1
00:00:05,360 --> 00:00:07,360
Speaker 1: Welcome to Fear and Greed the week ahead. I'm Sean

2
00:00:07,400 --> 00:00:09,840
Speaker 1: Alma and as always at this time on a Monday morning,

3
00:00:09,880 --> 00:00:12,799
Speaker 1: I'm joined by economist Stephen Cooculis. You'll find him at

4
00:00:12,800 --> 00:00:15,640
Speaker 1: the Cook dot com, t h e k O UK

5
00:00:15,920 --> 00:00:18,720
Speaker 1: dot com, the Cook dot com and on X using

6
00:00:18,720 --> 00:00:22,759
Speaker 1: to handle the Kirk. Stephen, Good morning. First things, first,

7
00:00:23,960 --> 00:00:25,560
Speaker 1: spring racing cardial How are you going?

8
00:00:25,920 --> 00:00:28,720
Speaker 2: Oh fantastic, What a great weekend it was. I was

9
00:00:28,760 --> 00:00:32,040
Speaker 2: actually out of Corefield and the lead into the Melbourne Cup,

10
00:00:32,080 --> 00:00:34,559
Speaker 2: which is only a couple of weeks away now is

11
00:00:34,600 --> 00:00:38,920
Speaker 2: getting very excited. The Everest is only a week away too,

12
00:00:39,000 --> 00:00:43,040
Speaker 2: so boy oh boy, core Field Cup, the Coxplate. Too

13
00:00:43,040 --> 00:00:45,360
Speaker 2: many races to mention, so I'll be starting that form

14
00:00:45,360 --> 00:00:47,400
Speaker 2: as well as the economic form over the next little while.

15
00:00:48,040 --> 00:00:51,479
Speaker 1: Okay, forget the form for a moment. Read those economic

16
00:00:51,520 --> 00:00:54,160
Speaker 1: speeches from the Reserve Bank in the minutes. What to

17
00:00:54,200 --> 00:00:55,280
Speaker 1: make of everything last week?

18
00:00:55,320 --> 00:00:55,520
Speaker 2: Brother?

19
00:00:55,600 --> 00:00:57,960
Speaker 1: You know, I mean consumer confidence jumped a bit, which

20
00:00:58,000 --> 00:01:00,960
Speaker 1: was encouraging, but the Reserve Bank was giving too many hints.

21
00:01:01,520 --> 00:01:05,600
Speaker 2: Result Bank really reiterated not rulling anything in, not ruling

22
00:01:05,640 --> 00:01:09,720
Speaker 2: anything out. So we've got that issue from their perspective

23
00:01:09,800 --> 00:01:14,640
Speaker 2: where they are acknowledging a period of subdued growth. There

24
00:01:14,720 --> 00:01:16,959
Speaker 2: were in the minutes and acknowledgment that there was a

25
00:01:16,959 --> 00:01:20,280
Speaker 2: downward revision to household consumption, which is something that sort

26
00:01:20,319 --> 00:01:23,200
Speaker 2: of fed their hawkishness, if you like, on interest rates

27
00:01:23,240 --> 00:01:26,760
Speaker 2: for the last few months. So they were generally interpreted

28
00:01:26,800 --> 00:01:31,400
Speaker 2: as being just a touch more constructive. There's no guidance.

29
00:01:31,400 --> 00:01:33,360
Speaker 2: They're not about to cut, they're not about to hike,

30
00:01:33,720 --> 00:01:35,840
Speaker 2: and I think, like all of us, they're going to

31
00:01:35,840 --> 00:01:38,440
Speaker 2: be watching their data flow over the next few weeks

32
00:01:38,440 --> 00:01:41,080
Speaker 2: and a few months to work out which direction rates

33
00:01:41,120 --> 00:01:43,520
Speaker 2: go next. So yeah, they are analysis. They can see

34
00:01:43,560 --> 00:01:48,360
Speaker 2: the slow down. They're still reiterating the concern that inflations

35
00:01:48,720 --> 00:01:53,200
Speaker 2: not falling as rapidly as they would like. So we're

36
00:01:53,240 --> 00:01:55,800
Speaker 2: back to data watching. I'm afraid that's despite the fact

37
00:01:55,800 --> 00:01:58,600
Speaker 2: that our friends in New Zealand they cut it illustrates

38
00:01:58,640 --> 00:02:02,560
Speaker 2: by fifty basis points. It's last week joining the band

39
00:02:02,640 --> 00:02:05,720
Speaker 2: of central banks that are cuming mats aggressively. That is,

40
00:02:06,080 --> 00:02:08,080
Speaker 2: all of them except for our friends at the RBA.

41
00:02:08,840 --> 00:02:10,720
Speaker 1: We'll come to that in a moment, because they've got

42
00:02:10,720 --> 00:02:13,600
Speaker 1: the ECB this week. What about those consumer conference numbers.

43
00:02:13,680 --> 00:02:15,840
Speaker 1: Do we read anything into that, just the fact that

44
00:02:15,880 --> 00:02:18,320
Speaker 1: they have picked up on the back of people thinking

45
00:02:18,320 --> 00:02:19,720
Speaker 1: that rates won't rise.

46
00:02:20,400 --> 00:02:22,440
Speaker 2: Yeah. Look, I think it was an interesting six percent

47
00:02:22,520 --> 00:02:25,240
Speaker 2: jump in the Westpac measure of consumer sentiment at a

48
00:02:25,280 --> 00:02:27,720
Speaker 2: two and a half year high. Now a couple of things.

49
00:02:27,800 --> 00:02:30,480
Speaker 2: That is from a ridiculously low level that we've consumers

50
00:02:30,520 --> 00:02:32,800
Speaker 2: have been pessimistic for such a long period of time,

51
00:02:33,200 --> 00:02:37,000
Speaker 2: But it was interesting. The Westpac people noted that it

52
00:02:37,080 --> 00:02:40,480
Speaker 2: was probably linked to no more rate hikes and indeed

53
00:02:40,520 --> 00:02:44,359
Speaker 2: the vague possibility that interest rates could be cut. There's

54
00:02:44,400 --> 00:02:47,040
Speaker 2: also this lag effect that there were income tax cuts

55
00:02:47,040 --> 00:02:49,760
Speaker 2: paid on the first of July this year and that

56
00:02:49,800 --> 00:02:51,720
Speaker 2: took a month or two to work its way through

57
00:02:51,720 --> 00:02:54,240
Speaker 2: into people's bank accounts and pay packets and the like.

58
00:02:54,639 --> 00:02:57,959
Speaker 2: Plus the fact that we've got the electricity substancees coming through,

59
00:02:58,080 --> 00:03:00,000
Speaker 2: Plus the fact that the stock market over the last

60
00:03:00,160 --> 00:03:02,919
Speaker 2: few weeks has been testing record highs. You know, there's

61
00:03:03,080 --> 00:03:06,560
Speaker 2: some reasons to be I won't say blindly optimistic, but

62
00:03:06,560 --> 00:03:08,760
Speaker 2: there's a few things there that are just impacting on

63
00:03:08,840 --> 00:03:11,800
Speaker 2: that consumer sentiment reading. And when you overlay that with

64
00:03:11,880 --> 00:03:14,200
Speaker 2: the recent retail sales numbers. I know that's a little

65
00:03:14,200 --> 00:03:16,440
Speaker 2: while ago now, but we had the plus point seven

66
00:03:16,520 --> 00:03:19,520
Speaker 2: percent lift in retail sales for months more. There's just

67
00:03:19,600 --> 00:03:22,680
Speaker 2: a few little hints that the consumer, we consumers out

68
00:03:22,680 --> 00:03:26,079
Speaker 2: there are feeling a little bit better. We're spending a

69
00:03:26,160 --> 00:03:27,760
Speaker 2: speech more. You know, we want to see more than

70
00:03:27,760 --> 00:03:29,800
Speaker 2: just one or two months of data. But you know,

71
00:03:29,919 --> 00:03:32,519
Speaker 2: we'll take a we'll take some good news. Having had

72
00:03:32,600 --> 00:03:35,120
Speaker 2: such gloomy news on the household sector for the last

73
00:03:35,160 --> 00:03:37,200
Speaker 2: six months or so, will we.

74
00:03:37,120 --> 00:03:39,320
Speaker 1: Get any good news this week when the labor force

75
00:03:39,360 --> 00:03:40,040
Speaker 1: figures come out?

76
00:03:40,840 --> 00:03:43,000
Speaker 2: Good question. They tend to be a bit of a

77
00:03:43,000 --> 00:03:46,920
Speaker 2: proverbial crapshoot, as they say in the casinos. Look that

78
00:03:47,280 --> 00:03:51,000
Speaker 2: we've had this interesting issue with the recent labor market numbers.

79
00:03:51,160 --> 00:03:54,680
Speaker 2: The employment side's been nice and strong, you know, averaging

80
00:03:54,960 --> 00:03:58,320
Speaker 2: thirty forty fifty thousand jobs per month extra, but the

81
00:03:58,440 --> 00:04:00,880
Speaker 2: unemployment rate has crept up. It was only a year

82
00:04:00,880 --> 00:04:02,960
Speaker 2: ago the unemployment rate was three and a half percent.

83
00:04:03,160 --> 00:04:06,560
Speaker 2: It's now four point two percent. So yeah, the Bureau

84
00:04:06,600 --> 00:04:09,160
Speaker 2: statistics not their fault. They just do a survey of

85
00:04:09,440 --> 00:04:12,240
Speaker 2: these households to see how many people are employed unemployed,

86
00:04:12,240 --> 00:04:14,880
Speaker 2: and the like. But the market's looking for another, you know,

87
00:04:15,200 --> 00:04:18,720
Speaker 2: reasonably solid twenty twenty five thousand increase in employment, the

88
00:04:18,800 --> 00:04:21,520
Speaker 2: unemployment rate to hold at four point two percent. But

89
00:04:21,960 --> 00:04:25,440
Speaker 2: if there's any significant deviation from those numbers, that'll actually

90
00:04:25,480 --> 00:04:28,359
Speaker 2: feed into that interest rate debate, both in the markets

91
00:04:28,400 --> 00:04:30,760
Speaker 2: and of course for the RBA, who has a dual

92
00:04:30,839 --> 00:04:33,680
Speaker 2: mandate of keeping the economy at full employment as well

93
00:04:33,680 --> 00:04:35,760
Speaker 2: as hitting the two to three percent inflation target.

94
00:04:36,279 --> 00:04:37,960
Speaker 1: Now you mentioned the reserve bag of New Zealand a

95
00:04:38,000 --> 00:04:41,000
Speaker 1: moment ago cutting interest rates by fifty basis points. The

96
00:04:41,080 --> 00:04:44,480
Speaker 1: ECB are meeting this week. Can they go into it, Well,

97
00:04:44,480 --> 00:04:46,479
Speaker 1: they've joined the party already, but are they going to

98
00:04:46,560 --> 00:04:47,680
Speaker 1: keep the champagne flowing?

99
00:04:48,360 --> 00:04:51,520
Speaker 2: Yeah, well, the ECB are meeting this week, and yes,

100
00:04:51,560 --> 00:04:54,479
Speaker 2: the expectations are that they well, they could go fifty

101
00:04:54,520 --> 00:04:57,800
Speaker 2: bases points again, like our friends in New Zealand. And

102
00:04:57,839 --> 00:05:01,680
Speaker 2: that said, the European economy are particularly weak at the

103
00:05:01,680 --> 00:05:04,159
Speaker 2: moment that Germany is in a recession. Some of the

104
00:05:04,200 --> 00:05:09,000
Speaker 2: other smaller economies are also very weak, and they have

105
00:05:09,160 --> 00:05:12,960
Speaker 2: had this sharp deceleration in inflation, so inflation is basically

106
00:05:12,960 --> 00:05:16,520
Speaker 2: out their target already about two percent. So they've got

107
00:05:16,520 --> 00:05:20,800
Speaker 2: interstrates that for the Eurozone are quite restrictive. We've had

108
00:05:20,839 --> 00:05:23,839
Speaker 2: the one twenty five point cut from the ECB the

109
00:05:23,880 --> 00:05:26,640
Speaker 2: month before last. So this is where the market's saying, Gee,

110
00:05:26,640 --> 00:05:30,080
Speaker 2: if they're to arrest this decline in economic growth, the

111
00:05:30,080 --> 00:05:32,000
Speaker 2: fact that Germany's in a recession and we want to

112
00:05:32,400 --> 00:05:34,880
Speaker 2: kick start the economy, they may well go fifty. So

113
00:05:34,920 --> 00:05:37,560
Speaker 2: we'll be watching what happens, and you're very closely to

114
00:05:37,560 --> 00:05:39,840
Speaker 2: see if there's yet another rate cut from one of

115
00:05:39,839 --> 00:05:42,120
Speaker 2: the big central banks around the world. Really interesting sort

116
00:05:42,160 --> 00:05:44,200
Speaker 2: of stuff when everybody else's cutting rates.

117
00:05:44,640 --> 00:05:47,920
Speaker 1: Okay, so Stephen, to wrap this up, if you were

118
00:05:48,000 --> 00:05:51,719
Speaker 1: running an economy, as we all stand, would you prefer

119
00:05:51,760 --> 00:05:54,520
Speaker 1: to be running the European economy generally?

120
00:05:54,560 --> 00:05:54,960
Speaker 2: Broadly?

121
00:05:55,000 --> 00:05:56,520
Speaker 1: I know that there's a bunch of economies there, but

122
00:05:56,960 --> 00:06:01,479
Speaker 1: go with me the European economy, the US economy, the

123
00:06:01,560 --> 00:06:04,880
Speaker 1: New Zealand economy, or the Australian economy. And you are

124
00:06:04,920 --> 00:06:08,000
Speaker 1: the lord and master of all fisc on Montreal policy,

125
00:06:08,120 --> 00:06:10,279
Speaker 1: you can get whatever you want. Which who's in the

126
00:06:10,279 --> 00:06:10,840
Speaker 1: best position.

127
00:06:11,120 --> 00:06:13,440
Speaker 2: Yeah, I don't be focusing on home side bias. But look,

128
00:06:13,440 --> 00:06:16,080
Speaker 2: Australia's still got a lot of things going for it

129
00:06:16,120 --> 00:06:18,760
Speaker 2: that these other economies don't have going for it, and

130
00:06:18,880 --> 00:06:22,159
Speaker 2: in no particular order. Look the growth in inflation numbers,

131
00:06:22,160 --> 00:06:24,320
Speaker 2: they'll always be cyclical. So it's not really those things

132
00:06:24,360 --> 00:06:27,200
Speaker 2: that I'm going to be focusing on. It's more to

133
00:06:27,240 --> 00:06:31,240
Speaker 2: do with the fiscal soundness of the Australian economy. And

134
00:06:31,320 --> 00:06:35,239
Speaker 2: while there are still massive challenges about the underlying budget

135
00:06:35,400 --> 00:06:38,400
Speaker 2: balance and the cyclical budget deficits that are still there,

136
00:06:38,720 --> 00:06:43,599
Speaker 2: our fiscal position is vastly superior. We do have a

137
00:06:43,680 --> 00:06:47,200
Speaker 2: labor market that is probably stronger than most of these

138
00:06:47,200 --> 00:06:49,839
Speaker 2: other labor markets too, suggesting that the unemployment rate and

139
00:06:49,880 --> 00:06:51,080
Speaker 2: wage is gooth are going to be a little bit

140
00:06:51,120 --> 00:06:54,040
Speaker 2: more favorable to us. And the other thing from our

141
00:06:54,080 --> 00:06:55,760
Speaker 2: friends at the Reserve Bank, if I was sort of

142
00:06:55,760 --> 00:07:00,200
Speaker 2: managing any of these central banks. The transmission mechanism of

143
00:07:00,279 --> 00:07:03,359
Speaker 2: what the Reserve Bank does, and that is the pass

144
00:07:03,400 --> 00:07:05,760
Speaker 2: through from when it changes rates into the economy is

145
00:07:05,880 --> 00:07:09,080
Speaker 2: very quick. Because ninety percent of us have a variable mortgage.

146
00:07:09,520 --> 00:07:12,200
Speaker 2: In the US it's five percent, it's about seventy percent

147
00:07:12,240 --> 00:07:15,800
Speaker 2: in New Zealand, and in the Eurozone it's actually very

148
00:07:15,840 --> 00:07:18,680
Speaker 2: very low. So our potency of monetary policy, which is

149
00:07:18,680 --> 00:07:20,680
Speaker 2: why we were just about it. Strates all the time

150
00:07:21,040 --> 00:07:23,600
Speaker 2: is very very strong. So I'll give a tick to Australia.

151
00:07:24,080 --> 00:07:25,960
Speaker 1: That is a great answer, Steven, enjoy your week.

152
00:07:26,440 --> 00:07:28,600
Speaker 2: Thanks Sean onto the Alboum Cup in a couple of weeks.

153
00:07:28,800 --> 00:07:31,520
Speaker 1: Indeed, that was economist Stephen cookulis better an as the Cook.

154
00:07:31,560 --> 00:07:33,080
Speaker 1: You can find him at the cook dot com and

155
00:07:33,160 --> 00:07:35,640
Speaker 1: follow him on excusing the handle of the Kok. I'm

156
00:07:35,640 --> 00:07:37,920
Speaker 1: Seanelmer and this is fear and greed the weak ahead