WEBVTT - #179 Christopher Joye: Trump’s Tariffs & How the Trade War will hit Australia 0:00:00.200 --> 0:00:03.120 Hi, Mike Boris and this is straight talk, Chris Joy, 0:00:03.680 --> 0:00:04.720 Well do straight talk. 0:00:04.760 --> 0:00:05.880 Thanks for having me, mate. 0:00:06.559 --> 0:00:09.160 So, yeah, you're still there, you know, Like I know 0:00:09.200 --> 0:00:11.319 you're downplay it, but you know you're a portfolio manager. 0:00:11.360 --> 0:00:13.680 There's which loads to describe yourself as, amongst many other 0:00:13.760 --> 0:00:15.920 millions of things that I know you do, which we won't 0:00:15.880 --> 0:00:18.880 talk about today. Portfolio manager at Cooler Bar. Tell me 0:00:18.880 --> 0:00:20.320 a little bit of a story about Coolerbart and in 0:00:20.440 --> 0:00:22.560 terms of what you are doing now, like what's what's 0:00:22.680 --> 0:00:25.200 Coolerbar doing right now? In terms of intergesters. 0:00:25.560 --> 0:00:31.480 Yeah, so we run fifteen billion across about fifty portfolios. 0:00:31.840 --> 0:00:35.000 I have fifty three professionals around the world. We have 0:00:35.080 --> 0:00:40.200 officers in London, Miami, Auckland, Sydney, in mon I'm smiling 0:00:40.200 --> 0:00:43.440 because you've known me since I was at university and 0:00:43.560 --> 0:00:46.120 you you kind of backed me the whole way along. 0:00:46.159 --> 0:00:47.720 So I really appreciate your support. 0:00:47.720 --> 0:00:51.120 Mark, But it's got nothing to do with me, mate, 0:00:51.159 --> 0:00:52.680 But you've done it all on your own. By the way, 0:00:53.080 --> 0:00:55.840 for those guys who don't know that, this bloke is 0:00:55.880 --> 0:00:58.600 the most dynamic, hard working basket I've ever met my 0:00:58.680 --> 0:01:00.560 wife and he's got a million ideas and the actually 0:01:00.640 --> 0:01:02.680 actually executes on him, which is the reason I backed him. 0:01:03.040 --> 0:01:05.240 I did a purely out of economics. From my appointment, 0:01:05.240 --> 0:01:07.479 I did very well out of him. So don't get 0:01:07.520 --> 0:01:09.000 him wrong, don't miss into it. But but I did 0:01:09.080 --> 0:01:10.399 back him, and I believe in him, and I've known 0:01:10.440 --> 0:01:12.480 his family for a long time too. But mate, what 0:01:13.000 --> 0:01:16.280 are your portfolios covering off now? So originally we didn't 0:01:16.360 --> 0:01:17.880 enhance cash fund but you have a lot more things 0:01:17.920 --> 0:01:18.399 going on now. 0:01:18.800 --> 0:01:24.360 Yeah, So today we run enhanced cash strategies, long short 0:01:24.360 --> 0:01:26.880 credit strategies. I mean, we do everything in fixed income 0:01:26.959 --> 0:01:31.800 sovereign strategies. Today. We're the biggest trader of ossie Commonwealth 0:01:31.800 --> 0:01:34.440 government bonds in the world, so we are about five 0:01:34.480 --> 0:01:36.679 to six percent of the total market turnover. I think 0:01:36.680 --> 0:01:39.280 we're bigger than anyone according to my guys estimates. But 0:01:39.360 --> 0:01:41.479 I have fifty three guys around the world and girls. 0:01:42.080 --> 0:01:47.280 We have twelve traders, nineteen analysts, and we really specialize 0:01:47.319 --> 0:01:51.880 in just pricing the correct or fair value interest rate 0:01:52.280 --> 0:01:56.240 for a bond to pay us Australian assets. Our global global, 0:01:56.320 --> 0:01:58.080 very global. Yeah, so two thirds of our trading. We 0:01:58.080 --> 0:02:01.640 trade about a billion a day last year we bought 0:02:01.640 --> 0:02:05.800 and sold close to one hundred and fifty billion. But 0:02:06.240 --> 0:02:09.520 our edge is we're highly quantitative, so we have eighty 0:02:09.960 --> 0:02:12.360 different bond pricing models we use around the world. But 0:02:12.400 --> 0:02:14.960 really what we're trying to do is conceptually simple, what 0:02:15.040 --> 0:02:17.720 interest rate should CEBA pay us on a three year 0:02:17.760 --> 0:02:19.560 seeing bond, or A and Z pay us on a 0:02:19.600 --> 0:02:23.760 five year subordinated bond, or Australia pass on a ten 0:02:23.840 --> 0:02:25.960 year government bond? And we do that all around the 0:02:25.960 --> 0:02:32.280 world all day. And we're incredibly active, very systematic, very 0:02:32.320 --> 0:02:37.120 quantitative and just very rigorous in figuring out what the 0:02:37.160 --> 0:02:38.960 fair value interest rate is. And what we really want 0:02:38.960 --> 0:02:42.240 to do mate is find a bond paying seven percent 0:02:42.240 --> 0:02:43.840 that only pay six and a half percent, and when 0:02:43.840 --> 0:02:45.919 that interest rate drops down to our fair value target, 0:02:45.960 --> 0:02:48.160 we get a little bit of price appreciation and then 0:02:48.160 --> 0:02:50.560 we rinse and repeat. Yeah capital gate, Yeah, get a 0:02:50.560 --> 0:02:54.440 capital gain exactly. And then today we do offer strategies 0:02:54.440 --> 0:02:57.880 that actually have very high yields as well. We use 0:02:57.919 --> 0:03:00.800 some gearing. So you know our floating at HIG Yield fund, 0:03:01.280 --> 0:03:04.200 which is also available as an ATF. The ticker is 0:03:04.200 --> 0:03:07.239 a WYLDDX. It's paying about a seven and a half 0:03:07.280 --> 0:03:11.639 percent weighted average interestrate on its portfolio, and the portfolio 0:03:11.720 --> 0:03:17.600 is ostensibly very high grade. So the portfolio is seventy 0:03:17.600 --> 0:03:21.000 percent major bank senior ranking bonds and thirty percent major 0:03:21.000 --> 0:03:23.600 bank subordinated bonds. The average credit rating is very higher 0:03:23.600 --> 0:03:27.040 A plus. It's daily liquid, it's floating rate. But we 0:03:27.120 --> 0:03:30.080 use about sixty five percent gearing to boost the interest 0:03:30.160 --> 0:03:31.959 rates to the bonds are paying about five percent and 0:03:32.000 --> 0:03:33.760 we're getting seven and a half percent because we're using 0:03:33.760 --> 0:03:36.280 that gearing to boost the interest round the portfolio. But 0:03:36.680 --> 0:03:41.720 cool by capital Investments we set up in twenty eleven 0:03:41.760 --> 0:03:45.120 with a lot of help from you and your nephew. 0:03:45.680 --> 0:03:48.400 Luke still works for me. We were just talking about 0:03:48.400 --> 0:03:50.840 the fact that, look, if you're listening, made you could 0:03:50.880 --> 0:03:56.320 emulate your uncle's aesthetic appeal and dress sense. Luke's really 0:03:56.360 --> 0:03:58.360 struggles the way he presents himself. 0:03:58.720 --> 0:03:59.960 And that's because if his father is my. 0:04:00.680 --> 0:04:04.920 Yeah, yeah, Adrian, but Luke's our chief operating officer, a 0:04:05.000 --> 0:04:09.160 brilliant boy, and so yeah, that's that's kind of what 0:04:09.200 --> 0:04:13.120 we do. We just trade. We trade more actively in 0:04:13.160 --> 0:04:15.720 austrain fixed income, I think than any other party locally. 0:04:15.760 --> 0:04:18.200 But we are one of the most active traders in 0:04:18.200 --> 0:04:20.080 the world, you know, so over the last twenty four 0:04:20.080 --> 0:04:24.440 hours we probably traded a billion dollars Aussie in the 0:04:24.560 --> 0:04:27.640 US and European bond markets. And that's why we need 0:04:27.640 --> 0:04:29.599 a global team. In global officers. We just opened up 0:04:29.600 --> 0:04:31.960 the Miami office. We've got ten guys in London, five 0:04:32.000 --> 0:04:36.120 traders in London, five analysts in London, and no one 0:04:36.200 --> 0:04:39.760 really does what we do. Like we're very differentiated in 0:04:39.839 --> 0:04:41.839 terms of our approach. Typically in fixed income, it's just 0:04:42.160 --> 0:04:44.040 you hold too maturity, you buy a bond, you get 0:04:44.040 --> 0:04:45.760 the yield on the bond less the fees. You don't 0:04:45.800 --> 0:04:48.360 trade it around. And if you want more yield, you 0:04:48.400 --> 0:04:50.440 take more risk, you take more liquidity risk, or more 0:04:50.440 --> 0:04:53.320 default risk, or more interest rate risk, and we don't 0:04:53.320 --> 0:04:55.360 do that. We focus on super liquid bonds that are 0:04:55.600 --> 0:04:58.880 very low volatilely that are floating rate, that really don't 0:04:58.880 --> 0:05:02.000 have any default risk, and we generate the total return 0:05:03.920 --> 0:05:06.480 through trading. So in the last twelve months, you know, 0:05:06.680 --> 0:05:08.360 our fleeing right how you'd found in a long shore 0:05:08.360 --> 0:05:10.560 credit fun would have returned nine to ten percent after fees, 0:05:11.040 --> 0:05:13.080 and they're currently paying it was around seven seven and 0:05:13.080 --> 0:05:13.680 a half percent. 0:05:14.640 --> 0:05:17.719 So that means by definition, you gotta understand Instagram markets, 0:05:18.600 --> 0:05:21.400 you and your team. That is, so let's talk about 0:05:21.440 --> 0:05:23.520 We'll talk about Australia in the middle of an election period, 0:05:23.560 --> 0:05:25.760 so it's a bit of a bit tricky, but let's 0:05:26.279 --> 0:05:30.920 let's park the election period to the side. You know, today, 0:05:30.960 --> 0:05:32.680 on the day we're doing the podcast, we'd we've got 0:05:32.839 --> 0:05:36.719 as a big board meeting and there's probably no point 0:05:36.720 --> 0:05:38.440 because by the tom this goes THEEAH, there's probably the 0:05:38.560 --> 0:05:41.640 decision is already going to be made. But if we 0:05:41.720 --> 0:05:44.000 look at if I look forward to May, the main meeting, 0:05:44.000 --> 0:05:46.240 which I think is around seventeenth y May, off the 0:05:46.240 --> 0:05:48.160 back of the April numbers, which would be the March 0:05:48.200 --> 0:05:51.440 quarter numbers, which are pretty important to come out. Where 0:05:51.440 --> 0:05:55.000 do you see, as where you guys seeing the official 0:05:55.080 --> 0:05:57.680 rate of interest rates in Australia. I'm not on talking 0:05:57.680 --> 0:05:59.760 about bomb marks, they're not talking about bbs. I'm talking 0:05:59.760 --> 0:06:01.720 about just the official rate which off the back of 0:06:01.760 --> 0:06:04.720 which homeline rates get set. Where do you see official 0:06:04.800 --> 0:06:07.240 rates for the calendar year of twenty five And you 0:06:07.240 --> 0:06:09.320 could be till his subject to this subject, because of 0:06:09.360 --> 0:06:11.160 course we will be subjected to data, where's it going. 0:06:11.680 --> 0:06:17.280 Yeah, So in twenty twenty three and twenty twenty two, 0:06:17.279 --> 0:06:20.159 we argued rates need to go a lot higher, and 0:06:20.520 --> 0:06:22.280 I think some folks were calling for rate cuts in 0:06:22.320 --> 0:06:24.080 twenty twenty three and we said, no, they need to 0:06:24.080 --> 0:06:26.920 go higher, and the RBA only lifted its cash rate 0:06:27.279 --> 0:06:30.520 to four point three five percent, pretty much every other 0:06:30.560 --> 0:06:33.200 developed central bank New Zealand, Canada, the UK US went 0:06:33.240 --> 0:06:37.240 to five five and a half and in twenty twenty 0:06:37.279 --> 0:06:39.799 four there were a lot of calls for rate cuts 0:06:39.880 --> 0:06:43.400 rate hikes. The inflation data was pretty brisk in twenty 0:06:43.440 --> 0:06:46.960 twenty four and actually got revised up. If they'd had 0:06:46.960 --> 0:06:50.760 that information the revisions, they almost certainly would have hiked 0:06:50.760 --> 0:06:52.920 once more in twenty twenty four. But when they had 0:06:52.920 --> 0:06:55.840 that opportunity to hike, they didn't see that revised data. 0:06:55.880 --> 0:06:57.400 But they didn't cut in twenty twenty four, and that 0:06:57.440 --> 0:06:59.560 was that. Our view was they're going to hike in 0:06:59.600 --> 0:07:03.719 twenty two for again again, or they're not going to cut. 0:07:03.800 --> 0:07:06.479 And a lot of people the market, for example, the 0:07:06.480 --> 0:07:08.960 financial market and Mark was pricing in quite big rate 0:07:09.000 --> 0:07:11.160 cuts from the RBA last year, and we said that's 0:07:11.560 --> 0:07:12.880 that's all shit. That's not going to happen. You need 0:07:12.920 --> 0:07:14.920 the beginning of the year. Yeah, you're exactly right, like 0:07:14.960 --> 0:07:16.400 at the start of the year. And we look at 0:07:16.440 --> 0:07:19.000 the FED. The start of the year, the market was 0:07:19.040 --> 0:07:22.000 pricing in one hundred and seventy five bases points of 0:07:22.040 --> 0:07:23.960 rate cuts from the FED, and we said, that's beast, 0:07:24.000 --> 0:07:25.640 it's not going to happen. They're going to cut that 0:07:25.760 --> 0:07:27.880 fraction of that, And the market was pricing the FED 0:07:27.920 --> 0:07:30.880 starting to cut in March, and then they had the 0:07:30.960 --> 0:07:33.760 RBA a bit later than that, and of course the 0:07:33.800 --> 0:07:36.720 RBA didn't cut at all, which was the right decision, 0:07:38.160 --> 0:07:40.680 and the FED only started cutting in September and they 0:07:40.680 --> 0:07:42.440 only cut by one hundred and now they're completely on 0:07:42.480 --> 0:07:48.280 the sidelines. But in December this year we started publishing 0:07:48.520 --> 0:07:50.640 in my run, a weekly column for the Financial Review. 0:07:50.680 --> 0:07:52.800 I started saying the AFR that I thought they cut 0:07:52.840 --> 0:07:53.360 in February. 0:07:54.600 --> 0:07:56.360 Why what changed your mind? 0:07:56.680 --> 0:08:00.880 Yeah, so not the data per se. But in December 0:08:01.360 --> 0:08:04.400 the RBA completely changed the tune and they surprise everyone, 0:08:04.440 --> 0:08:07.200 they shifted something called a easing bias for no reason. 0:08:07.640 --> 0:08:10.680 But we thought we figured out why they shifted, and 0:08:10.720 --> 0:08:14.280 that was because we knew in December. The inflation data 0:08:14.400 --> 0:08:16.440 the next month in January, and they met in February 0:08:17.120 --> 0:08:17.600 would be. 0:08:17.520 --> 0:08:19.960 Soft you're talking about the December quarter, Yeah. 0:08:19.760 --> 0:08:22.200 December quarter. Yeah, So we the December quarter data on 0:08:22.440 --> 0:08:25.360 five from me and I think it was very good memory. Yeah, 0:08:25.360 --> 0:08:27.560 so we knew it was going to print point five. Ye, Well, 0:08:27.560 --> 0:08:30.000 that was our forecast and we published that number in December, 0:08:30.600 --> 0:08:34.559 and for statistical reasons, there was good grounds to believe 0:08:34.600 --> 0:08:36.719 the final quarter of twenty twenty four was going to 0:08:36.800 --> 0:08:37.559 be a soft print. 0:08:37.800 --> 0:08:39.800 So just just explain Chris a little bit more about that. 0:08:39.840 --> 0:08:44.839 So just for our audience sake, because he's one of 0:08:44.840 --> 0:08:46.400 the fastest talkers I know, because he's one of the 0:08:46.440 --> 0:08:48.840 fastest things I know. But just to put into context, 0:08:49.400 --> 0:08:52.120 explain why point five for the December quarter and I 0:08:52.360 --> 0:08:55.440 was for the last three months of twenty twenty four, 0:08:56.160 --> 0:08:59.440 giving such an idea, Why is an important relative to 0:08:59.760 --> 0:09:01.720 where the Reserve Bank wanted to be once a bit 0:09:01.760 --> 0:09:04.360 between two and three? Why is that the case that quarter? 0:09:04.360 --> 0:09:05.640 Why is that quarter so important? 0:09:05.760 --> 0:09:10.920 Well that a point five outcome would imply that, you know, 0:09:11.240 --> 0:09:15.800 on a short term basis, the core inflation rate in 0:09:15.800 --> 0:09:18.000 Australia was actually hitting the bottom of the target bad. 0:09:18.080 --> 0:09:20.760 They ran two, yeah, exactly four times point five. 0:09:20.640 --> 0:09:23.240 Because they target officially the midpoint of two to three, 0:09:23.280 --> 0:09:25.600 so they target two and a half and point five 0:09:25.640 --> 0:09:27.160 is actually at the bottom of that range. 0:09:28.200 --> 0:09:32.560 Is that correct it? But historically though, they've been only 0:09:32.559 --> 0:09:35.480 interested on the historical inflation number, which is the point 0:09:35.559 --> 0:09:37.920 the quarter for the sorry, the point five for that quarter, 0:09:38.120 --> 0:09:40.320 but every other quarter before that would have given you 0:09:40.320 --> 0:09:43.439 a three point two correct? Why do they change? Why 0:09:43.480 --> 0:09:44.800 do you think they changed there? 0:09:44.840 --> 0:09:48.160 Well, you know, so this is the little puzzle. Yeah, okay, so. 0:09:48.280 --> 0:09:51.520 This is the puzzle. I ain't get so very easy to. 0:09:51.559 --> 0:09:56.080 Understand what happened. So Michelle Bullock a few weeks before 0:09:56.160 --> 0:09:58.400 the December board meeting had said we need at least 0:09:58.440 --> 0:10:02.200 two quarters of softing fflation data or positive inflation data 0:10:02.840 --> 0:10:05.640 to be comfortable that we can lower rates. And then 0:10:05.679 --> 0:10:08.000 in December we all wake up, and she turns around 0:10:08.000 --> 0:10:14.000 and says in her statement after the board meeting that 0:10:14.120 --> 0:10:16.640 basically they've adopted an easy bias and they're laying the 0:10:16.640 --> 0:10:20.160 groundwork we felt to cut in February, and there was 0:10:20.200 --> 0:10:23.320 only one new data print available between December and the 0:10:23.320 --> 0:10:26.320 February meeting, which was the generary release, which was the 0:10:26.320 --> 0:10:28.960 fourth quarter data, So she kind of had busted her 0:10:28.960 --> 0:10:31.319 own decision making rule that she'd announced only a few 0:10:31.360 --> 0:10:34.080 weeks prior. So you take the fact that you've got 0:10:34.080 --> 0:10:36.560 this inconsistency and their messaging why are they so keen 0:10:37.040 --> 0:10:40.200 to set up the grounds for potential easing in February, 0:10:40.640 --> 0:10:42.800 and the fact that they knew and we knew that 0:10:43.240 --> 0:10:45.800 we were forecasting a point five trim mean print and 0:10:45.800 --> 0:10:47.880 at printed took point five for the fourth quarter, which 0:10:47.960 --> 0:10:52.840 was implying that it was annualizing around two. But crucially, 0:10:52.840 --> 0:10:56.439 the trajetory of the data was heading even though the 0:10:56.480 --> 0:10:59.040 twelve month rate might have been above three, the trajedory 0:10:59.080 --> 0:11:02.080 of that data was heading towards target. And remember, they 0:11:02.200 --> 0:11:05.079 think that the normal or neutral interest rate in Australias 0:11:05.080 --> 0:11:07.880 around three and a half. There have been some recent 0:11:07.920 --> 0:11:10.280 reassessments of that where it might be closer to three. 0:11:10.440 --> 0:11:12.040 But if they're at four point three five and they're 0:11:12.240 --> 0:11:16.559 you know, they think that through the cycle interest rate 0:11:16.600 --> 0:11:19.600 that is neither stimulitary for the economy or contracting is 0:11:19.640 --> 0:11:21.840 around three and a half, you can mount the case 0:11:21.880 --> 0:11:23.200 if you're them, and you want to cut, and near 0:11:23.240 --> 0:11:25.559 a bit dubbish and maybe you're a bit politically compromised 0:11:26.720 --> 0:11:29.199 that it would be pretty nice to kind of punch 0:11:29.200 --> 0:11:32.200 out an interest rate cut in February, knowing that an 0:11:32.240 --> 0:11:35.280 election would be held after then, and that cutting in 0:11:35.280 --> 0:11:37.880 the middle of an election in April would be difficult. 0:11:38.000 --> 0:11:40.440 Right just now, which is now, that's a situation we 0:11:41.240 --> 0:11:43.480 sit in. So we did not think they should cut. 0:11:43.800 --> 0:11:45.719 So I was very clear. I wrote this repeatedly in 0:11:45.760 --> 0:11:48.440 the Financial Review, and I think everyone understands is we said, 0:11:48.440 --> 0:11:50.560 we don't think there's any case to cut, but we 0:11:50.600 --> 0:11:52.960 think but we think they will cut in February, So 0:11:53.000 --> 0:11:55.800 we forecast the February cut. Yeah, yeah, one hundred percent. 0:11:56.200 --> 0:11:58.520 We're very very clear. I wrote it repeatedly. We don't 0:11:58.520 --> 0:12:00.000 think they should cut, but we think they will cut. 0:12:00.400 --> 0:12:02.040 And people were a bit confused because we've been very 0:12:02.080 --> 0:12:04.360 hawkish in twenty twenty four seving no cuts and no 0:12:04.440 --> 0:12:07.600 case for cutting. But I knew people would get confused, 0:12:07.640 --> 0:12:09.920 so we made it very very explicit that we thought 0:12:09.960 --> 0:12:12.920 they would cut in February, but we didn't agree with 0:12:12.960 --> 0:12:15.640 the logic, right because by her own logic, she needed 0:12:15.679 --> 0:12:18.360 two quarters of data and suddenly she's very comfortable with 0:12:18.360 --> 0:12:20.600 one quarter of data. And the key point is the 0:12:20.600 --> 0:12:23.600 point five percent trim MI in print was statistically biased. 0:12:24.040 --> 0:12:26.720 So all the smart forecasters knew that it was going 0:12:26.760 --> 0:12:30.080 to print off for some statistical reasons, right, so it 0:12:30.120 --> 0:12:34.120 wasn't necessarily a high quality signal. And then they cut 0:12:34.120 --> 0:12:36.240 in February. So then this all bigs a question. The 0:12:36.240 --> 0:12:38.560 puzzle was, well, why did they cut? You know, if 0:12:38.600 --> 0:12:40.559 you know what we know, which was maybe it was 0:12:40.559 --> 0:12:44.040 statistically biased. The cost of living subsidies that Jim Chalmers 0:12:44.040 --> 0:12:46.080 has given the community, and that the state governments have 0:12:46.120 --> 0:12:50.280 also replicated, they are sandbagging the inflation data. They're artificially 0:12:50.320 --> 0:12:53.240 suppressing the inflation data. They're doing that deliberately to try 0:12:53.240 --> 0:12:54.760 and get the RBA to cut, and lo and behold 0:12:54.760 --> 0:12:57.560 they've cut. But obviously when they're cost living subsces expired, 0:12:57.559 --> 0:13:00.880 the data pops back up. And you know, my simple 0:13:00.960 --> 0:13:04.880 kind of calculus is Charmer's appointed Bill Michelle Bullock. So 0:13:04.960 --> 0:13:08.400 he single handedly selected her, and it was a controversial 0:13:08.400 --> 0:13:10.480 appointment in the sense that he was expected to appoint 0:13:10.480 --> 0:13:12.840 someone outside of the bank and he went for the inside. 0:13:13.320 --> 0:13:16.400 So he hand selected Michelle Book, he hands selected her 0:13:16.440 --> 0:13:20.240 deputy Houser, and he's appointed a lot of the board members. 0:13:20.400 --> 0:13:22.600 And now there's this new committee that will set interest 0:13:22.679 --> 0:13:25.120 rates that he's also selected. 0:13:25.240 --> 0:13:26.560 So do you think it was politically Do you think 0:13:26.559 --> 0:13:29.080 there was? I don't think. I'm not asking you. Did 0:13:29.120 --> 0:13:30.840 he bring over? So listen, I want to rate reduction, 0:13:31.520 --> 0:13:31.839 but I. 0:13:31.800 --> 0:13:33.960 Have to we now know actually the Financial Reviews published 0:13:33.960 --> 0:13:35.880 a lot of information on this. He's jawbone the heck 0:13:35.920 --> 0:13:38.160 out of the RBA, like he's absolutely put them under 0:13:38.240 --> 0:13:41.439 enormous pressure. And you've got to remember he's his idol 0:13:41.559 --> 0:13:44.040 is Paul Keating. He wrote his phdwn Paul Keating, and 0:13:45.480 --> 0:13:48.480 Paul Keating was famous for jaw boning and haranguing the RBA. 0:13:48.600 --> 0:13:50.560 And so I just think he's pulling straight from the 0:13:50.559 --> 0:13:53.800 por Keating playbook. I actually don't have a huge issue 0:13:53.800 --> 0:13:54.319 with it at all. 0:13:54.400 --> 0:13:56.560 Like you know, Castella is to do it against the banks. 0:13:56.640 --> 0:14:00.160 Yeah, there's you know, people say that the RB he's 0:14:00.160 --> 0:14:03.040 politically independent, the politicians shouldn't give them heat. I agree 0:14:03.080 --> 0:14:05.679 that the politicians shouldn't create too much heat for them. 0:14:05.720 --> 0:14:08.400 But if he wants to have a go and say, hey, 0:14:08.600 --> 0:14:10.000 here are the reasons I think you should cut I 0:14:10.040 --> 0:14:12.600 personally think he's entitled to make that case. So if 0:14:12.679 --> 0:14:14.679 Jim Chalmers is listening, I would just say, dude, I've 0:14:14.679 --> 0:14:18.440 got no problem with you harassing her. But he did, Like, 0:14:18.520 --> 0:14:21.040 that's very clear that I was published a lot of 0:14:21.120 --> 0:14:24.480 stuff showing that. Like you know, mind standing is he 0:14:24.480 --> 0:14:26.520 put a lot of pressure on the board, and he 0:14:26.560 --> 0:14:29.320 has an appointee to the board, his Treasury secretary as well. 0:14:29.360 --> 0:14:31.360 So Steve Kennedy sits on the board. 0:14:32.280 --> 0:14:34.360 But that board won't do But that board didn't meet 0:14:34.400 --> 0:14:36.240 at that meeting though the new board didn't meet. It 0:14:36.400 --> 0:14:38.000 meet the meeting of this meeting at the April meeting. 0:14:38.000 --> 0:14:39.440 But they didn't. They didn't meet in February meeting. 0:14:39.560 --> 0:14:43.280 No, no, But Steve Kennedy sits on the board. Yeah, who 0:14:43.280 --> 0:14:47.200 works for Charmers. Yeah, Charmers has pressured the RBA much 0:14:47.240 --> 0:14:51.840 more directly than any recent treasures in the nineties. Yeah. 0:14:51.880 --> 0:14:54.040 But by the way, again, i'd say I have no 0:14:54.080 --> 0:14:54.560 problem with that. 0:14:54.800 --> 0:14:55.560 I think it's appropriate. 0:14:55.720 --> 0:14:59.360 My mate John here the fr he appropriately says that 0:14:59.360 --> 0:15:02.880 that's inappropriate. I think I can perfectly understand how people 0:15:02.920 --> 0:15:05.600 think that's inappropriate, But I say fair play to Jim Chalmers, 0:15:06.000 --> 0:15:08.240 Like if I was in his shoes, I'd probably be 0:15:08.240 --> 0:15:10.600 putting pressure on the RBA. I've got no problem he 0:15:10.640 --> 0:15:13.000 can make the intellectual case like it's a you know, 0:15:13.080 --> 0:15:17.040 we have free speech. Sure we recognize their politically independent, 0:15:17.360 --> 0:15:22.280 but there's no problem with politicians prosecuting their intellectual agenda. 0:15:22.640 --> 0:15:26.600 Like you know, I think he should be doing everything 0:15:26.640 --> 0:15:29.800 possible if he honestly believes, and he probably does believe 0:15:29.840 --> 0:15:32.680 that rates should be lower. And our mate Stephen Cook 0:15:32.680 --> 0:15:35.200 Coulis has argued forever and to day rates should be lower. 0:15:35.760 --> 0:15:37.920 He obviously is very sympathetic to the labor cause. 0:15:38.000 --> 0:15:40.120 Although he and I disagreed on that February meeting because 0:15:40.160 --> 0:15:43.000 I said, based on what they've done historically, we should 0:15:43.040 --> 0:15:45.600 not get we will not get a rate reduction in February. 0:15:45.600 --> 0:15:47.680 I think we'll get later on in the year. But 0:15:47.800 --> 0:15:48.640 I didn't know. 0:15:48.920 --> 0:15:52.040 Well he knows. I was consistently like we published relentlessly 0:15:52.080 --> 0:15:52.920 from to He. 0:15:52.960 --> 0:15:54.920 And I discussed it, and I discussed what you're going 0:15:54.960 --> 0:15:55.720 to publish. 0:15:55.440 --> 0:15:58.000 Yeah, so we called the February cuver very very clearly. 0:15:58.000 --> 0:16:00.520 But it come back to I think the interesting thing 0:16:00.520 --> 0:16:04.280 around the political nexus is what we know as charmers 0:16:04.280 --> 0:16:07.000 has put a lot of pressure on directly on Bullock 0:16:07.040 --> 0:16:09.320 and on the board. But I think that's fine, Like 0:16:09.360 --> 0:16:11.280 they can make their case, but the RBA needs to 0:16:11.280 --> 0:16:13.720 be big and strong enough, like we're all grown men 0:16:13.720 --> 0:16:14.120 and women. 0:16:14.160 --> 0:16:15.760 So we're disappointed in the way she come out in 0:16:15.840 --> 0:16:18.080 a press conference after because she then sort of looked 0:16:18.080 --> 0:16:19.600 like she was resolving in a bacular position. 0:16:19.680 --> 0:16:23.840 It's ridiculous. What I'm disappointed in the I was the RBA. 0:16:24.160 --> 0:16:26.960 So the RBA made there was no intellectual or evidentiary 0:16:27.040 --> 0:16:30.320 basis based on their decision making front of it that 0:16:30.360 --> 0:16:32.240 they set up that we need two quarters of data 0:16:33.200 --> 0:16:35.880 a couple of weeks before the December meeting, and then 0:16:35.880 --> 0:16:39.160 suddenly something happened in December where they were laying the 0:16:39.200 --> 0:16:41.600 foundations for a political cut. It was a political cut 0:16:41.600 --> 0:16:42.840 because they knew they were going to get that soft 0:16:42.840 --> 0:16:46.000 print and that was the perfect excuse to cut. And 0:16:46.440 --> 0:16:48.000 as soon as they went to that easy bias, the 0:16:48.080 --> 0:16:50.600 market had it like seventy percent priced, and they know 0:16:50.720 --> 0:16:54.200 that if the market's got a priced then it's very 0:16:54.200 --> 0:16:55.840 hard for them not to cut because they can then 0:16:55.880 --> 0:16:58.920 say well, the whole world thinks we should. Yeah. No, 0:16:58.960 --> 0:17:02.360 but that's that was deliberate because what the RBA says, well, 0:17:02.480 --> 0:17:05.040 market expectations. You know, every bond trader in the planet 0:17:05.080 --> 0:17:07.720 thinks we should cut rates. It's obviously the right thing 0:17:07.760 --> 0:17:10.080 to do. And so they cut rates. And you know, 0:17:10.080 --> 0:17:11.560 by the time they came to the meeting, I think 0:17:11.560 --> 0:17:14.080 it was like eighty percent priced, and they could have 0:17:14.080 --> 0:17:17.200 eviscerated the pricing. Takes thirty seconds for Bullet to stand 0:17:17.240 --> 0:17:19.600 up in jarring and say, oh, we did she has 0:17:19.640 --> 0:17:22.920 no problem and numerous occasions, and she did this after 0:17:22.920 --> 0:17:25.720 the February meeting saying she thought that market pricing was junk. 0:17:26.040 --> 0:17:29.320 So she could have set up that conversation prior in January. 0:17:29.320 --> 0:17:30.560 At any point in time, they could have said, and 0:17:30.600 --> 0:17:32.080 this is another reason why I was very confident they 0:17:32.080 --> 0:17:35.240 were cutting cutting. They did nothing to dispel market pricing, 0:17:35.320 --> 0:17:36.160 and they often do. 0:17:36.280 --> 0:17:37.440 They did no preconditioning. 0:17:37.600 --> 0:17:39.560 No, well, but they just have to give a speech 0:17:39.600 --> 0:17:42.000 and say, well, respectfully, we completely disagree with market pricing, 0:17:42.000 --> 0:17:44.320 and they do that all the time. They didn't engage 0:17:44.320 --> 0:17:45.440 in any of that rhetoric. 0:17:45.560 --> 0:17:46.680 So that's Latin. 0:17:47.080 --> 0:17:48.679 Then, yeah, it was Lad amaze. That's why we were 0:17:48.760 --> 0:17:50.960 kind of like, that's why I was saying, is laid Almazir. 0:17:51.640 --> 0:17:53.560 But interestingly, and this is where it gets all the 0:17:53.640 --> 0:17:56.239 more absurd. After they cut, that's what I'm saying. They 0:17:56.280 --> 0:17:59.280 never cut more than just once. That's just you know, 0:17:59.520 --> 0:18:02.639 an only ones. Yeah, so they only never cut only once. 0:18:02.720 --> 0:18:04.640 I think I said more than once. Yeah, so they 0:18:04.720 --> 0:18:08.120 never only cut once. And after they cut, the most 0:18:08.240 --> 0:18:11.840 ridiculous narrative was, oh, it's kind of more or less 0:18:11.840 --> 0:18:14.840 one and done. And that market pricing, which was for 0:18:14.920 --> 0:18:18.040 a very I thought reasonable and cookiin I would I 0:18:18.040 --> 0:18:20.639 think be at one with this market was only pricing 0:18:20.760 --> 0:18:22.960 two and a half more cuts throughout the whole year 0:18:23.080 --> 0:18:27.880 of twenty twenty five. And she said, you know, market 0:18:28.560 --> 0:18:33.480 pricing was unrealistic, and she and her proxies at the 0:18:33.520 --> 0:18:36.679 RBA had went out on this campaign to completely dismiss 0:18:36.680 --> 0:18:39.800