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Speaker 1: Welcome to Fear and Greed, summer investing series brought to

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Speaker 1: you by vanta specialist in compliance lead growth. I'm Sean Alma.

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Speaker 1: What's going to happen in the global economy this year?

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Speaker 1: We could be asking the impossible, but if anyone can

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Speaker 1: answer it, it's Fear and Greed's resident economist, Stephen Coolest.

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Speaker 1: We've called him in from his holiday. You always find

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Speaker 1: him at the cook dot com or an ex using

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Speaker 1: the handle of the cook. This morning you'll find him

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Speaker 1: with us. Stephen, Welcome back to.

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Speaker 2: Fear and Greed today, Sean happening in a year?

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Speaker 1: So where we're going. Let's start with the US, the

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Speaker 1: big story, and there's so much in that quite outside economics,

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Speaker 1: with the political side of things as well. What are

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Speaker 1: we going to see?

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Speaker 2: You're quite right, it's hard to articulate exactly what Trump

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Speaker 2: and Musk will do. I think we've got to include

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Speaker 2: hit into the picture because of his doze. You know

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Speaker 2: that was the Department of Government Expenditure. So there's going

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Speaker 2: to be a few things happening. If Trump's even half

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Speaker 2: true to his word, and he probably will be, there

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Speaker 2: will be a an escalation of tariffs through the course

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Speaker 2: of this year, which you'll have implications for the US

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Speaker 2: consumer prices, will have implications for global trade that will

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Speaker 2: be driven by the US, and that's part of the situation.

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Speaker 2: You are going to have a fiscal contraction. If Musk

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Speaker 2: delivers what path of what is going to do to

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Speaker 2: slashing public service spending and government demand on things that

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Speaker 2: he and Trump probably think don't matter. That could well

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Speaker 2: be a significant subtraction from economic growth from government demand

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Speaker 2: being held back. But then again, like the three hand

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Speaker 2: of economists I am. On the other hand, we then

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Speaker 2: got the probability of company tax cuts coming through and

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Speaker 2: Trump wanting to get the company tax rate down to

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Speaker 2: fifteen percent, so an incredibly no number. Yeah, hugely costing

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Speaker 2: for the budget. So you've got this stimulus from tax cuts,

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Speaker 2: you've got the distortion of global trade from tariffs, and

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Speaker 2: you've got the contraction on the economy from cuts in

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Speaker 2: government spending in public services. So that's that background, And

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Speaker 2: don't get the fens already cut interestrates a lot the

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Speaker 2: other the rate cuts through the course of the latter

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Speaker 2: part of twenty twenty four, there's still too impact on

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Speaker 2: bottom line economic growth in the US. They're are positive

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Speaker 2: for growth. So you put all that into the great

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Speaker 2: big melting pot of US economic outlook, it's still one

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Speaker 2: where the growth is probably going to be okay, that

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Speaker 2: the only rate stays low. Inflation might not fall much more,

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Speaker 2: and that's probably a fact that it's feeding to some

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Speaker 2: of the bond market reaction of recent times that back

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Speaker 2: up in yields. Not many more rate cuts from the Fed.

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Speaker 2: Probably there might be a couple more during the course

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Speaker 2: of the year, but I think the bulk of the

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Speaker 2: monetary easing has already come and the US will as

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Speaker 2: the dominant economy in the world, will probably be growing

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Speaker 2: at a reasonable steady pace.

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Speaker 1: Okay, So that's probably good news, I would say. And

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Speaker 1: that word about China, which of course is our biggest

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Speaker 1: training partner, all important for.

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Speaker 2: US, Well, China's been weak, unambiguously weak, and we've seen

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Speaker 2: that in Australia's terms of trade, which have sort of

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Speaker 2: come off about fifteen or twenty percent over the last

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Speaker 2: few months. Some of these commodity price falls have been

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Speaker 2: quite big, and some of the export volumes have been

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Speaker 2: a bit weaker. So if you look at the trade

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Speaker 2: balance between US and China, the surface that we run

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Speaker 2: with and shrinking. Now they realize that, yeah, they've got

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Speaker 2: the beauty of being a well, a one state government.

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Speaker 2: They don't have an upper house to deal with or

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Speaker 2: on opposition, or they sorts of things that what they

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Speaker 2: say in terms of policy will call they just do it,

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Speaker 2: which is lovely from that perspective anyway. And so we

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Speaker 2: saw it again at the end of last year. We

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Speaker 2: saw a number of interesstrate reductions to the extent that

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Speaker 2: they've got a monetary policy system it's different to the

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Speaker 2: Western world, but nonetheless they're lowering interest rates. We've seen

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Speaker 2: fiscal stimulus measures as part of the plan to sort

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Speaker 2: of get the economy growing at near a five percent

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Speaker 2: than four or three percent, which was probably going to

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Speaker 2: be the case had it not been that stimulus measure.

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Speaker 2: So if they're right, if these things gain some traction

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Speaker 2: in the Chinese economy, that yeah, the first quarter, maybe

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Speaker 2: the first half of the year will still be a

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Speaker 2: little bit soggy. But if these things get their traction,

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Speaker 2: and the US, in its wisdom ordinate strength actually provides

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Speaker 2: a bit of a to the Chinese economy. Tariffs just

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Speaker 2: to the side at the minute, you know, we could

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Speaker 2: see the Chinese economy doing okay. On the back of

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Speaker 2: that Australia, it's a bit of a free ride in

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Speaker 2: terms of a bottom out of the terms of trade,

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Speaker 2: a little bit of a pick up in exports, a

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Speaker 2: bit of a pickup in national income from that stronger

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Speaker 2: Chinese economy.

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Speaker 1: Okay, what about Japan. We don't talk a lot about Japan,

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Speaker 1: but very important training partner.

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Speaker 2: It's an important It's still i think the fourth or

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Speaker 2: fifth biggest economy in the world, despite the problems that

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Speaker 2: it's had. In your case, yeah, well, well they are

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Speaker 2: certainly the odd one out. You know, they're tightening interest

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Speaker 2: rates over there because they're finally, after decades of deflation

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Speaker 2: the economy basically going backwards. They had a little bit

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Speaker 2: of a success I suppose in that you know, quite

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Speaker 2: phenomenal stimulus both on fiscal policy, government to bension that

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Speaker 2: they own half a stock market, the goverment. It's a

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Speaker 2: really crazy situation there, but again it's a good sign.

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Speaker 2: It's a bit of inflation pressure coming from an economy

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Speaker 2: that was experiencing deflation, and to the extent that they

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Speaker 2: get a little bit of momentum that okay, offset by

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Speaker 2: a slight tightening policy that if Japan grows and of

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Speaker 2: course you know one one and a half percent GDP growth,

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Speaker 2: which but Japan is actually pretty good. You know, our

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Speaker 2: major energy expert's cole Gas, these sorts of things would

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Speaker 2: actually get a bit of an upside too. So Japan

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Speaker 2: it's all looking reasonably good. I'm sure you're going to

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Speaker 2: ask about shortly and that's Europe.

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Speaker 1: Yeah, yeah, yeah, So I was going to say, say, US, China,

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Speaker 1: Japan probably three of the most influential economies on ours.

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Speaker 1: You're kind of telling me they're all okay, all okay. Europe.

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Speaker 1: Hit me.

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Speaker 2: Europe's again the bad card in the pack. It's a shocker.

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Speaker 2: They're going through incredible transitional problems through the German economy

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Speaker 2: not being able to compete. It's manufacturing sectors in decline.

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Speaker 2: There's political turmoil. We saw that in France. We said, well,

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Speaker 2: we'll call count the UK in Europe, even not strictly,

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Speaker 2: but ye know, the UK with the new Starmer administrations

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Speaker 2: going through a whole hotch potch of fiscal again a

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Speaker 2: little bit like the U is about to go through

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Speaker 2: this for consolidation, but also trying to implement a whole

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Speaker 2: lot of reforms that they want to do. So there's

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Speaker 2: that push and pull from the government sector there, and

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Speaker 2: you look at the whole European dynamic and it's oh,

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Speaker 2: really weak. You know. One of the things that's been

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Speaker 2: evident in the latter part of last years of the

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Speaker 2: climb in the Euro. You know, investors are putting their

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Speaker 2: money where their mouth is. You know, the European Central

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Speaker 2: Bank's cut like crazy. They're going to cut. I think

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Speaker 2: they're going to cut a whole lot more. I think

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Speaker 2: the futures market's got a cash rpe for the European

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Speaker 2: Central Bank two percent or less something like that through

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Speaker 2: the course of this year. If that is the case,

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Speaker 2: the Euro gets hammered, which of course is a bit

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Speaker 2: of an automatic stabilizer for the economy, but it'll need

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Speaker 2: every bit of help it can get. So Europe's probably

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Speaker 2: just going to be lingering at this sort of barely

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Speaker 2: positive economic growth.

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Speaker 1: Thank you for joining me this morning, Stephen.

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Speaker 2: Thanks John.

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Speaker 1: There is economist Stephen Kokulis. You'll find him at the

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Speaker 1: cook dot com or on exit using the handle to Cook.

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Speaker 1: This is Fear and Greece Summer Investing Series, brought to

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Speaker 1: slash Dear, and Greed. I'm Sean Elmer, enjoying your day.