1 00:00:08,720 --> 00:00:11,240 Sean Aylmer: Welcome to Fear and Greed - The Week Ahead. As always, 2 00:00:11,240 --> 00:00:14,510 Sean Aylmer: I'm with economist, Stephen Koukoulas, you'll find him at thekouk. 3 00:00:14,510 --> 00:00:19,180 Sean Aylmer: com and on Twitter using the handle, TheKouk, T- H- E- K- O- U- 4 00:00:19,210 --> 00:00:20,960 Sean Aylmer: K. Stephen, good morning. 5 00:00:21,400 --> 00:00:22,490 Stephen Koukoulas: Good morning, Sean. 6 00:00:22,810 --> 00:00:25,520 Sean Aylmer: How did you recover from last week? It was a 7 00:00:25,520 --> 00:00:28,290 Sean Aylmer: massive week. We had the reserve bank, we had GDP, 8 00:00:28,290 --> 00:00:31,300 Sean Aylmer: we had all partial indicators. Did you enjoy it? 9 00:00:31,300 --> 00:00:34,360 Stephen Koukoulas: I did. It was something to look at every day. 10 00:00:34,420 --> 00:00:36,940 Stephen Koukoulas: And in fact, several times a day to see just 11 00:00:36,940 --> 00:00:40,660 Stephen Koukoulas: how this economy ended 2021, that was with the GDP number, and then 12 00:00:40,800 --> 00:00:43,260 Stephen Koukoulas: how we've kicked off 2022 with a range of those 13 00:00:43,260 --> 00:00:46,120 Stephen Koukoulas: partial indicators. So, lots to look at in terms of 14 00:00:46,120 --> 00:00:48,860 Stephen Koukoulas: the hard data, and then the RBA put out its statement 15 00:00:48,860 --> 00:00:51,560 Stephen Koukoulas: where obviously, they left things on hold, but again, they 16 00:00:51,560 --> 00:00:53,620 Stephen Koukoulas: were flagging that the economy's doing quite well. 17 00:00:53,940 --> 00:00:55,870 Sean Aylmer: So, just, if we wrap all that up, which is 18 00:00:55,870 --> 00:00:59,410 Sean Aylmer: a bit difficult, because so much was there. Josh Frydenberg, the treasurer, 19 00:00:59,630 --> 00:01:03,310 Sean Aylmer: was particularly enthusiastic of about how things had kicked off 20 00:01:03,630 --> 00:01:07,949 Sean Aylmer: in 2022. Reserve Bank was too. There's reason to be 21 00:01:07,950 --> 00:01:12,959 Sean Aylmer: fairly optimistic, not withstanding floods, not withstanding Ukraine, stuff to 22 00:01:12,980 --> 00:01:13,589 Sean Aylmer: look forward to. 23 00:01:13,830 --> 00:01:16,750 Stephen Koukoulas: Yes. Look, I think they're both right that the numbers 24 00:01:16,750 --> 00:01:20,289 Stephen Koukoulas: on the economy, so the hard facts, are good. The GDP 25 00:01:20,290 --> 00:01:24,830 Stephen Koukoulas: result, 3. 4% for the December quarter. 4.2% through the 26 00:01:24,830 --> 00:01:29,150 Stephen Koukoulas: course of 2021, that's good growth in anybody's language, even 27 00:01:29,150 --> 00:01:32,040 Stephen Koukoulas: allowing for a bit of a bounce back from 2020 28 00:01:32,040 --> 00:01:33,910 Stephen Koukoulas: when we of course, had the worst of the COVID 29 00:01:33,980 --> 00:01:37,470 Stephen Koukoulas: recession. But, the year ended well. The year's kicked off 30 00:01:37,470 --> 00:01:39,850 Stephen Koukoulas: pretty well and okay, there are some huge issues obviously 31 00:01:39,850 --> 00:01:43,060 Stephen Koukoulas: going on in geopolitics and the floods down the East 32 00:01:43,060 --> 00:01:45,679 Stephen Koukoulas: Coast, are not good news. And they will be a 33 00:01:45,890 --> 00:01:48,410 Stephen Koukoulas: clear hand break on the momentum in the economy. But, 34 00:01:48,410 --> 00:01:53,040 Stephen Koukoulas: that said, the conditions in terms of consumer spending, in 35 00:01:53,040 --> 00:01:55,590 Stephen Koukoulas: terms of the housing cycle and while house prices have 36 00:01:55,590 --> 00:01:58,430 Stephen Koukoulas: slowed off a bit, they're still pretty robust across most 37 00:01:58,430 --> 00:02:01,620 Stephen Koukoulas: of the country. And you've got this scenario now, where 38 00:02:01,910 --> 00:02:05,430 Stephen Koukoulas: the... Well, one of the interesting effects and it sounds a 39 00:02:05,430 --> 00:02:08,480 Stephen Koukoulas: bit unfair to say this, but Australia is a major 40 00:02:08,480 --> 00:02:11,860 Stephen Koukoulas: beneficiary of this global conflict, or the conflict in Ukraine, 41 00:02:11,860 --> 00:02:17,419 Stephen Koukoulas: because commodity prices are absolutely booming. Wheat, copper, iron ore, 42 00:02:17,419 --> 00:02:20,430 Stephen Koukoulas: they're all bouncing back, natural gas and okay, oil, we 43 00:02:20,430 --> 00:02:22,950 Stephen Koukoulas: are an importer of oil, but energy we do export 44 00:02:23,070 --> 00:02:26,880 Stephen Koukoulas: net terms and the coal price has gone gangbusters again. 45 00:02:26,880 --> 00:02:31,060 Stephen Koukoulas: So, in a funny way, our economy does benefit from 46 00:02:31,060 --> 00:02:34,800 Stephen Koukoulas: these commodity price dislocations, but the prices are all going up. 47 00:02:35,340 --> 00:02:38,959 Sean Aylmer: Okay. So, we're in pretty good fettle. If you look 48 00:02:39,090 --> 00:02:42,250 Sean Aylmer: forward to what's happening this week, as business confidence aims their 49 00:02:42,280 --> 00:02:44,589 Sean Aylmer: job ads, we'll get to those in a moment. But 50 00:02:44,770 --> 00:02:47,880 Sean Aylmer: Dr. Phil Lowe, the RBA boss is speaking. Do you 51 00:02:47,880 --> 00:02:50,779 Sean Aylmer: think he'll say anything much different? I mean, he only 52 00:02:50,780 --> 00:02:52,799 Sean Aylmer: spoke a couple of weeks ago, but there's been a 53 00:02:52,800 --> 00:02:54,480 Sean Aylmer: fair bit going on in the world since then. 54 00:02:55,040 --> 00:02:56,610 Stephen Koukoulas: Yeah, a lot going on. And when they put out 55 00:02:56,610 --> 00:03:00,480 Stephen Koukoulas: their statement last week, accompanying the board meeting of last 56 00:03:00,500 --> 00:03:04,800 Stephen Koukoulas: Tuesday, if you cut through the references to uncertainty, because 57 00:03:04,800 --> 00:03:09,080 Stephen Koukoulas: of Ukraine, because of uncertainty with still lingering effects of 58 00:03:09,110 --> 00:03:12,250 Stephen Koukoulas: COVID-19, and we're not exactly sure how that's going to be panning 59 00:03:12,250 --> 00:03:16,510 Stephen Koukoulas: out. There were a good 10, or 12 references to 60 00:03:16,860 --> 00:03:18,480 Stephen Koukoulas: strong economic conditions. 61 00:03:18,480 --> 00:03:18,540 Sean Aylmer: Yeah. 62 00:03:19,500 --> 00:03:22,880 Stephen Koukoulas: Inflation was higher than the RBA was anticipating, wages growth 63 00:03:23,000 --> 00:03:26,370 Stephen Koukoulas: is picking up. So, there were lots of those positive 64 00:03:26,370 --> 00:03:29,350 Stephen Koukoulas: things within that. And clearly, that's that good news that 65 00:03:29,360 --> 00:03:31,230 Stephen Koukoulas: we're talking about just a moment ago. So, I wouldn't 66 00:03:31,230 --> 00:03:34,300 Stephen Koukoulas: be at all surprised if these speeches coming up later this 67 00:03:34,300 --> 00:03:37,960 Stephen Koukoulas: week on Wednesday, and then on Friday, are confirming that 68 00:03:37,960 --> 00:03:40,150 Stephen Koukoulas: he's got an upbeat view in the economy and that 69 00:03:40,430 --> 00:03:43,100 Stephen Koukoulas: he's not poised to hike interest rates, arguably he could, 70 00:03:43,100 --> 00:03:45,700 Stephen Koukoulas: or should, but he's not going to, because he's just 71 00:03:45,700 --> 00:03:48,220 Stephen Koukoulas: got that uncertainty about those things that we've just mentioned. 72 00:03:48,550 --> 00:03:50,770 Sean Aylmer: So, let's talk about wages. They've got ANZ job ads 73 00:03:50,770 --> 00:03:52,370 Sean Aylmer: this week and also payroll data. 74 00:03:52,670 --> 00:03:54,870 Stephen Koukoulas: Yes, the job ads. Well, they were down the last 75 00:03:54,880 --> 00:03:57,940 Stephen Koukoulas: couple of months, having boomed through the course of 2021. 76 00:03:57,940 --> 00:04:00,890 Stephen Koukoulas: And they were down, because of the Omicron hit to 77 00:04:00,890 --> 00:04:03,030 Stephen Koukoulas: the economy, I suppose we can call it, when a 78 00:04:03,030 --> 00:04:05,540 Stephen Koukoulas: few businesses did close down and people stayed at home, 79 00:04:05,540 --> 00:04:07,520 Stephen Koukoulas: they got sick and they isolated and all the rest 80 00:04:07,520 --> 00:04:09,290 Stephen Koukoulas: of it. So, I wouldn't be at all surprised to 81 00:04:09,290 --> 00:04:12,520 Stephen Koukoulas: see that bouncing back. The payrolls number, which doesn't have 82 00:04:12,520 --> 00:04:14,720 Stephen Koukoulas: a long history. So, we economists, we want a long 83 00:04:14,720 --> 00:04:17,409 Stephen Koukoulas: time series to be able to interpret the swings and 84 00:04:17,410 --> 00:04:19,720 Stephen Koukoulas: roundabouts on this thing. But, the last monthly one that 85 00:04:19,720 --> 00:04:24,070 Stephen Koukoulas: we saw, had employment doing well. So, the payrolls that 86 00:04:24,070 --> 00:04:26,660 Stephen Koukoulas: businesses are paying for the number of people was going 87 00:04:26,660 --> 00:04:28,969 Stephen Koukoulas: up, but the extraordinary thing, and this is where this 88 00:04:28,970 --> 00:04:32,060 Stephen Koukoulas: wages question coming, which of course, feeds into the RBA 89 00:04:32,060 --> 00:04:34,670 Stephen Koukoulas: and Dr. Lowe's views on the economy and inflation risks 90 00:04:34,670 --> 00:04:39,970 Stephen Koukoulas: and these things. It does have some measure of wage increases 91 00:04:39,970 --> 00:04:43,760 Stephen Koukoulas: there. In the last month, it was absolutely booming. And 92 00:04:43,760 --> 00:04:46,870 Stephen Koukoulas: it's signaling that, through a combination of more jobs, more 93 00:04:46,870 --> 00:04:51,029 Stephen Koukoulas: hours, and even underlying pay increases, that there's something happening 94 00:04:51,029 --> 00:04:52,800 Stephen Koukoulas: in the wages front. So, we'll watch that one very 95 00:04:52,800 --> 00:04:55,440 Stephen Koukoulas: closely, for more clues and the hints that wages growth 96 00:04:55,440 --> 00:04:56,300 Stephen Koukoulas: is in fact picking up. 97 00:04:56,779 --> 00:04:59,210 Sean Aylmer: Okay. And the other one this week, is business confidence. I 98 00:04:59,210 --> 00:05:01,750 Sean Aylmer: wonder whether that's been knocked around by recent events? 99 00:05:01,920 --> 00:05:04,430 Stephen Koukoulas: Oh, look, it's extremely choppy. There's no doubt that the 100 00:05:04,430 --> 00:05:08,869 Stephen Koukoulas: business survey for confidence conditions, and then the sub components, you 101 00:05:08,910 --> 00:05:11,810 Stephen Koukoulas: know is profitability Gordon. Are you planning to hire more 102 00:05:11,810 --> 00:05:14,610 Stephen Koukoulas: people? And what's your expected selling prices?" So, there's a 103 00:05:14,610 --> 00:05:17,640 Stephen Koukoulas: lot of subsets to that business confidence survey, which makes 104 00:05:17,640 --> 00:05:20,029 Stephen Koukoulas: it so good by the way. And it has been pushed 105 00:05:20,029 --> 00:05:22,760 Stephen Koukoulas: and pulled at the latter part of 2021. So, January, 106 00:05:22,760 --> 00:05:26,500 Stephen Koukoulas: it was also down sharply, in terms of business confidence. 107 00:05:26,550 --> 00:05:28,970 Stephen Koukoulas: Business conditions were good. So, we'll be looking at that 108 00:05:28,970 --> 00:05:31,900 Stephen Koukoulas: for some rebound, but as you alluded to, the issue 109 00:05:31,900 --> 00:05:35,540 Stephen Koukoulas: associated with the Ukraine and now the floods, I'm not 110 00:05:35,540 --> 00:05:37,440 Stephen Koukoulas: quite sure what the timing of the survey was. It 111 00:05:37,440 --> 00:05:39,950 Stephen Koukoulas: may not have captured the full effects of these floods 112 00:05:39,950 --> 00:05:42,159 Stephen Koukoulas: down the East Coast, but we'll be watching it closely, 113 00:05:42,200 --> 00:05:44,770 Stephen Koukoulas: maybe not for the headline confidence number, but more for, 114 00:05:45,060 --> 00:05:47,560 Stephen Koukoulas: are you hiring staff? Are you putting up your selling 115 00:05:47,560 --> 00:05:50,380 Stephen Koukoulas: prices? Are you planning to increase your CapEx through the 116 00:05:50,380 --> 00:05:51,589 Stephen Koukoulas: course of the next 12 months? 117 00:05:51,960 --> 00:05:52,990 Sean Aylmer: Stephen, enjoy the week. 118 00:05:53,260 --> 00:05:54,170 Stephen Koukoulas: Thank you, Sean. You too. 119 00:05:54,430 --> 00:05:56,930 Sean Aylmer: That was economist, Stephen Koukoulas, better known as The Kouk. 120 00:05:57,700 --> 00:05:59,950 Sean Aylmer: You can find him at thekouk. com and follow him 121 00:05:59,950 --> 00:06:03,099 Sean Aylmer: on Twitter using the handle, TheKouk. I am Sean Aylmer, 122 00:06:03,100 --> 00:06:04,900 Sean Aylmer: and this is Fear and Greed- The Week Ahead.