1 00:00:08,070 --> 00:00:11,310 Sean Aylmer: Welcome to Fear and Greed: the week ahead. I'm Sean Aylmer, and as 2 00:00:11,310 --> 00:00:13,560 Sean Aylmer: always, at this time on a Monday morning, I'm joined 3 00:00:13,560 --> 00:00:17,070 Sean Aylmer: by Economist Stephen Koukoulas. You'll find him at thekouk. com 4 00:00:17,070 --> 00:00:20,250 Sean Aylmer: and on Twitter using the handle TheKouk T- H- E- K- O- U- 5 00:00:20,250 --> 00:00:21,480 Sean Aylmer: K. Steven, good morning. 6 00:00:21,750 --> 00:00:22,620 Stephen Koukoulas: Good morning, Sean. 7 00:00:23,489 --> 00:00:25,560 Sean Aylmer: Big week last week, really for a week that wasn't 8 00:00:25,560 --> 00:00:28,860 Sean Aylmer: offering much the Reserve Bank minutes and then the Fed's 9 00:00:28,860 --> 00:00:30,750 Sean Aylmer: decision on interest rates. Plenty going on. 10 00:00:31,530 --> 00:00:34,650 Stephen Koukoulas: Plenty going on that well, the Fed was obviously the big one. 11 00:00:34,650 --> 00:00:37,949 Stephen Koukoulas: It hiked the 25 basis points, and I think it 12 00:00:37,950 --> 00:00:41,430 Stephen Koukoulas: had more caveats and qualifications on the decision that I've 13 00:00:41,430 --> 00:00:45,479 Stephen Koukoulas: ever seen before. Clearly, it's worried about inflation. That's why 14 00:00:45,479 --> 00:00:48,450 Stephen Koukoulas: it delivered the rate hike and had an element of 15 00:00:48,450 --> 00:00:50,699 Stephen Koukoulas: hawkishness to it. But of course, it's also seeing the 16 00:00:50,700 --> 00:00:55,050 Stephen Koukoulas: banking problems emerging in the US economy. The slowdown that's 17 00:00:55,080 --> 00:00:57,990 Stephen Koukoulas: occurring in sort of a lot of the leading indicators, 18 00:00:57,990 --> 00:01:00,660 Stephen Koukoulas: not so much in the labor market. So there's something 19 00:01:00,660 --> 00:01:03,120 Stephen Koukoulas: for everybody in that raid hike. I'm not sure whether 20 00:01:03,120 --> 00:01:05,820 Stephen Koukoulas: it was ish or hawkish, but it was delivered. Anyway. 21 00:01:06,510 --> 00:01:09,330 Stephen Koukoulas: The banking crisis is still sort of lingering somewhere in 22 00:01:09,330 --> 00:01:13,500 Stephen Koukoulas: the background there, and with Credit Swiss sort of imploding 23 00:01:13,590 --> 00:01:17,880 Stephen Koukoulas: also, the markets are just very, very skittish and a 24 00:01:17,880 --> 00:01:20,880 Stephen Koukoulas: little unsure about what to do. So that was the 25 00:01:20,880 --> 00:01:25,679 Stephen Koukoulas: big thing. RBA minutes, again, curious, there was a hint 26 00:01:25,830 --> 00:01:29,280 Stephen Koukoulas: that maybe they want to pause the rate hikes of 27 00:01:29,280 --> 00:01:33,870 Stephen Koukoulas: February and March were sort of the really drivers, I 28 00:01:33,870 --> 00:01:36,690 Stephen Koukoulas: suppose, of the anti inflation result of the RBA, but 29 00:01:37,470 --> 00:01:40,860 Stephen Koukoulas: they're obviously meeting next week. So a lot's happening and 30 00:01:40,860 --> 00:01:42,720 Stephen Koukoulas: still a lot to get through before we see what 31 00:01:42,720 --> 00:01:43,980 Stephen Koukoulas: the RBA does here. 32 00:01:44,490 --> 00:01:46,290 Sean Aylmer: Now, what the Reserve Bank did say is that it's 33 00:01:46,290 --> 00:01:49,560 Sean Aylmer: looking at, I think there are four main indicators to 34 00:01:49,560 --> 00:01:52,950 Sean Aylmer: see how things were going. They're interested in business conditions, 35 00:01:52,950 --> 00:01:56,070 Sean Aylmer: which we've seen National Australia Bank pretty good, the employment 36 00:01:56,070 --> 00:01:59,460 Sean Aylmer: market pretty good. Two others, which we get were one, 37 00:01:59,460 --> 00:02:01,590 Sean Aylmer: we get proper figures for February retail trade, and the 38 00:02:01,590 --> 00:02:04,650 Sean Aylmer: others, the, at least the monthly CPI, the Reserve Bank 39 00:02:04,650 --> 00:02:07,110 Sean Aylmer: is very interested in those. What are we expecting? 40 00:02:07,680 --> 00:02:10,620 Stephen Koukoulas: Well, you're quite right. Just looking backwards at those employment 41 00:02:10,620 --> 00:02:12,810 Stephen Koukoulas: numbers, which were much stronger than I think the market 42 00:02:12,810 --> 00:02:15,570 Stephen Koukoulas: was expecting. The unemployment rate, this is going back, gosh, 43 00:02:15,570 --> 00:02:19,350 Stephen Koukoulas: almost two weeks ago now, to 3.5% for the unemployment rates 44 00:02:19,350 --> 00:02:21,630 Stephen Koukoulas: so that was a good number. This week we've actually 45 00:02:21,630 --> 00:02:23,820 Stephen Koukoulas: got the retail sales numbers for the month of February. 46 00:02:24,389 --> 00:02:27,180 Stephen Koukoulas: Market is looking for a soggy sort of result, a 47 00:02:27,180 --> 00:02:32,070 Stephen Koukoulas: small negative near -0. 2, - 0. 3 month on month. Remembering 48 00:02:32,070 --> 00:02:35,280 Stephen Koukoulas: that followed a bit of a rebound in January. So 49 00:02:35,760 --> 00:02:40,019 Stephen Koukoulas: the banks who provide the internal data on credit card 50 00:02:40,080 --> 00:02:43,530 Stephen Koukoulas: turnover and direct debit sort of numbers are suggesting that 51 00:02:43,650 --> 00:02:46,500 Stephen Koukoulas: the consumer is pairing back. So we're expecting a bit 52 00:02:46,500 --> 00:02:49,709 Stephen Koukoulas: of a softer number for retail spending. The monthly CPI, 53 00:02:49,710 --> 00:02:52,530 Stephen Koukoulas: gosh, hard to forecast monthly inflation. It's petrol plus a 54 00:02:52,530 --> 00:02:55,500 Stephen Koukoulas: few other bits and bobs I think. But we're wanting 55 00:02:55,500 --> 00:02:59,220 Stephen Koukoulas: to see the inflation rate drop from 7. 4%, which 56 00:02:59,220 --> 00:03:03,000 Stephen Koukoulas: was in the year to January, down towards 7%, all 57 00:03:03,000 --> 00:03:06,990 Stephen Koukoulas: thereabouts. So still elevated, but nonetheless down from that 8. 58 00:03:06,990 --> 00:03:09,690 Stephen Koukoulas: 4% peak that we saw in December, 2022. 59 00:03:10,230 --> 00:03:13,860 Sean Aylmer: Okay. We've also got job vacancy figures this week. That's 60 00:03:13,860 --> 00:03:16,770 Sean Aylmer: a leading indicator of what we expect to see in 61 00:03:16,770 --> 00:03:18,810 Sean Aylmer: the labor market. What do you reckon about those ones? 62 00:03:18,930 --> 00:03:21,360 Stephen Koukoulas: Yeah, job vacancies have been inching down the last couple 63 00:03:21,360 --> 00:03:23,460 Stephen Koukoulas: of quarters. These are three monthly figures from the Bureau 64 00:03:23,460 --> 00:03:26,430 Stephen Koukoulas: of Stats and Demand for Labor has tapered off a 65 00:03:26,430 --> 00:03:29,850 Stephen Koukoulas: little bit as the economy slowed down. High immigration sort 66 00:03:29,850 --> 00:03:32,520 Stephen Koukoulas: of provided a lot of workers for business in any 67 00:03:32,520 --> 00:03:36,450 Stephen Koukoulas: event. So expect another sort of smallish 2% fall in 68 00:03:36,450 --> 00:03:39,420 Stephen Koukoulas: the number of job vacancies, just consistent with yes, a 69 00:03:39,420 --> 00:03:42,870 Stephen Koukoulas: slowing economy and perhaps in the next couple of months, 70 00:03:43,080 --> 00:03:45,270 Stephen Koukoulas: a bit of an easing in the very, very tight 71 00:03:45,270 --> 00:03:47,100 Stephen Koukoulas: labor market that we've got used to seeing. 72 00:03:47,550 --> 00:03:51,210 Sean Aylmer: Okay, so a couple of final things. Reserve Bank meets 73 00:03:51,210 --> 00:03:55,320 Sean Aylmer: next week. Bond traders reckon that they're not going to 74 00:03:55,410 --> 00:03:58,770 Sean Aylmer: lift rates, market economist like yourself say they are. Where 75 00:03:58,770 --> 00:03:59,400 Sean Aylmer: do you stand? 76 00:03:59,400 --> 00:04:02,640 Stephen Koukoulas: Well, I'm on the on hold. I think the market's 77 00:04:02,640 --> 00:04:05,430 Stephen Koukoulas: got it right this time around. It's quite extraordinary. Even 78 00:04:05,430 --> 00:04:08,310 Stephen Koukoulas: after the Fed hike last week, the short end of 79 00:04:08,310 --> 00:04:11,700 Stephen Koukoulas: the Australian curve and the pricing of interest rate changes 80 00:04:11,700 --> 00:04:14,670 Stephen Koukoulas: in Australia still had no change basically, there's a couple 81 00:04:14,670 --> 00:04:17,250 Stephen Koukoulas: of basis points here or there, but basically no change. 82 00:04:17,790 --> 00:04:20,160 Stephen Koukoulas: Look, I think there's enough coming through in our local 83 00:04:20,160 --> 00:04:23,339 Stephen Koukoulas: data to suggest the RBA's done a lot. We've got 84 00:04:23,339 --> 00:04:26,669 Stephen Koukoulas: the mortgage cliffs still unfolding. We don't know exactly how 85 00:04:26,670 --> 00:04:28,770 Stephen Koukoulas: that's going to play out. So I think one of 86 00:04:28,770 --> 00:04:30,780 Stephen Koukoulas: the last thing the RBA would want to do is hike 87 00:04:31,020 --> 00:04:33,719 Stephen Koukoulas: too much too late when we already know that there's 88 00:04:33,720 --> 00:04:36,750 Stephen Koukoulas: a bit of weakness coming through in terms of some 89 00:04:36,750 --> 00:04:40,680 Stephen Koukoulas: of the consumer spending risks out there. So they'll still 90 00:04:40,860 --> 00:04:43,500 Stephen Koukoulas: have a tightening bias. That is if we do move 91 00:04:43,500 --> 00:04:45,900 Stephen Koukoulas: rates again, it'll be up not down, but I don't think 92 00:04:45,900 --> 00:04:46,950 Stephen Koukoulas: they're actually going to act on it. 93 00:04:47,670 --> 00:04:50,160 Sean Aylmer: The other thing when it comes to predicting the economy 94 00:04:50,160 --> 00:04:53,670 Sean Aylmer: is the Autumn racing carnival. Stephen, I know you had 95 00:04:53,670 --> 00:04:56,789 Sean Aylmer: a nice weekend you actually had part of a horse 96 00:04:56,790 --> 00:04:59,279 Sean Aylmer: at least that ran a group one race. Did you 97 00:04:59,279 --> 00:05:01,290 Sean Aylmer: enjoy the weekend? Did you enjoy the races? 98 00:05:01,470 --> 00:05:04,589 Stephen Koukoulas: It was sensational, a little bit damp, but it was 99 00:05:04,589 --> 00:05:07,920 Stephen Koukoulas: great fun. And having a horse that can even run 100 00:05:07,920 --> 00:05:11,010 Stephen Koukoulas: in a Group one race is something that's super exciting. 101 00:05:11,010 --> 00:05:13,770 Stephen Koukoulas: So we're just waiting to see how she cools up. 102 00:05:14,160 --> 00:05:15,570 Stephen Koukoulas: But there's a chance you'll be running in a couple 103 00:05:15,570 --> 00:05:19,470 Stephen Koukoulas: of weeks time in The Oaks, the Group one Oaks. So it's something that 104 00:05:19,680 --> 00:05:22,260 Stephen Koukoulas: I've dreamt about since I bought the first share on 105 00:05:22,260 --> 00:05:24,180 Stephen Koukoulas: a racehorse many years ago, and when it won it's 106 00:05:24,390 --> 00:05:27,390 Stephen Koukoulas: maiden at Orange, I think it was, that was exciting. 107 00:05:27,390 --> 00:05:32,549 Stephen Koukoulas: But Royal Rose Hill group one, that's what that's aiming for. 108 00:05:32,610 --> 00:05:34,980 Sean Aylmer: What's the horse's name for the Oaks in case it's 109 00:05:34,980 --> 00:05:35,280 Sean Aylmer: in it? 110 00:05:35,430 --> 00:05:38,490 Stephen Koukoulas: For the Oaks. If we get in there, it's Frankie's 111 00:05:38,490 --> 00:05:39,090 Stephen Koukoulas: Me Dad. 112 00:05:39,450 --> 00:05:40,349 Sean Aylmer: Frankie's Me Dad. 113 00:05:40,710 --> 00:05:44,279 Stephen Koukoulas: And dad is actual Frankl, who was of course the super 114 00:05:44,279 --> 00:05:48,180 Stephen Koukoulas: champion from the UK who was arguably as good as 115 00:05:48,180 --> 00:05:51,180 Stephen Koukoulas: Winks, if you have a look at some of his 116 00:05:51,180 --> 00:05:53,460 Stephen Koukoulas: forms. So yeah, here's hoping. 117 00:05:53,880 --> 00:05:55,529 Sean Aylmer: Here's hoping. Stephen, have a great week. 118 00:05:55,890 --> 00:05:56,460 Stephen Koukoulas: Thank you, Sean. 119 00:05:56,910 --> 00:05:59,549 Sean Aylmer: That was economist Stephen Koukoulas, better known as The Kouk. 120 00:05:59,550 --> 00:06:01,620 Sean Aylmer: You can find him at thekouk. com and follow him 121 00:06:01,620 --> 00:06:04,920 Sean Aylmer: on Twitter using the handle TheKouk. I'm Sean Aylmer, and 122 00:06:04,920 --> 00:06:06,570 Sean Aylmer: this is Fear and Greed: The Week Ahead.