker 2: timetable and he wanted to be the smartest guy in
Speaker 2: the room, the fact that Israel had aerial superiority and
Speaker 2: it was a very easy mission to execute, the fact
Speaker 2: that the GBU fifty sevens are really the only weapon
Speaker 2: that can penetrate sixty meters of high performance contray concrete.
Speaker 2: And even then the GBU fifty sevens, which are the
Speaker 2: thirty pound bombs that they dropped on the tents and
Speaker 2: for door fourteen of them twelve year, twelveteen. Yeah, but
Speaker 2: even though they actually can't get through sixty meters of
Speaker 2: high performance concrete, so they drop them through the aerill sorry,
Speaker 2: the air conditioning shafts, so the ventilation shafts, and so,
Speaker 2: you know, for me, and also being a narcissist, I thought,
Speaker 2: this is just such a perfect window of opportunity where
Speaker 2: he can come in. The Israelis have done all the
Speaker 2: heavy lifting. You know, they killed thirty generals, They've got
Speaker 2: rid of all the air defenses, all the aircraft decimated.
Speaker 2: I ran, and he just comes over the top with
Speaker 2: his seven, you know, deathly looking stealth B twenty B
Speaker 2: two raiders and finishes the Iranians off. And then so
Speaker 2: this is the Kamene puzzle that we still don't know
Speaker 2: the answer to. He tweets out afterwards that the hit
Speaker 2: quote unquote is what sealed the peace steal right says
Speaker 2: like our raid on these nuclear sides and the hit,
Speaker 2: but he puts it in adverted commas sealed the piece. Still,
Speaker 2: I reckon he was intimating to a Kamene hit. So
Speaker 2: I think he's got the old double entendre going. And
Speaker 2: so the one hit was obviously the hit on the
Speaker 2: nuclear sides. But the other hit was I think he
Speaker 2: knows that comedy's gone. It's also interesting, fascinating. Actually he
Speaker 2: called for regime change in Iran. He called for Migga
Speaker 2: makeer run great again. And then now when they've asked
Speaker 2: him a war about regime change run, he say, oh,
Speaker 2: we don't need regime change in a run. You know,
Speaker 2: that would be chaos, That would be a huge one
Speaker 2: for me. What he's actually saying is we've already had
Speaker 2: regime change in a run. We're now dealing with the
Speaker 2: new guys and we're fine with that.
Speaker 1: That's very interesting. And why do you think that it
Speaker 1: hasn't been revealed here is because the Iranians just don't
Speaker 1: want to tell the world.
Speaker 2: Yeah, I think they want to manage the optics. I mean,
Speaker 2: they've just had the worst twelve day war, you know,
Speaker 2: arguably and ranks up there in the history of warfare.
Speaker 2: Is one of the most one sided conflicts ever. So
Speaker 2: you know, as a proud nation, they're obviously humiliated, and
Speaker 2: I think they I think it's also there's a real
Speaker 2: problem in terms of geopolitical precedent with a nation state
Speaker 2: knocking off a national leader doesn't really happen often.
Speaker 1: It's very very rare.
Speaker 2: So I think neither the Israelis nor the Americans really
Speaker 2: want to author that assassination, even though it's extremely likely
Speaker 2: that he and his son and he's in he's wider
Speaker 2: family have all been assassinated because they were sitting in
Speaker 2: a bunker in northern Tehran. I think it's called Leversan
Speaker 2: the suburb and the Israelis and the Americans, I think
Speaker 2: we're pounding. Well, the Israelis were certainly pounding that bunker.
Speaker 2: Remember Trump came out and boasted on Twitter or truth
Speaker 2: social that he knew exactly where KEMANI was and we
Speaker 2: weren't going to kill him yet, right, We weren't going
Speaker 2: to We weren't going to take him out at this point.
Speaker 1: But he You know, I could be wrong, but I
Speaker 1: think he's been taken out. That is, if I could
Speaker 1: just go one step further on their cynicism that some
Speaker 1: people might suggest it's just cynicism. But in terms of timing,
Speaker 1: do you think the whole thing was time for his
Speaker 1: arrival at NATO to sort of take control of NATO
Speaker 1: as well, Because like, if I'm wanting to convince ever
Speaker 1: a NATO, you now spend five percent or three and
Speaker 1: a half plus one and a half of your GDP
Speaker 1: on defense. But if I want to convince you, I
Speaker 1: wanted to show you that I can do what I
Speaker 1: say I'm going to do. And I mean, do you
Speaker 1: think the whole thing was timed around this NATO? I
Speaker 1: think am I being super cinical here?
Speaker 2: I mean, I just take a step even further back.
Speaker 2: I mean, it's extraordinary. This has been a multi decade
Speaker 2: problem for the world, dealing with a theocracy that is
Speaker 2: hell bent on trying to evistrate America and Israel. I mean,
Speaker 2: it's a really serious problem. And that was also hellbent
Speaker 2: on weaponizing uranium and developing nuclear weapons that they could
Speaker 2: potentially provide to the who he is and you know,
Speaker 2: theirs pro mass Hesbela. So this was a profound, multi
Speaker 2: decade problem that George Bush, Obama, Clinton and Biden and
Speaker 2: Trump had never been up to resolve, and then one
Speaker 2: fell swoop. Trump has again superficially dealt with the problem now,
Speaker 2: but also in a very kinetic aggressive way, like sending
Speaker 2: his seven stealth bombers and bombing these guys, you know,
Speaker 2: back into the dark ages. It's pretty full on. I
Speaker 2: had never thought about the NATO angle. I think you're right.
Speaker 2: I think he wanted to capitalize on that window. I
Speaker 2: had a naper Nator. But here's the next profound because it.
Speaker 1: Was literally a week after but mart and he normally,
Speaker 1: I mean, he's not going to go unless he controls it.
Speaker 1: I mean, if you saw he sat, He's sat next
Speaker 1: to the president of NATO, right next to him. And
Speaker 1: actually they changed the whole event for him, so they
Speaker 1: because he doesn't like to sit too long in those disations,
Speaker 1: so they actually said, okay, we're just going to have
Speaker 1: one on ones. That's pretty amazing.
Speaker 2: But here's what's even more amazing is this guy, the
Speaker 2: celebrity apprentice star. He'll from a business partner, right, he
Speaker 2: has single handedly, single handedly changed European history, Like he
Speaker 2: has reversed the course of European history by forcing these
Speaker 2: otherwise previously very dubbish from a military perspective, state, So
Speaker 2: we're spending nothing on defense to boost defense spending to
Speaker 2: five percent of GDP, I mean, that's extraordinary. That's sort
Speaker 2: of in line with long term US defense spinning. But
Speaker 2: no one in the world spends that much on defense
Speaker 2: aside from America and China. Here in Australia, we're spending
Speaker 2: less than half that, and we're an arguably.
Speaker 1: Just a small GDP relative everybody else.
Speaker 2: And we're arguably in a equally if not more precarious
Speaker 2: position given our proximity to the south trying to see Taiwan.
Speaker 2: But Trump has done this. No one else has done this.
Speaker 2: You know, he was excoriated for you know, not being
Speaker 2: a multilaterist, and for threatening to withdraw from NATO, and
Speaker 2: for being you know, Pudin's bitch, and then Ella Mask's bitch,
Speaker 2: and then China's bitch and North Korea's bitch. But actually
Speaker 2: he's There was some sort of interview I saw in
Speaker 2: the last twenty four hours where apparently the American head
Speaker 2: of NATA referred to him as daddy and this is Trump.
Speaker 2: But he's pretty, and he's the guy with the big
Speaker 2: swinging dick, and he's a trigger puller, like he's a killer.
Speaker 1: And yeah, trump trade, the so called Trump trade, the
Speaker 1: taco trade, that was the other thing. So like he's
Speaker 1: absolutely blasted it.
Speaker 2: Yeah yeah, so you know Trump always chickens out the
Speaker 2: taco trade trade. That was the other reason I thought
Speaker 2: he'd go hard and go quickly.
Speaker 1: He wouldn't like that.
Speaker 2: He would have hated the tarco trade and this taco
Speaker 2: trade was getting a huge amount of narrative or momentum,
Speaker 2: narrative momentum in the mainstream media, and that would have
Speaker 2: That's the antithesis of the way he sees himself. He
Speaker 2: sees himself as a hitter, right, and he is. He
Speaker 2: makes decisions, and he often changes his mind, but which
Speaker 2: is entitled to do right, Like, you know, he wages
Speaker 2: forever trade war and everyone and then he decides, you know,
Speaker 2: a week and a half later that he'll do deals,
Speaker 2: but he won't do deal with deals with China. He's
Speaker 2: saying he'll do deals with China, but the reality is
Speaker 2: they're decoupling right that manufacturing is coming home, and that's
Speaker 2: his key mission. He wants to square up the rest
Speaker 2: of the world and make sure that people don't cheat
Speaker 2: on trade. And I think that's a perfectly kind of
Speaker 2: reasonable ambition. But isn't it interesting that this guy that
Speaker 2: has been dismissed by everybody as being you know, hypermiopic
Speaker 2: and just incapable of rational cojun deep strategic thought, this
Speaker 2: is the dude that is revolution revolutionizing the geostrategic environment
Speaker 2: in the Middle East and Europe.
Speaker 1: I mean, it's extraordinary generary.
Speaker 2: He's aways been nominated for a Nobel Peace Prize as
Speaker 2: a result of the And not only does he bomb,
Speaker 2: you know, the Iranians into oblivion, but he is also
Speaker 2: catalyzed and negotiated the ceasefire. And I presume now that
Speaker 2: Ukraine and Russia and the crosshairs, and he's kind of
Speaker 2: started to create a lot of distance between himself and
Speaker 2: Putin because he's running around now saying, well, Puttin, offer
Speaker 2: to mediate between Punaimi and said, I'll mediate between a
Speaker 2: run and Israel. And he said, dude, you mediate your
Speaker 2: own war. My problems with you, mate, You're not meeting anything,
Speaker 2: mediating anything on my buff.
Speaker 1: He said this.
Speaker 2: So it's interesting, and it's classically sort of he's a
Speaker 2: preternatural businessman, like, you know, I take you at face
Speaker 2: value until I can't take you at face value. But
Speaker 2: when I can't take you at face value, I'm going
Speaker 2: to treat you differently. And that's the way Trump seems
Speaker 2: to work.
Speaker 1: It's very itederative.
Speaker 2: We were talking about this before. He's massively adaptive, like
Speaker 2: he's constantly iterating his business model or his mental model
Speaker 2: to adjust for the circumstances. You know, if people want
Speaker 2: to be you do handshake deals and principle based transactions.
Speaker 2: I can do that. But if they fuck me over, well,
Speaker 2: then I'll fuck them back five times harder and then
Speaker 2: we'll see, you know what the consequences are.
Speaker 1: Just if I could just go flip back to because
Speaker 1: that stuffs fascinating in terms of someone being so strategic
Speaker 1: and on their not on their own. Obviously you've got
Speaker 1: a team, but someone is so strategy and such a
Speaker 1: short period. He's had to be the president for like
Speaker 1: most of this year. So if I just tracked back
Speaker 1: on one step bar in terms of the bringing manufacturing
Speaker 1: back to the United States and the point you just
Speaker 1: may decoupling, maybe we could just spend a little bit
Speaker 1: of time thinking about that, particularly in relation to interest rates,
Speaker 1: because in the US and the like, if we take
Speaker 1: what you just said is being correct, and I tend
Speaker 1: to agree with I do agree with you, his constant
Speaker 1: belligerent behavior against the current Federal Reserve boss your own
Speaker 1: power would be indicative of a bigger strategy. Plant It's
Speaker 1: not just because he doesn't like him there's a Biggert
Speaker 1: strategy plan. What is it that? Why do you think
Speaker 1: he wants to get interest rates down in America irrespective
Speaker 1: and just take inflation out of it. Why is he
Speaker 1: trying to make money cheap in the United States? And
Speaker 1: why does he want to do couple from China? And
Speaker 1: why does why would he be happy for the US
Speaker 1: dollar to suffer as a result of that? There's some
Speaker 1: obviously examples reasons for it, but maybe you could explain that,
Speaker 1: you know, like they might manufacture, they need to export
Speaker 1: get better currency results. Why do you take us through that?
Speaker 2: So when you peel back the onion on Trumps, there's
Speaker 2: always a really lucid strategic clarity underpinning his decision making.
Speaker 2: That's what I'm finding. And you know, I'm not a
Speaker 2: trump ack lite. I didn't have strong views on him
Speaker 2: in his first administration.
Speaker 1: Like he's different this time, Aroun one hundred percent.
Speaker 2: Yeah, And this is the keyp on is different, which
Speaker 2: doesn't normally happen. Like we've just elected our government. Our
Speaker 2: bow is going to be exactly the same, charm is
Speaker 2: going to let me be the same. And presumably they're
Speaker 2: in bolden because they think they have a mandate, so
Speaker 2: they're going to do more of the same. We're not
Speaker 2: going to see I doubt much iteration or evolution, other
Speaker 2: than them doubling down on whatever they were doing in
Speaker 2: the past, which is spending a shitload of money and
Speaker 2: crowding out the private sector, and government solving all of
Speaker 2: our problems and tax reform, which will be interesting.
Speaker 1: Right so I think.
Speaker 2: So the Trump program is actually really simple, but it
Speaker 2: is intricate. So part one is, okay, we set up
Speaker 2: this free trade system after World War two and we
Speaker 2: said we'll trade with anyone, and over the period since
Speaker 2: that time, we dropped all about tariffs and our trade subsidies.
Speaker 2: And the idea was if everyone trades on equal terms.
Speaker 2: You know, Mark bills houses, Chris has a factory that
Speaker 2: produces close that's your pawer of advantage, that's my competitive advantage,
Speaker 2: and we all benefit from trade and we're prosperous. And
Speaker 2: that's the capitalist model, the Western liberal democratic model, which
Speaker 2: worked incredibly well post World War two. But then, of
Speaker 2: course some country started to cheat, like Australians to cheated.
Speaker 2: We decided to subsidize the production of movies and we
Speaker 2: start stealing investment from Hollywood. No one really talks about this,
Speaker 2: but the reality is we've stolen a ton of investment
Speaker 2: from Hollywood. And then Trump turns around say's, actually, I'm
Speaker 2: going to wa one hundred percent tariffs on any foreign
Speaker 2: made films. And we're like, oh, shock, how did you
Speaker 2: do that? But the truth is we just can't compete
Speaker 2: with Hollywood, and so we're cheating by getting government to
Speaker 2: kind of bonds, yeah, compensate for our deficiency. So he's like,
Speaker 2: we need to square everybody up globally. But the main
Speaker 2: culprit here has been China. China has been treating cheating
Speaker 2: relentlessly and also stealing an intellectual property and being very
Speaker 2: strategic in trying to dominate key market sectors that have
Speaker 2: long term geostrategic value, like telecommunications ext up with Huawei,
Speaker 2: and so Trump's like, we've actually thought we were outsourcing
Speaker 2: all of our manufacturing to a benign partner in China
Speaker 2: over the last thirty forty years, but actually they've ended
Speaker 2: up with control of all of our supply chains, and
Speaker 2: the event of any kinetic conflict, we're really screwed. And
Speaker 2: the truth is now with automation AI and digital printing,
Speaker 2: we can produce all this stuff at home, because obviously
Speaker 2: Musk has been an influence in the background. You know,
Speaker 2: Musk with SpaceX and with Tesla has proven you can
Speaker 2: build anything you want in an America and be well beating.
Speaker 1: You know.
Speaker 2: He's got a monopoly in global satellite business more or less,
Speaker 2: and he was dominant in the EV business until the
Speaker 2: Chinese totle it all his IP and created a BYD
Speaker 2: and BYD started decimating Tesla. So so I think part
Speaker 2: one is he wants to get trade back on an
Speaker 2: equal footing. Part two is unless you're a trusted counterparty,
Speaker 2: as in, if you're going to try and ask for
Speaker 2: US twenty four to seven and you're going to present
Speaker 2: a serious, potentially existential military threat to US, as the
Speaker 2: Chinese in his view, he's not going to trade with
Speaker 2: you at all, and he's going to bring all that
Speaker 2: investment home. So that's the game plan. To do that.
Speaker 2: You need to have credible trade barriers and that investment
Speaker 2: reassuring that home will create massive growth in the year.
Speaker 2: So that's really positive the United States.
Speaker 1: Massive economic growth.
Speaker 2: Massive economic growth, but it also create capacity and that
Speaker 2: all things being equal. On the one hand, the investment
Speaker 2: could be inflationary, but the capacity could be deflactury. But
Speaker 2: just that's one part of his program. The second part
Speaker 2: of his program is he wants to deliver about eight
Speaker 2: point one trillion tax cuts, massive tax cuts. He has
Speaker 2: to pay for them, and if he doesn't have money,
Speaker 2: he's got to borrow the money, and that means he's
Speaker 2: got to issue eight point one trillion dollars worth of
Speaker 2: debt and that's going to push up long term interest
Speaker 2: rates because people like me, the christ Joys the world
Speaker 2: are going to say, actually, Trumpy, I'm not going to
Speaker 2: lend you that money unless you pay me high rates.
Speaker 2: And that's generally what's happened in the US. Ten government
Speaker 2: bond yield has risen from about three point six percent
Speaker 2: in September last year to mid fours and people are
Speaker 2: very worried about the global tsunami of government borrowing and
Speaker 2: therefore the dead binge, partly because here in Australia, the
Speaker 2: States and the Feds are spending crazy amounts of money.
Speaker 2: We've now our government has a share of our economy
Speaker 2: is the biggest it's been since World War Two. Our
Speaker 2: government here in Australias accounted for two thirds of all
Speaker 2: economic growth since the pandemic and has accounted for more
Speaker 2: than fifty percent of all jobs growth.
Speaker 1: And that's not your federal birth state now.
Speaker 2: Federal and state, so that's Australia. Now Europeans are saying, well,
Speaker 2: we're going to spend five percent of g to be
Speaker 2: having done Circle one to fund defense. So where they
Speaker 2: going to get their money. They have to borrow the
Speaker 2: money and massive amount of debt, which means it's actually
Speaker 2: perversely good for someone like Maye because it means I'm
Speaker 2: going to get great interest rates on those bonds, right,
Speaker 2: so it means long term interstrates are going to stay high.
Speaker 2: But coming back to Trumpy, he wants people to pay
Speaker 2: a lot of taxes. I get that. In California, if
Speaker 2: you're a top income, your top producer, you pay more
Speaker 2: than fifty to fifty five percent.
Speaker 1: That's because you pay Californian text too, and federal text.
Speaker 2: And in New York you pay over fifty percent as well.
Speaker 2: But in Florida, where they're running budget surpluses and they're
Speaker 2: running their finances really well, you only pay thirty eight
Speaker 2: percent total tax if you're a top income. So a
Speaker 2: lot of people are moving from New York and California
Speaker 2: down to Texas where you have the same think thirty
Speaker 2: eight percent top tax, and Florida. And so the US
Speaker 2: has had this cathartic internal conflict that's created the huge
Speaker 2: intense debate between the Republicans and the Democrats because they're
Speaker 2: seeing economic mayhem and social mayhem in California, particularly San
Speaker 2: Francisco kind of failing city, California, fault state, massive budget deficits,
Speaker 2: sort of on the brink of insolvency. And then they're
Speaker 2: seeing the counterfaction, which is Florida and Texas, budget surpluses,
Speaker 2: crime under control, generally, business thriving and flourishing. And that's
Speaker 2: I think what's galvanized the momentum behind Trump's program. So
Speaker 2: he wants to get taxes low. He's got to fund
Speaker 2: them to do that. He's got to get rid of
Speaker 2: big government. Specifically, he's got a shrink government by fifteen percent.
Speaker 2: It's not that much. If he does that, he gets
Speaker 2: about a trillion a year in savings, and that fully
Speaker 2: pays for the tax cuts. Now, if you shrink government
Speaker 2: and you cut government spending by fifteen percent or a
Speaker 2: trillion a year, that's deflationary. Because all that money a
Speaker 2: trullion year was going out there to contractors, builders, you know,
Speaker 2: service providers and government employees. Now are spending that money.
Speaker 2: That demand goes, So that's deflation and that creates job losses.
Speaker 2: On the other hand, the tax cuts, tax cuts are
Speaker 2: inflationing because that's more money in people's pockets they can
Speaker 2: spend that. And then clearly the returning all the supply
Speaker 2: chains back to America, so reassuring the manufacturing, getting this
Speaker 2: massive manufacturing boom in the US, which I think will happen.
Speaker 2: It'll happen much faster than people think over the next
Speaker 2: few years. That's also inflationy. But the key point is
Speaker 2: the Fed things are normal ingstraate it's three percent. They're
Speaker 2: currently at four and a quarter to four and a half.
Speaker 2: Inflation has been pretty benign. Tariffs will push up inflation temporarily,
Speaker 2: but it'll pass through the data like a pig through
Speaker 2: a python. And here and now the Fed should be
Speaker 2: cutting now. Trump is right about power, So this is
Speaker 2: where the signal and the noise is. Power's a bit
Speaker 2: of a dickhead. Okay, I shouldn't probably say that, but
Speaker 2: I'll tell you he was very political prior to and
Speaker 2: during the U S election, So he was pulling super
Speaker 2: hard for Biden and Harris, and they were cutting when
Speaker 2: they shouldn't have been cutting. As I argued at the time.
Speaker 2: As soon as Trump was elected, they stopped cutting. They
Speaker 2: cut once more in descemi've basically they said we're not
Speaker 2: going to do any more cuts. They haven't cut since.
Speaker 2: And he's been quite reckless in the way that he's
Speaker 2: been talking about, for example, the tariffs. He's been trying
Speaker 2: to maximize financial market volatively. He's been trying to sheet
Speaker 2: home as much blame to Trump for the tariffs, even
Speaker 2: though the tariffs in and of themselves are necessary and
Speaker 2: reasonable because everyone the world's been cheating and stealing American
Speaker 2: sort of basically stealing their prosperity, particularly the Chinese, anyone
Speaker 2: who hasn't been trading on fair terms, and he's just
Speaker 2: trying to square them up. So you do need tariffs
Speaker 2: of some sort to rewrite big global economy. But the
Speaker 2: ultimate endgame is we're going to have multiple trading blocks.
Speaker 2: We're going to have the non democratic authoritarian states, the Chinas,
Speaker 2: the Irans, the Russias and North Koreas trading with themselves
Speaker 2: and probably some African and Asian nations, and then you
Speaker 2: have the Western liberal democracies. But you can see this
Speaker 2: is a big juggling tax cuts on the one hand,
Speaker 2: cutting government spending on the other hand, reassuring some applight chains,
Speaker 2: and then issuing potentially a lot of debt if you
Speaker 2: can't if you can't get the government spending changes, he
Speaker 2: will have to issue a lot of debt. And this
Speaker 2: comes back to the FED. The feeds at four and
Speaker 2: a half percent. Inflation in the US has been benign.
Speaker 2: Normal is three. So what Trump is saying, you should
Speaker 2: be closer to three, and you should be moving towards three,
Speaker 2: and they haven't been doing.
Speaker 1: And we America in the country as a as a borrower,
Speaker 1: as a borrower, could be paying a lot less interest
Speaker 1: exactly if you reduce the rate.
Speaker 2: Yeah, that's the one liner. The one liner is the
Speaker 2: Americans have a lot of government debt. Potentially that government
Speaker 2: debt is going to increase unless they crush government spending.
Speaker 2: So Trump wants to get the interest right down on
Speaker 2: that government debt. And one way to do that is
Speaker 2: definitely try and get the Fed to cut But I
Speaker 2: think intellectually he's right, the FED should be cutting I mean,
Speaker 2: I think the FED should be cutting right now. It's
Speaker 2: not that they should put rates at a really low level,
Speaker 2: but they should probably be getting closer to neutral and
Speaker 2: their way. I mean, they're miles away from neutro at
Speaker 2: four and a quarter to four and a half neutral three.
Speaker 2: They should be much closer to three. And I think,
Speaker 2: you know, he's had it with power, and so he's
Speaker 2: latest I think movies to say, you know what, I'm
Speaker 2: going to appoint your successor or naming name your successor exactly,
Speaker 2: and then that will completely undermine powers authority, and power
Speaker 2: will be forced now to contend with an internal replacement
Speaker 2: that he will have to to some extent reflect the
Speaker 2: will of So so it's all really interesting and the
Speaker 2: world's definitely a more safe and stable place post Trump
Speaker 2: Bombinger run, just make no mistake about that. Like, everyone
Speaker 2: feels better about the Middle East. The Saudis are happy,
Speaker 2: the Syrians are happy, the Jordanians are very happy, the
Speaker 2: Israelis are happy.
Speaker 1: The Emirates happy.
Speaker 2: The Emirates are very happy. Happy, everyone's even Qatar and Oman,
Speaker 2: which you know have had close ties to a run. Yeah,
Speaker 2: they're probably neutral to positive. So so you know, one
Speaker 2: guy's done this and it's just quite amazing.
Speaker 1: It's amazing, It is quite amazing because.
Speaker 2: We don't have leadership like that in this country. Mate.
Speaker 2: Well yeah, but like you should run for office, thanks
Speaker 2: very much.
Speaker 1: So let's just bueld it back. You should do something. Yeah, well,
Speaker 1: you can't run for office in this country. The problem
Speaker 1: is in this country. You can in the US, but
Speaker 1: you can't in this country. In this country got to
Speaker 1: being a party. The party's got to win or be
Speaker 1: able to do deals with somebody else and have a coalition,
Speaker 1: so to speak. And then you're going to be by
Speaker 1: your party voted in to be the dute And that's
Speaker 1: the problem in this country. That's the issue around that.
Speaker 1: I mean, it's fraught with danger. If I could just
Speaker 1: peel it back then. So relative to anyone who's listening
Speaker 1: to this, who's interested in interest rates and prosperity here
Speaker 1: in Australia, which by the way, is that the RBA
Speaker 1: is that mandate you know, welfare and prosperity of all Australians,
Speaker 1: by the way, which is the terminology in its mandate.
Speaker 1: What do you think all this means for Australia. So
Speaker 1: I'm not going to talk just put interest rates aside
Speaker 1: for the moment. What do you think this means for
Speaker 1: US just as a nation? What's happening in the US.
Speaker 2: I'm actually loath to kind of talk about it because
Speaker 2: I've got some pretty serious concerns and fears short term,
Speaker 2: like we're spinning like drunken salors. So all that a
Speaker 2: government levels, at government levels, all that public money from
Speaker 2: the states and the fairs, is going to mean that
Speaker 2: growth in austral is going to be good and the
Speaker 2: economy will look good, will look good. Economy is going
Speaker 2: to be totally fine because the government will be powering
Speaker 2: that growth well.
Speaker 1: In terms of dudyp measurement. Correct, Yeah, but that doesn't
Speaker 1: mean it's good.
Speaker 2: It doesn't.
Speaker 1: If we go to look at private sectors part it's
Speaker 1: not so good.
Speaker 2: Yeah, it's abysmal. And then we've also got super strong
Speaker 2: population growth and a lot of these new immigrants have
Speaker 2: voted for labor and so that's going to continue and
Speaker 2: it's putting a lot of pressure on cities. But as
Speaker 2: far as the economic data's concerned, people come to the country,
Speaker 2: they spend money. That's positive in the long run. I mean,
Speaker 2: we're really screwed.
Speaker 1: Do you think it's your musing? Okay, do you think
Speaker 1: GDP today is a poor measurement of how well we're
Speaker 1: doing because it can be manipulated.
Speaker 2: Yes, one hundred percent can be manipulated. I mean it's
Speaker 2: a measurement. It's a very carefully measured proxy for the
Speaker 2: rate of change in output over time. But I mean
Speaker 2: what I'm focused on is productivity and what that means
Speaker 2: is output for our work, So how much we produce
Speaker 2: for the amount of time we put into it. And
Speaker 2: on that basis, Australia. Australia looks terrible. I mean, we're
Speaker 2: on a productivity basis, labor productivity in total what's called
Speaker 2: multi factor productivity, but basically.
Speaker 1: Whether you've gone backwards MFP, Yeah, it's gone backwards.
Speaker 2: So if whether you look at broad productivity or just
Speaker 2: labor productivity, what you see as Australia's productivity performance has
Speaker 2: not really improved over a quarter of a century, and
Speaker 2: we're lagging Europe, We're lagging by long way the US,
Speaker 2: and we're going to end up Asia as of etha.
Speaker 2: We're going to be a beach resort for rich members
Speaker 2: of the literati in the Indo Pacific region. And it's
Speaker 2: okay for the short term, it's okay probably for the
Speaker 2: next five, ten to fifteen years, but eventually for our
Speaker 2: children's children, it's going to be a massive problem and
Speaker 2: we won't produce anything. There won't be any entrepreneurship, any
Speaker 2: real innovation, and then living standards will start to decay signif.
Speaker 1: Have but not significantly, I guess because one of the
Speaker 1: things I found quite fascinating the other day when I
Speaker 1: was looking at capital investments, So in other words, the
Speaker 1: amount of money that gets reinvested by not any prophecies,
Speaker 1: but also by the government in terms of how efficient,
Speaker 1: how efficient I should say, employees can be for example,
Speaker 1: you know the verious tools that employees can use to
Speaker 1: be much more productive. Our cabin investments like at an
Speaker 1: all time low. As you just mentioned. Our productivity relatively speaking,
Speaker 1: has been in terms of normal measurements is ridiculously loan
Speaker 1: as probably the worst it's been for a long long time.
Speaker 1: But what a really fascinating is a sent about eighty
Speaker 1: percent of our productivity is coming from services sector. It
Speaker 1: doesn't come out of product products actual products, So eighty
Speaker 1: percent and becaurse I'm not having here having to go
Speaker 1: at you, Jimlake, but you know, when you keep putting
Speaker 1: people long into public service and not having our public
Speaker 1: servance side because as a space for public service saying
Speaker 1: can be wrong. But the more times you just keep
Speaker 1: loading up the employment number, well then I'm employed as
Speaker 1: a result of all the people you bring into the country.
Speaker 1: The more times you can continue to do that, you're
Speaker 1: just building up this services sector which by definition, generally speaking,
Speaker 1: isn't that productive. So as a result of that, the
Speaker 1: productive productivity of the country is very very low. Opposite
Speaker 1: in the United States, opposite in Germany, and heavily with
Speaker 1: the amount of capital that Germany and the US have reinvested,
Speaker 1: we aren't investing anything into our public service in terms
Speaker 1: of making them more efficient and therefore more production.
Speaker 2: You're exactly right, Mark, It's interesting, Well, not only we're
Speaker 2: not really producing anything in Australia like tangible goods, that's
Speaker 2: all been offshore, but we're not actually investing in technology
Speaker 2: or soft capital investment. Yeah, but we're not investing in
Speaker 2: technology to support our services.
Speaker 1: Yeah, correct, that's what I'm saying. We're just saying, go
Speaker 1: into the job, so people working longer hours, more hours,
Speaker 1: but they're not working more efficiently and they're more productive.
Speaker 2: So it doesn't matter hay sliced, does it. Whether you
Speaker 2: look at research and development, whether you look at the
Speaker 2: amount of money that firms are investing in technology, software
Speaker 2: and tools to make their employees more productive, whether you
Speaker 2: look at overall capital spending, labor productivity, which is bismal,
Speaker 2: total productivity terrible. It's just a disaster, and we're kind
Speaker 2: of just kicking the can down the road by bringing
Speaker 2: massive amounts of people in the country to grow through
Speaker 2: population growth, and by borrowing from the future and spending today.
Speaker 2: You know, a country, a state like Victoria just prior
Speaker 2: to the pandemic in twenty nineteen, I think owed the
Speaker 2: world forty five to fifty billion. Within a few years
Speaker 2: Victoria owed the world close to three hundred billion. And
Speaker 2: it's interesting. I saw Peter Thiel in the last twenty
Speaker 2: four hours came out and said that he thinks the
Speaker 2: reason that millennials have sort of pivoted to a hard
Speaker 2: left political direction is they've got a lot of student
Speaker 2: debt and they can't afford to buy a home, so
Speaker 2: they're looking for the public sector to provide that panacea
Speaker 2: to that solution. And I definitely, you know, notice it
Speaker 2: when I speak to the younger generations that worked for us,
Speaker 2: a lot of them voted labor and which is not
Speaker 2: a bad thing, Jim. I'm not party political. I don't
Speaker 2: really care. I just want solutions. But but it is
Speaker 2: interesting I think people, and particularly in a very entitled
Speaker 2: place and economy like Australia, where you've had just like
Speaker 2: you've been hit on the ass by every golden rainbow,
Speaker 2: imaginable well beating population growth, world beating endowments of commodities
Speaker 2: and natural resources and now you know, mega public spending
Speaker 2: and the absence of a bona fidi recession since nineteen
Speaker 2: ninety one. You know, people have just become accustomed to
Speaker 2: expect these solutions to be perveyed to them. And I
Speaker 2: think that's the problem. So Asias of bethro is the
Speaker 2: direction in which we're heading a beach resort for the
Speaker 2: well held of the region. And I think it's a
Speaker 2: huge problem. But what can we do about it in
Speaker 2: the meantime? In the short term, and everyone's so myopic
Speaker 2: and hedonistic. In the short term, everything's going to be fine.
Speaker 2: In Australia like rate's going to come down. The rbable
Speaker 2: to cut three times this year. The cash read will
Speaker 2: go to three percent. It's currently a three point eight
Speaker 2: five percent. House prices are starting having been very weak
Speaker 2: in Sydney and Melbourne, house prices we're falling in twenty
Speaker 2: twenty four. House prices are rising at a decent clip,
Speaker 2: not a crazy clip, but we'll get a very robust
Speaker 2: housing recovery, which is good.
Speaker 1: Do you subscribe to the View you rate reductions house
Speaker 1: price increases?
Speaker 2: Of course? Yeah, Well it's not, it's an empirical fact.
Speaker 2: I know my esteemed mate he does not.
Speaker 1: I saw I saw something of on next recently. He
Speaker 1: doesn't subscribe to View.
Speaker 2: It's just wrong. I mean it affis purchasing power. The
Speaker 2: only way interest rates coming down directly and very materially
Speaker 2: change the amount of debt that you can afford.
Speaker 1: To assume, and it goes straight into the property.
Speaker 2: And therefore interest rates coming down directly impact the value
Speaker 2: of the property that you can purchase. Nothing formula, and
Speaker 2: it gets capitalized into prices and the only thing that
Speaker 2: can change that is supply. Yeah, and so you produce
Speaker 2: more houses. But you know, we can't change supply instantaneously.
Speaker 2: That's a multi year process. So the supply side, so
Speaker 2: you know, in the long run, the supply side should
Speaker 2: react to those changes in demand that are a function
Speaker 2: of changes in interest rates. But there's no doubt that
Speaker 2: house prices are highly interest rate sensitive. And it's not
Speaker 2: a bad thing. I mean, this is what the NBA.
Speaker 2: This is called the transmission mechanism. The RBA cuts rates,
Speaker 2: that reduces borrowing costs, and that shows up in the
Speaker 2: form of more discretionary disposable income, higher house prices. So
Speaker 2: the housing market is a key channel through which monetary
Speaker 2: policy provides it bequeaths that economic relief to the broader community.
Speaker 2: It's not a bad thing.
Speaker 1: But yeah, there's a lot of power for our monetary
Speaker 1: policy too. We observe during the rate rise period because
Speaker 1: most trainers are on fixed on verable rates, but during
Speaker 1: a rate reduction period, that verbal rate is pretty valuable
Speaker 1: and it actually reflects in the purchase purchasing power. As
Speaker 1: as you said, it's amazing, it's actually just as solid
Speaker 1: on the way down as it is on the way up.
Speaker 2: Well, I'll tell you this, and i'd say this to Kookie.
Speaker 2: Doubt Cookie's got to this, well, maybe has got to
Speaker 2: this part of the interview. But if you look at
Speaker 2: the daily Cooreo Logic house price indexes that I helped
Speaker 2: co create, they're published on College Week's website. You can
Speaker 2: see them every day, and you hit the back series
Speaker 2: tab on the core Logic website and you dis select
Speaker 2: every city except for Sydney. What you'll see is that
Speaker 2: Sydney prices were falling until the middle of Februar this
Speaker 2: year cuts rates. Literally the same week they cut rates,
Speaker 2: house prices turned one hundred and eight degrees, started rising again,
Speaker 2: and then rose and rose and rose, and then they
Speaker 2: started to stabilize a little bit until May. When May
Speaker 2: came along, we got the cut and they went off
Speaker 2: again to the races. So there's you know, it's unambiguously
Speaker 2: the case that prices are very responsive to changes in
Speaker 2: the purchasing power of those properties, which is governed by incomes.
Speaker 1: And income is fixed, but the amount of money you
Speaker 1: can borrow is variable. Because correct interest rates goes down,
Speaker 1: you can borrow more money. That's what we do. We
Speaker 1: lend you more money if because when we do our calculation,
Speaker 1: your debt servicing ability is far greater because the interest
Speaker 1: rate we assume you're going to pay is much lower.
Speaker 2: I actually want to ask you a question, like, you've
Speaker 2: had a bit to do with Trump yourself back the
Speaker 2: day when he was the gregarious entrepreneur and he's political,
Speaker 2: he wasn't in that political decision making mode. But I
Speaker 2: remember asking you about this years ago. I actually can't
Speaker 2: remember your response. So what was he like?
Speaker 1: Well, yeah, but the thing I've had a trumpes is
Speaker 1: very purposeful. So he knew everything he was doing, down
Speaker 1: to the most minute detail, how he dressed, how he
Speaker 1: addressed the camera, what we talked about. Because I interviewed
Speaker 1: interviewed him. I spent like forty five minutes interviewing him. Yeah, yeah,
Speaker 1: we did a live TV interview, Yeah, one online which
Speaker 1: I'm trying to call you but I can't find it.
Speaker 1: But it's his purposefulness in relation to his answers and
Speaker 1: everything he tracks and he sits on the same topics
Speaker 1: he won't It doesn't matter what questions ask He knew
Speaker 1: what answers he wanted to give me.
Speaker 2: So so interesting because I see that in that mindfulness
Speaker 2: and purpose purposefulness that you mention. You see that actually
Speaker 2: in his interviews.
Speaker 1: Now he knows what he wants to get out before
Speaker 1: he gets there.
Speaker 2: He's delivering those very, very clearly cultivated messages, but he's
Speaker 2: also very strategic with their delivery. Have you seen the
Speaker 2: there's a really good little video of him recently where
Speaker 2: he's getting ready for an interview.
Speaker 1: Have you seen this one?
Speaker 2: And so there's two actually, So he's prepping for an
Speaker 2: interview and there's a table with a glass of water
Speaker 2: next to him, and he's just sitting there and the
Speaker 2: camera's rolling and the MIC's hot, and he says, hey, John,
Speaker 2: move that table. And so he moves the table and
Speaker 2: he just sits and he says, actually bring it back,
Speaker 2: and bring the glass back. And the glass has a
Speaker 2: little piece of paper on top of the glass. Just
Speaker 2: get rid of the piece of paper on top of
Speaker 2: the glass, and get rid of the matt under the glass.
Speaker 2: And he's just looking himself in the camera. Yeah, that's perfect.
Speaker 2: And then there's another shot of him in the Oval
Speaker 2: office and he's recording his commentary on the I think
Speaker 2: the US economy and he's being fairly there's a lot
Speaker 2: of gesticulation and he's quite emphatic, and somebody coughers coughs
Speaker 2: halfway through. You know what he is. This is a
Speaker 2: kind of distant coffee you can hear in the background
Speaker 2: because it stops. Why the hell would you cougher the room?
Speaker 2: Leave the room and let's roll again, And he kind
Speaker 2: of seamlessly just slides straight back into that discourse.
Speaker 1: But yes, super super, I would say this, Chris, like
Speaker 1: a irrespective of your politics, whether your Republican or a
Speaker 1: Democrat or a liberal or a labor whatever, never underestimate him.
Speaker 1: If you do, you're going to do it at your
Speaker 1: own peril. The guy is on on narrative, on brand,
Speaker 1: on everything. He absolutely does like he knows exactly what
Speaker 1: he's going to do the outcome and it is not right.
Speaker 1: He gets it fixed and he has the ability to.
Speaker 1: By the way, when when when I did the interview
Speaker 1: to preempt where you might go first because and I
Speaker 1: won't say what he was asked me not to talk about,
Speaker 1: but he actually preempted a number of things to me
Speaker 1: before we got to that territory. And he did it
Speaker 1: through his head of pr person here they come and
Speaker 1: told me what territories you cannot go. And then when
Speaker 1: we did talk about fainily enough. He was. He was
Speaker 1: extremely critical of China an Australia's relationship with China, and
Speaker 1: I said to him, well, you know, like at seventy
Speaker 1: percent of our trade, you know, like export trade, and
Speaker 1: he just didn't copy. He's just but they're raping you,
Speaker 1: he said, are they are taking you for a ride?
Speaker 1: And he did not. And I thought it was chill
Speaker 1: because like you know, this is like they're a major
Speaker 1: trading part I think I don't want to go down
Speaker 1: the territory. But he didn't give a damn. So to
Speaker 1: some extent, and be honest, he's fearless. He's fearless like
Speaker 1: in a commercial Sceen is quite fearless. He doesn't care
Speaker 1: if the opposition is his.
Speaker 2: Ear blown off. And he was up there saying five
Speaker 2: fight fight. The dude's got balls, like he's he's a hitter. Yeah,
Speaker 2: he's a real hitter. And it's interesting how controlled and yeah,
Speaker 2: strategic and disciplined he is with his own decisioning and
Speaker 2: external as you were saying, communications like everything the no drinking,
Speaker 2: the no drugs, the appearance, the way, everything's very very careful.
Speaker 1: He's always on cure always and then he's messaging is
Speaker 1: just relentless, and relentless is a good word. And we're
Speaker 1: not here trying to blow smoke up the president's bump.
Speaker 1: But in terms of observations, I think relentless is a
Speaker 1: good word. He's relentless with his messaging about himself and
Speaker 1: everything that he's trying to achieve. In terms of his strategy,
Speaker 1: he's totally relentless. And even at seventy nine, just turns
Speaker 1: seventy nine. That's quite amazing. Acuities, incredible leaks, bang bang bang,
Speaker 1: and he's on and everything sort of set out, And
Speaker 1: I just want to quickly.
Speaker 2: Ask you before we go on, so one other point
Speaker 2: here that is important to your comment that we're not
Speaker 2: here to blow up, blow win up Trump's us. Like
Speaker 2: my job, I run fifteen billion, My job is to
Speaker 2: anticipate what the MOFO is going to do, right, I
Speaker 2: have to. You know, I invest a huge amount resources
Speaker 2: in trying to study him and understand him. And then
Speaker 2: through that process, if I find his decision making interesting
Speaker 2: and informative and illuminating, I'm actually trying to learn myself.
Speaker 2: You know, how can I better prosecute my own decision
Speaker 2: making problems? You know, when you've got a guy that's
Speaker 2: been elected president twice, he's a multi billionaire. Okay, he
Speaker 2: comes with all his again let's say acknowledged shortcomings, but
Speaker 2: there's there's the signal with the noise, there's there's something
Speaker 2: we can everyone can learn from Trump.
Speaker 1: And that's what today's about. And by the way, what
Speaker 1: do you read about the must trade?
Speaker 2: Great question. Yeah, so I think he just blew up.
Speaker 2: I think he really regrets the you know, vicious exit.
Speaker 2: I think I think that was an amazing partnership. I
Speaker 2: really hoped that it would endure. I actually think there'll
Speaker 2: be a reproachment at some point. Musk will come back
Speaker 2: to owl between his legs. I mean, Musk got way
Speaker 2: over his skis. He was politicizing everything he touched. Tesla
Speaker 2: was blowing up, he was a risk of losing SpaceX contracts.
Speaker 2: He wasn't focused on his businesses. And you know, I
Speaker 2: don't know, I mean he was. I don't want to
Speaker 2: call him a nascist, but he was clearly enjoying being
Speaker 2: in the Oval officer every day, sleeping in the Lincoln Room,
Speaker 2: being joint press conferences with Trump all the time, and
Speaker 2: I guess being at the center of a global decision
Speaker 2: making authority, dealing with leaders of nation states. So he
Speaker 2: was clearly getting off on that. You could see whether
Speaker 2: he has this ketamine addiction, I'm not sure, but it's
Speaker 2: clear that that he's an unusual cat, and it seemed
Speaker 2: if you look at the tapes, he was on something.
Speaker 1: And he has retracted a bit since.
Speaker 2: Yeah, and he's you know, he's he's definitely retracted a
Speaker 2: fair bit since. So, I mean, the big beautiful bill.
Speaker 2: Sure it has a lot of pork barreling in it,
Speaker 2: but these things are always compromises. You know. The tax
Speaker 2: cuts are important, the defense spending is important. I thought
Speaker 2: Doge had a lot of momentum behind it. So he
Speaker 2: kind of torched Doge. He torched his constituency inside the
Speaker 2: White House. He potentially torched a lot of his access
Speaker 2: in the context of his own businesses like Tesla and SpaceX.
Speaker 2: SpaceX's biggest customers the US government, So that's a that's
Speaker 2: a big potential problem. I think it's interesting how his
Speaker 2: crawl right back into his shell musk, and he's thus
Speaker 2: far been pretty a political except for the Californian rights
Speaker 2: where he's been retweeting what Trump and Jady Vance have
Speaker 2: been saying, so I think I think Mask made a
Speaker 2: big mistake and it wouldn't surprise me if he was intoxicated.
Speaker 2: I also thought the way that Trump dealt with him
Speaker 2: was really interesting, like really interesting. He was far less
Speaker 2: vicious and far more restrained until Muss started dropping the
Speaker 2: personal bombs on Trump, and then he just said, listen,
Speaker 2: you know, if you want to get personal, we can
Speaker 2: get personal. Like, you know, we don't need to do
Speaker 2: business with you if you want to go down that route.
Speaker 1: That's not shout, but that's like that's like the Iran
Speaker 1: Iran trade, like, yeah, you got forty days. Yeah, yeah,
Speaker 1: I mean will do a deal. He'll do an ultimatum
Speaker 1: that's to anyone.
Speaker 2: Correat Yeah, And Jady Vance said, I thought it was
Speaker 2: really interesting. Jeddy Vance said, we love Elin, he's been
Speaker 2: great for us, but do you really want to get
Speaker 2: into a blood rivalry with Donald Trump at this point
Speaker 2: in his career. No, that's not the trade you want
Speaker 2: to do, and he was just like, you get back
Speaker 2: into your box. I love Musk. I think he's amazing
Speaker 2: and he's an extraordinary human being. He's done so much
Speaker 2: for society. But I think it was just a mistake.
Speaker 2: We all make mistakes, and I think I think Musk
Speaker 2: will iterate big time. So I expect Musk to come
Speaker 2: back out and swing strongly behind Trump in whatever ways
Speaker 2: he can in the future. There was also I mean,
Speaker 2: I think Trump made the point that Musk was upset
Speaker 2: about him removing the electric vehicle subsidies by way of
Speaker 2: this big, bold, beautiful bill, whatever it's called. And whether
Speaker 2: that paid played part of it, I'm not sure. There
Speaker 2: was also, I think issues with Musk dealing with the
Speaker 2: broader administration. It's one thing to have a bilateral relationship
Speaker 2: with Trump when you've got to deal with all of
Speaker 2: his lackey's. Someone like Musk is going to blow up
Speaker 2: those guys because he's just you know, for sure, he's
Speaker 2: a force of nature. And so yeah, but I'm disappointed, mate,
Speaker 2: because I thought Musk had a lot of answers to
Speaker 2: Trump's problems from a policy perspective, like Musk has really
Speaker 2: extraordinary strategic clarity, and he was right on the economics.
Speaker 2: You know, you've got to cut government spending in the
Speaker 2: US in order to balance the books, and you need
Speaker 2: to balance the budget in order to start paying back
Speaker 2: the debt and reducing the burden of the interest rate
Speaker 2: servicing costs. So yeah, it was disappointed.
Speaker 1: I got down in Murky on in next week. What
Speaker 1: would you say about the budget that came up from
Speaker 1: New South Wales on Tuesday this week?
Speaker 2: Mate, Mooki is probably the best politician in Australia. Definitely
Speaker 2: the best treasure, best treasure in Australia. I'm sorry, definitely
Speaker 2: the best stay treasurer your soft mate, come on, So yeah,
Speaker 2: Mooki is definitely. I think he's the hardest working, smartest
Speaker 2: politician in the country. He is formidably intelligent. He know
Speaker 2: what's different about Murky as well. I think he really
Speaker 2: is in it for the right reasons. He doesn't want
Speaker 2: to be Premier or Prime Minister. He cares about change
Speaker 2: and he's also very sensible. I've dealt with him a lot.
Speaker 2: He's a fucking weapon, mate, He's an absolute beast man.
Speaker 1: How much of the budget do you think was about
Speaker 1: saying or preserving our credit rating for New South Wales
Speaker 1: I'm talking about.
Speaker 2: I mean with a good look. Yeah, I think we
Speaker 2: think they're at risk of losing the credit rating. But
Speaker 2: he's doing everything he can to try and salvage it.
Speaker 2: I can tell you this. You know, the Victorians are
Speaker 2: borrying about forty billion a year, the Queensland's borring about
Speaker 2: forty billion a year. Mook, He's only borrowing twenty four
Speaker 2: billion a year for a bigger state, for a much
Speaker 2: bigger state. And so he's been incredibly disciplined on debt.
Speaker 2: And that's something I spoke to him a lot about
Speaker 2: before he became treasurer. He's an immense he's an immense
Speaker 2: human being, and he's one of the good guys. Like
Speaker 2: if someone like him could become premier or Prime minister,
Speaker 2: that's when you win, you know, when you've got somebody
Speaker 2: who's there for the right reasons, who isn't a narcissist,
Speaker 2: who isn't just trying to accumulate power and kind of
Speaker 2: settle scores, And then.
Speaker 1: That's how that's how I see Christian's by the way,
Speaker 1: at a state level, yeah, I think christ is there
Speaker 1: for the right reasons. Us again that right, but he's
Speaker 1: in the right reasons. He's not trying to settle scores.
Speaker 1: It's I think it's a bit different at the federal level.
Speaker 1: But I meant anyway, I rate both.
Speaker 2: I've only met him once and I had like a
Speaker 2: meeting with Min's and Murky and Men's was fantastic. He
Speaker 2: went to Princeton. He's a farman, super impressive guy. And
Speaker 2: I think the fact that there is also normal normal
Speaker 2: and the fact that their relationship is sort of seem
Speaker 2: to be high fidelity is very positive.
Speaker 1: One more question for Chris. So one of our listeners
Speaker 1: has asked asked us to ask you this question, he says,
Speaker 1: from one of our Mental Plus subscribers, Aaron Scott, and
Speaker 1: he says, I'm here to to hear Chris. Chris's thoughts
Speaker 1: about tax reform, and we like to see lower income taxes,
Speaker 1: a high broad based consumer tax such as an increase
Speaker 1: the GST, or he says, an increase in CGT. So
Speaker 1: I presume it could be meaning capital against AX or
Speaker 1: the GST. But we are we do have a reform. Sorry,
Speaker 1: we do have a someone coming up in August. I
Speaker 1: think it is question is have they asked you to
Speaker 1: come along?
Speaker 2: And they haven't asked me either, So what are you
Speaker 2: not one of the good guys as nor am I
Speaker 2: one of Charmers himself, or one of those guys said
Speaker 2: a long time ago that dealing with me, you've got
Speaker 2: to use fireproof gloves, so they don't trust me. And
Speaker 2: that's fine. I mean, I've got no problem with any
Speaker 2: of them. As said, I'm pretty a political but I
Speaker 2: just the problem is I say what I think and
Speaker 2: I can't be controlled and therefore, well, you're not going
Speaker 2: to be a job.
Speaker 1: Why would you?
Speaker 2: Yeah, But I think answer to the question, I think
Speaker 2: everything's on the table, capital gains tax discounts, capital gains
Speaker 2: tax period GSD.
Speaker 1: He's made it pretty clearly.
Speaker 2: I would just think that state taxes, gst capital gains taxes,
Speaker 2: you know, mineral resource rent taxes, stamp duty is like
Speaker 2: state and federal taxes. I think it's all on the
Speaker 2: table because they're going to need to raise a lot
Speaker 2: of tax.
Speaker 1: Or that'll borrow more money, which is a problem.
Speaker 2: Yeah, yeah, to pay the interest on the the borrowings
Speaker 2: of their currently.
Speaker 1: Yeah.
Speaker 2: So I think taxes are heading one way, and I
Speaker 2: think it's gonna be really nasty unfortunately. And I think
Speaker 2: this is over a ten. Particularly if they get another
Speaker 2: two terms, you're going to see a huge increase in
Speaker 2: the public tax stake to fund the NDIS. I mean,
Speaker 2: that's sixty billion a year, as big as medicare one
Speaker 2: and nine kids are apparently autistic. It's just the biggest.
Speaker 2: It's the biggest rued in the history of ruds.
Speaker 1: And you know, one of the reason why I found
Speaker 1: it the other day is because if you're diagnosed and
Speaker 1: prescribed as autistic, and I don't mean severely autistic, I
Speaker 1: don't mean completely different everybody else, because there are autistic
Speaker 1: people in kids who are really at a disadvantage to
Speaker 1: some extent, and fair enough, but even if you're mildly autistic,
Speaker 1: however that it gets diagnosed that they at the HC,
Speaker 1: they get special advantages in terms of how they do
Speaker 1: the exam. They get much more time.
Speaker 2: Well, it's also assessed not by anyone who's into pen interview,
Speaker 2: but both whomever you choose to have the assessment made by.
Speaker 2: And it's not means tested.
Speaker 1: So clever parents will say that diagnosed every.
Speaker 2: Man and their dogs now in the NDIS. And so
Speaker 2: I think the taxes are heading one way. I mean,
Speaker 2: you're going to be paying a lot of tax to
Speaker 2: the government because the government's got to pay for the NDS.
Speaker 2: They're going to pay for all this infrastructure, they're going
Speaker 2: to pay for the huge public service and the fact
Speaker 2: that they represent a larger share of the economy than
Speaker 2: any government we've seen since more or less World War Two.
Speaker 2: So I think forget what they say, like any any
Speaker 2: claims that we're not going to do gs here, we're
Speaker 2: not going to do with stay taxes. I think it's
Speaker 2: all on the table. Maybe not this term, maybe next term,
Speaker 2: but it's they're coming for everybody. There's gonna be a
Speaker 2: lot of tax paid. I mean, and you see the
Speaker 2: bifurcation here between libertarian states like Florida in the US
Speaker 2: and the super center left states like California. I mean,
Speaker 2: the totality of taxes you pay in California fifty six,
Speaker 2: where you're paying basically half that in Florida, because they're
Speaker 2: just two distinctly different business models. And I think it
Speaker 2: also is unfortunately generational. Younger generations want government to solve
Speaker 2: their problems. Order generations want government to get out of
Speaker 2: the way.
Speaker 1: And yeah, have you got one quick, quick one that
Speaker 1: just came through to my mind. Let's forget about the
Speaker 1: unfairness of the total tax or the way its been
Speaker 1: calculator should say, but this superinnoation tax over over three
Speaker 1: million dollars was your view.
Speaker 2: It just doesn't make any sense to me at all, Like,
Speaker 2: I have no idea where this came from.
Speaker 1: It's not indexed.
Speaker 2: I mean, it just looks like an a team gains
Speaker 2: unrealized gains. It looks like an attempt just to attax
Speaker 2: into oblivion anyone who has a large superbalance.
Speaker 1: But what would be the episode?
Speaker 2: Presumably the intent is to get them out of Super.
Speaker 2: But where's that money going to go? It's probably going
Speaker 2: to go back into the owner occupied property, right, Like,
Speaker 2: what are you going to do? You're going to take
Speaker 2: your fix million Super and say, fine, I'm just going
Speaker 2: to upgrade to a bigger house and get tax free
Speaker 2: capital gains on my home.
Speaker 1: Maybe they've got that lined up as well.
Speaker 2: Wouldn't surprise me, mate, it would not. I mean it's
Speaker 2: going to be nasty. It's going to be really bad.
Speaker 1: This is terrible. But but it's not yet. We'll wait
Speaker 1: and see what happens in August or whenever he's having
Speaker 1: commting and what you know, Dreasure, you should be inviting
Speaker 1: this bloke and a few other people that I know,
Speaker 1: but I doubt very much again invite us. We'll at
Speaker 1: least tell you what you should you need to hear.
Speaker 2: We won't be there, So I say what we need
Speaker 2: to do is Australian needs to be a magnet for
Speaker 2: the best talent globally and to do that we need
Speaker 2: to have globally competitive tax rates. And we know we're close,
Speaker 2: like we need to radically revise. We should be less
Speaker 2: progressive in our tax regimes.
Speaker 1: It should be.
Speaker 2: Much the tax CAU should be much flatter, much lower.
Speaker 2: And but it'll happen. What's going to happen is we're
Speaker 2: gonna have a couple of terms of this and then
Speaker 2: there will be big problems. But eventually you get a
Speaker 2: trumpy and style character who just come in and will
Speaker 2: just slash all the taxes, and so you know, the
Speaker 2: pendulum will swing in the other direction and eventually just
Speaker 2: gonna stay alive long enough, you guys, stay alive long enough.
Speaker 1: Yeah, thanks mate, good to speak in Chris
Speaker 2: M.