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Speaker 1: Today on Fear and Greed. Financial markets brace for the

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Speaker 1: US election and the Reserve Bank's decision on interest rates.

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Speaker 1: Prime Minister Anthony Albernizi makes a bid for younger voters

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Speaker 1: with a sixteen billion dollar plan to forgive debt, and

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Speaker 1: the housing market wobbles continue with the lowest auction clearance

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Speaker 1: rate for the year over the past week, plus, a

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Speaker 1: massive chat GPT trial gives AI the thumbs up, and

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Speaker 1: the UK Conservatives appoint a black woman to run the

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Speaker 1: party for the first time. Welcome to Fear and Greed.

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Speaker 1: Daily business news for people who make their own decisions.

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Speaker 1: It is Monday, the fourth of November twenty twenty four.

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Speaker 1: Are Michael Thompson and Good Morning, Adam Lange.

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Speaker 2: Good morning Michael.

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Speaker 1: Adam The main story this morning. Financial markets are bracing

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Speaker 1: for a very volatile week, it must be said, with

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Speaker 1: the US election set to drive equity and bond markets

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Speaker 1: and have far reaching implications for economies like Australia, especially

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Speaker 1: around trade.

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Speaker 2: Smuggel It's expected to be the tightest election in many decades,

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Speaker 2: though betting houses actually have installed Donald Trump as a favorite.

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Speaker 2: Investors would not mind a split decision. By that I

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Speaker 2: mean a stalemate in Congress with one party holding the

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Speaker 2: Senate and the other holding the House. That could potentially

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Speaker 2: mean a stalemate, and investors wouldn't mind that. A Democratic

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Speaker 2: sweep led by Kamala Harris winning the presidency is considered

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Speaker 2: an almost zero percent chance. A Republican sweep with Donald

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Speaker 2: Trump in the top job is considered a twenty five

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Speaker 2: percent chance, and that would likely help equity markets, but

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Speaker 2: also send bond yields higher and interest rates would stay

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Speaker 2: higher for longer. Are you with me so far? Michael?

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Speaker 2: So far?

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Speaker 1: I'm actually furiously taking notes here because I love that.

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Speaker 1: I love the politics kind of side of it all.

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Speaker 1: But in terms of the impact on financial markets, there's

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Speaker 1: a lot more to it. It gets quite I was about

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Speaker 1: to say quite intricate. I almost said intimate, and that

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Speaker 1: is definitely the wrong word.

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Speaker 2: Intricate. Yes, yeah, it's definitely intricate and strategic. So that

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Speaker 2: sort of outcome with Donald Trump in the top job,

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Speaker 2: that twenty five percent chance, that would help out quitny markets,

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Speaker 2: as bond yields would probably go higher, with those interest

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Speaker 2: rates staying higher for longer, that would not be good

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Speaker 2: for the Aussie dollar in the short term and Sean's

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Speaker 2: US holidays, but it might be good in the longer

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Speaker 2: term for the currency on the back of ballooning US deficit. Now,

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Speaker 2: it's fair to say that this campaign has been very ugly.

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Speaker 2: There's been little respect shown on either side and it

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Speaker 2: points to things like the assassination attempt on Donald Trump

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Speaker 2: and the dumping of Joe Biden for Kamala. Harris are

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Speaker 2: almost no longer part of the campaign. It's just quid

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Speaker 2: pro quo at the moment, Michael, as we come to

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Speaker 2: the final moments of the vote.

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Speaker 1: Yeah, it's been an extraordinary campaign and just too Just

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Speaker 1: to make something abundantly clear, you did mention Sean's US holidays.

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Speaker 1: He's not on a US holiday at the moment. He

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Speaker 1: is away for like half a day. He will be

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Speaker 1: back for the afternoon report this afternoon.

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Speaker 2: So fear not parental duties holiday.

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Speaker 1: Yeah, indeed, bring it all back home to us here, Adam.

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Speaker 1: The bottom line, what does a win for Trump or

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Speaker 1: a win for Harris mean for Australia.

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Speaker 2: There's a lot depending on what actually happens after they

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Speaker 2: get in because the words are really hard to sift through.

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Speaker 2: If Donald Trump wins and follows through with a twenty

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Speaker 2: percent tariff across the board then that would obviously be

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Speaker 2: bad for Australia's thirteen billion dollars of experts to the

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Speaker 2: world's biggest economy. He also said he will water down

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Speaker 2: the massive Biden administration Inflation Reduction Act, and a number

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Speaker 2: of Australian companies have actually benefited from that. Harris, on

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Speaker 2: the other hand, wants to lift the corporate tax rate

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Speaker 2: and Trump wants to lower it. They both want to

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Speaker 2: increase taxes on buybacks and companies for an income. Harris

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Speaker 2: wants a tax on billionaires and high income earners, as

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Speaker 2: well as assistance for small businesses, housing, healthcare and parents.

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Speaker 2: Harris will also maintain assistance to the Ukraine. Trump wants

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Speaker 2: to end that assistance to the UK, and there's some

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Speaker 2: smaller tax bras as well. There's a lot in this

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Speaker 2: mixed Michael. Probably the biggest impact on Australia comes by

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Speaker 2: the performance of the US economy. We haven't heard much

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Speaker 2: about the economy and the election campaign, but the US

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Speaker 2: is actually doing well. The strong labor market, inflation and

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Speaker 2: interest rates are falling, and solid growth is underpinning this economy.

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Speaker 2: That's the biggest economy in the world, of course, and

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Speaker 2: now wish it would be that whoever wins that can

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Speaker 2: keep going.

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Speaker 1: Now while the US election is going to dominate this week,

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Speaker 1: of course it is. We also, though, Adam, have the

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Speaker 1: Reserve Bank Board meeting today and then the decision tomorrow

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Speaker 1: afternoon two thirty pm on interest rates.

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Speaker 2: Yes, Michael, just ahead of the Melbourne Cup horse race,

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Speaker 2: which we know Stephen Coculis will be paying close attention

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Speaker 2: to that Reserve Bank meeting and the announcement is very

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Speaker 2: important for the economy. After last week's September quarter inflation figures,

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Speaker 2: where the headline rate fell below three percent and the

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Speaker 2: underlying rate came in at three point five percent for

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Speaker 2: the year to the end of September, no one actually

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Speaker 2: spects the RBA to cut rates, but it might soften

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Speaker 2: its language and suggest the next moving rates is more

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Speaker 2: likely to be down rather than a hold or even up.

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Speaker 2: At the moment, the RBA is sitting on the fence

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Speaker 2: saying it doesn't know which way rates will move next.

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Speaker 2: It wasn't just the inflation figures that could convince the

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Speaker 2: RBA to think about rate cuts. The retailed trade data

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Speaker 2: for the September quarter also showed to slow down in

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Speaker 2: spending on a per capita basis, and that adds to

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Speaker 2: the argument for a rate cut. The good news last

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Speaker 2: week was the apparent pickup in building approvals.

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Speaker 1: We are in for a massive, massive week this week

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Speaker 1: and I'm actually quite excited about it. We've also got

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Speaker 1: a big show today. We're only just getting started. We'll

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Speaker 1: be taking a quick break and we'll be back in

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Speaker 1: a moment with the rest of the day's business news.

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Speaker 2: Adam.

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Speaker 1: The housing market continues to slow, with auction clearance rates

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Speaker 1: hitting their lowest level for the year over the past week,

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Speaker 1: on the back of data last week showing house prices

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Speaker 1: going backwards in by Sydney and Melbourne.

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Speaker 2: Michael it is the selling season. There were just under

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Speaker 2: two thousand auctions over the week and that is a

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Speaker 2: sharp reduction from the previous week because of the reduced

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Speaker 2: numbers in Melbourne amid the spring racing carnival which is

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Speaker 2: obviously enormous there. The combined capital's preliminary clearance rate fell

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Speaker 2: to sixty three point four percent, down from sixty six

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Speaker 2: point eight the week prior. The final clearance weight for

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Speaker 2: the previous week was fifty nine and a half percent.

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Speaker 2: The finalized auction clearance rate has held below sixty for

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Speaker 2: three of the past four weeks, and is likely to

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Speaker 2: do so again when the most recent information is finalized.

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Speaker 2: Sydney hosted the most auctions this week, with one thousand,

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Speaker 2: forty six homes going under the hammer. The preliminary clearance

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Speaker 2: rate came in at sixty four and a half percent.

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Speaker 2: There were only four hundred and seventy three auctions in

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Speaker 2: Melbourne and that preliminary clearance rate was sixty two point four.

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Speaker 2: In Brisbane the rate was fifty two point three, Adelaide

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Speaker 2: sixty seven, and Canberra was fifty five point two.

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Speaker 1: Let's talk politics for a minute, Adam, because the federal election.

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Speaker 1: Your eyes actually just lit up then as soon as

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Speaker 1: I said, they're like.

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Speaker 2: Oh, here we go. Well, we've done American politics. Now

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Speaker 2: this is the Australian lang.

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Speaker 1: We're bringing it back home, aren't we. This is this

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Speaker 1: is all local and this is this is very populist stuff.

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Speaker 1: You would think it feels like It feels to me

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Speaker 1: like the federal election campaign actually got off to an

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Speaker 1: early start. I mean the election hasn't even been called yet,

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Speaker 1: we don't even know where it's going.

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Speaker 2: To be.

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Speaker 1: We know it's going to be sometime in the next

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Speaker 1: six months, but it feels like we've already started because

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Speaker 1: over the weekend Labor went all in on education. Every

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Speaker 1: student will have every kind of tertiary student. That is,

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Speaker 1: we'll have their debt cut by twenty percent at a

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Speaker 1: cost to the budget of sixteen billion dollars, and there'll

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Speaker 1: be one hundred thousand fee free takee places every year.

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Speaker 1: This is all under an Albanza government plan that will

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Speaker 1: go to the next election. It sounds an awful lot

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Speaker 1: like this campaign started, right.

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Speaker 2: Yeah, Michael, that's absolutely true. Over half the world has

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Speaker 2: gone to elections this year, India, the UK and obviously

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Speaker 2: the USA. This week this one's back to Australia and

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Speaker 2: as you say, it'll be in the next six months,

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Speaker 2: before May twenty twenty five or by the end of

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Speaker 2: May twenty twenty five. This election has to happen here.

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Speaker 2: Prime Minister Anthony Albanezi announced proposal yesterday and under this proposal,

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Speaker 2: every Australian with a student debt, including help that Student loan,

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Speaker 2: Australian Apprenticeship Support loan and other income contingent student loans

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Speaker 2: will be cut by twenty percent from June one next year.

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Speaker 2: That would wipe five five hundred and twenty dollars from

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Speaker 2: an average help debt of twenty seven six hundred dollars

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Speaker 2: for a university graduate. Now. Already the government has capped

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Speaker 2: the rate at which a student loan can be indexed,

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Speaker 2: and that's been at a cost of three billion dollars.

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Speaker 2: The government also announced other smaller initiatives over the weekend

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Speaker 2: to help former students with loans, as well as those

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Speaker 2: one hundred thousand free take places every year. Now, this

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Speaker 2: is a major play for younger a strainers, many of

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Speaker 2: whom may be sympathetic to the Greens, Michael, and this

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Speaker 2: is of course ahead of the next election due by

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Speaker 2: May five.

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Speaker 1: Now, Adam, the local market dropped on Friday, and I

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Speaker 1: suppose it will be in a bit of a holding

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Speaker 1: pattern bond it until after the US election results, based

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Speaker 1: on what we were saying earlier in the show.

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Speaker 2: Yeah, Michael, I think that's right. On Friday, the S

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Speaker 2: and PA six two hundred finished down zero point five

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Speaker 2: percent to eighty one hundred and nineteen points, having fallen

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Speaker 2: to its lowest point in seven weeks. For the month

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Speaker 2: of October the market is down more than one percent.

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Speaker 2: The financials led the market lower. Energy stocks were among

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Speaker 2: the strongest, and they were helped by a surge in

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Speaker 2: the price of oil as tensions in the Middle East

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Speaker 2: flared up.

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Speaker 1: Immediately after the show, We've got a great interview, Cantie.

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Speaker 1: Whenever I say we've got a great interview, it sounds

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Speaker 1: as though this one is particularly great. They are all great.

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Speaker 1: Today's chatter is with Joe Davis, Global Chief Economist at Vanguard.

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Speaker 1: Now Vanguard is obviously and in investment Giant, Global Investment Giant,

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Speaker 1: and Joe Davis is the global chief economist. He's in

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Speaker 1: Australia just for a few days. We grabbed him for

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Speaker 1: a chat and he talks about everything that can have

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Speaker 1: an impact on financial markets, from the US election kind

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Speaker 1: of right through to AI and other mega trends as

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Speaker 1: they call them. So this is a muscless and conversation.

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Speaker 1: It's coming up after the show. But Adam this story.

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Speaker 1: I saw this one coming through late on Friday afternoon,

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Speaker 1: and I find this quite extraordinary. More than twelve hundred

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Speaker 1: of Australia's biggest companies paid no corporate income tax in

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Speaker 1: the twenty twenty three financial year according to the Tax Office.

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Speaker 2: Yeah, Michael, this one's really interesting and it's somewhat strategic

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Speaker 2: because you look at it as though there's revenue, there's

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Speaker 2: costs is profit, and obviously tax is on profit. The

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Speaker 2: latest annual Tax Transparency report shows that big corporations paid

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Speaker 2: more than one hundred billion dollars in tax. That was

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Speaker 2: up seventeen percent from the previous year. The oil and

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Speaker 2: gas sector alone paid a combined eleven point six billion

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Speaker 2: of that. High commodity prices, project production cycles and four

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Speaker 2: point three billion realized through the ATO audits. Anti avoidance

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Speaker 2: programs and compliance checks in that sector drove the result.

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Speaker 2: And this is according to the Australian Financial Review. At

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Speaker 2: nearly fifty five billion, Miners paid more tax than all

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Speaker 2: other sectors combined in the year and paid five times

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Speaker 2: more than they did eight years earlier. What a change.

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Speaker 1: Yeah, indeed, now I mentioned this at the top of

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Speaker 1: the show, Adam. A trial of Microsoft's co Pilot by

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Speaker 1: almost five eight hundred federal employees shows that public servants

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Speaker 1: can save an hour a day on average by using AI.

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Speaker 1: I think that is amazing. That is a significant improvement

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Speaker 1: to productivity, right.

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Speaker 2: It's a big sample, Michael, eight hundred federal employees and

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Speaker 2: that hour day includes the time it took to check

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Speaker 2: the output of AI for its accuracy, so that was

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Speaker 2: fact checking the machines as it were. It's the largest

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Speaker 2: trial by any government in the world, and it was

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Speaker 2: based on using chat GPT. Those who took part said

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Speaker 2: it boosted productivity for simple tasks such as searching and

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Speaker 2: summarizing information, and analyzing preliminary data, and even writing or

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Speaker 2: reviewing programming code. And that's according to another report in

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Speaker 2: the Australian Financial Review. It wasn't all good news, though Michael.

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Speaker 2: In some cases, co pilot allows them to access documents

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Speaker 2: that staff had not classified or stored properly. The Digital

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Speaker 2: Transformation ATIONCY that ran the trial said that overall a

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Speaker 2: significant proportion of participants were optimistic about their use of copilot,

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Speaker 2: and about three quarters of participants who received three or

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Speaker 2: more forms of training became confident in using AI.

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Speaker 1: I actually really like that story because it says an

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Speaker 1: awful lot about the potential for this technology just to

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Speaker 1: improve productivity and efficiency, that really you can get through

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Speaker 1: a lot of those basic tasks and leave the human

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Speaker 1: and those human minutes and hours for the ones that

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Speaker 1: are really kind of challenging and need the creativity, need

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Speaker 1: the problem solving that only people can really do.

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Speaker 2: Yeah, and then of course to check the work like

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Speaker 2: you don't just do it and sign off. Yeah, gotta

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Speaker 2: check it, gosh.

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Speaker 1: I think it's fantastic. COVID deaths remain high, far above

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Speaker 1: fatalities from other respiratory illnesses, and it remains the leading

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Speaker 1: cause of respiratory infection mortality.

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Speaker 2: Yeah, Michael, and you did a great review of the

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Speaker 2: report into how we handled COVID nineteen. So in the

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Speaker 2: first seven months of this year there were almost four

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Speaker 2: thousand deaths related to COVID nineteen, and that is five

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Speaker 2: times the level of influenza deaths. The trend is down,

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Speaker 2: but there remain many COVID nineteen fatalities this year. There

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Speaker 2: were fewer deaths between February and April, according to the ABS,

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Speaker 2: but then there was a spike in May and June

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Speaker 2: before falling again in July. Now, typically it's older males

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Speaker 2: dying from the disease. Influenza deaths have fallen during COVID nineteen,

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Speaker 2: but they are back around the pre pandemic levels now.

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Speaker 1: Last one, Adam. Before we get to international news, Macquarie

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Speaker 1: Group has reported a fourteen percent jump in net profit

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Speaker 1: to one point six billion dollars for the six months

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Speaker 1: to the end of September.

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Speaker 2: Yeah, Michael, that part is good news. However, the figure

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Speaker 2: was down twenty three percent compared to the March twenty

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Speaker 2: twenty four half and was below expectations. Mccrary's share price

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Speaker 2: fell three point six percent on Friday to two hundred

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Speaker 2: and twenty three dollars twenty cents. A highlight was higher

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Speaker 2: management fees across the business. McQuary extended its two billion

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Speaker 2: dollars on market share buy back for another twelve months.

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Speaker 2: As of October thirty one, the company had purchased about

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Speaker 2: one billion dollars under that program. Chief executive Shamara Wickramaniaka

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Speaker 2: did not provide detailed earnings guidance and said the investment

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Speaker 2: bank continues to maintain a cautious stance with a conservative

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Speaker 2: approach to capital.

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Speaker 1: Turning to international news, now, Adam and Kemy Badenoch became

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Speaker 1: the British Conservative new leader over the weekend, the first

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Speaker 1: black woman to head a major British political party.

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Speaker 2: Yeah, Michael, water change, and she promised to return the

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Speaker 2: party to its founding principles. Bedenock, who is forty four,

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Speaker 2: replaces former Prime Minister Rishi Sunak and has pledged to

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Speaker 2: lead the party through a period of renewal after its

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Speaker 2: resounding defeat at Britain's July election, saying it veered toward

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Speaker 2: the political center by governing from the left. And that's

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Speaker 2: according to a report on Reuter's Beadanock becomes the Conservative's

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Speaker 2: fifth leader since mid twenty sixteen after winning fifty seven

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Speaker 2: percent of party members votes in the final stage of

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Speaker 2: a month's long contest that saw a field of six

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Speaker 2: whittled down to just two. She beat a former immigration minister,

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Speaker 2: Robert Jenrick, who won forty three percent of the votes.

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Speaker 2: Good luck to Kemy Bedenock.

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Speaker 1: Yeah, indeed, last one Adam Warren Buffett has further cut

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Speaker 1: his steak in Apple as part of a selling spree

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Speaker 1: that at Centers Berkshire Hathaway Company dump one hundred and

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Speaker 1: sixty six billion US dollars worth of stocks over the

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Speaker 1: past two years. Just get your head around that number

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Speaker 1: for a second. One hundred and sixty six billion US dollars.

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Speaker 1: That is staggering, right.

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Speaker 2: It absolutely is Michael and Look the so called oracle

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Speaker 2: of Omaha. Warren Buffett is also struggling to find opportunities

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Speaker 2: on Wall Street in general. And that's according to report

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Speaker 2: in The Financial Times, Buffett has now ditched almost two

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Speaker 2: thirds of his stake in Apple, which at its peak

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Speaker 2: in twenty twenty three accounted for one hundred and seventy

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Speaker 2: eight billion of the company's stock portfolio. The stock shares

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Speaker 2: are a dramatic shift by Buffet. Given in twenty twenty

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Speaker 2: two he described Apple as one of Berkshire's four giants,

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Speaker 2: accounting for the bulk of the company's value. Berkshire reported

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Speaker 2: on Saturday that had generated gains of ninety seven billion

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Speaker 2: dollars on the one hundred and thirty three billion of

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Speaker 2: stock that it had sold this year. What a profit level.

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Speaker 2: Now after taxes, that amount will get down to only

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Speaker 2: seventy six point five billion dollars worth of growth and

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Speaker 2: a big payoff for the group. Berkshire has about three

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Speaker 2: hundred and twenty five US billion in cash. And I'll

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Speaker 2: leave the last word on the Apple trade to a

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Speaker 2: Berkshire shareholder, Jace Stern and Coe's Christopher Rossbuck, he said,

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Speaker 2: end quote. It is still the greatest trade of all

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Speaker 2: time by the greatest investor of all time. End of quote.

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Speaker 1: That's a pretty good way to finish the show. Up next,

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Speaker 1: Adam is Fear and Greed the Week Ahead, featuring our

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Speaker 1: resident economist Stephen Cacaulus, who is excited at the best

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Speaker 1: of times, but he has beside himself with the fact

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Speaker 1: that we've got the Reserve Bank Board meeting tomorrow, and

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Speaker 1: we've got the US election and just every like it's

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Speaker 1: just a big, big week for the economy. So that's

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Speaker 1: coming up next, followed of course by the Fear and

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Speaker 1: Greed Daily Interview, and Joe Davis, Global Chief Economist from

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Speaker 1: Vanguard is Sean's special guest today. So a couple of

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Speaker 1: great pieces coming up in the Fear and Greed playlist

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Speaker 1: on your podcast platform or at Fearangreed dot com dot au.

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Speaker 2: Thank you very much, Adam, Thank you. Michael.

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Speaker 1: It is Monday, the fourth of November twenty twenty four.

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Speaker 1: Make sure you're following the podcast and please join us

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Speaker 1: online on LinkedIn, Instagram, x TikTok and Facebook. I'm Michael

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Speaker 1: Thompson and that was Fear and Greed. Have a great day.