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Speaker 1: Interest rate hikes are off the table after inflation shows

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Speaker 1: signs of slowing. The housing market splits into two, with

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Speaker 1: the smaller capital cities soaring as most of the rest

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Speaker 1: of the country SAgs, and Rio Tinto kicks off reporting

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Speaker 1: season with a bumper nine billion dollar a half year profit.

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Speaker 1: Welcome to Fear and Greed. Daily business news for people

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Speaker 1: who make their own decisions. It is Thursday, the first

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Speaker 1: of August twenty twenty four. Are Michael Thompson and Good Morning,

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Speaker 1: Sean Aylmer, Morning Michael Love.

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Speaker 2: August Few Reasons end a winter reporting season kicks off

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Speaker 2: and finally sort of the news cycle picks up a bit.

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Speaker 2: It's very exciting, big day to day.

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Speaker 1: Oh it certainly has picked up today, hasn't it. The

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Speaker 1: main story this morning is a cracker. Slightly Weaker than

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Speaker 1: expected inflation figures have alleviated fears of another interest rate

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Speaker 1: hike and raised hopes of a cut early next year.

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Speaker 2: Investors, and the consensus among as is that the next

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Speaker 2: move in interest rates will be down, probably sometime in

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Speaker 2: early twenty twenty five. Australian Bureau Statistics data released yesterday

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Speaker 2: shows that inflation for the Dune quarter came in at

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Speaker 2: one percent and three point eight percent for the full year.

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Speaker 2: The annual figure is a slight uptick, but it was

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Speaker 2: expected given the higher costs of rents and fuels and

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Speaker 2: things like that. The all important trimmed mean, which removes

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Speaker 2: volatile items, it's the one that the Reserve Bank likes

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Speaker 2: to think about. It came in at one percent for

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Speaker 2: the quarter as well and three point nine percent for

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Speaker 2: the year. That was actually slightly lower than expected. When

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Speaker 2: the Reserve Bank Board meets next week to deliberate on rates,

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Speaker 2: any number higher than four percent for that underlying rate

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Speaker 2: would have put pressure on them to hike interest rates,

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Speaker 2: but of course that didn't happen. Housing, including rents, is

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Speaker 2: driving prices higher, as their services like health and general

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Speaker 2: insurance and education. But economists pointed out that heat appears

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Speaker 2: to have come out of services. Inflation. We've been talking

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Speaker 2: a lot about that. It has been slower to fall,

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Speaker 2: but it just seems to be calming a bit. The

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Speaker 2: bondom currency markets reacted swiftly to the inflation figures, with

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Speaker 2: the Aussie dollar dropping below sixty five US cents, while

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Speaker 2: the three year bond rate also fell. Markets had priced

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Speaker 2: in a twenty percent chance of a rate rise ahead

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Speaker 2: of the eleven thirty am announcement next week when the

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Speaker 2: Reserve Bank Board meets. By the end of yesterday, that

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Speaker 2: actually priced in an eight percent chance of a cut.

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Speaker 2: Not much but a flip flop. While the consensus is

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Speaker 2: that the next move in the benchmark interest rate is

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Speaker 2: down next year, some economists, notably West Pax Lucy Ellis,

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Speaker 2: until recently was the Central banks chief economist, thinks it

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Speaker 2: might actually occur in November.

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Speaker 1: Early highlight for me so far today, Sean, you're used

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Speaker 1: the term.

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Speaker 2: Flip flop, flip flop. I actually like the word SAgs.

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Speaker 2: You said SAgs in the intro. I like that one

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Speaker 2: flip flop SAgs.

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Speaker 1: Gosh, run a roll. We are on a roll here today, Sean.

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Speaker 1: Now do you think the Reserve Bank will be relieved

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Speaker 1: by the inflation figures yesterday?

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Speaker 2: Absolutely? Inflation remains too high sticky, so to speak. But

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Speaker 2: further rate hikes could well tip the economy into recession

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Speaker 2: and that's not what the Central Bank wants. While the

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Speaker 2: employment market has remained remarkably resilient, unemployment is trending higher,

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Speaker 2: no doubt about that. There's been a sharp slow down

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Speaker 2: in the retail sector and in the construction sector. The

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Speaker 2: number of insolvencies hit a record last financial year on

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Speaker 2: a per capita basis. We are in a recession already.

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Speaker 2: We know that, even though officially the economy expanded at

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Speaker 2: just over one percent in the twelve months at the

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Speaker 2: end of June. As I said, the Reserve Bank doesn't

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Speaker 2: want to put the economy into recession. The inflation figures

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Speaker 2: show that price rises remain too high, but the trimm

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Speaker 2: mean measure now gives the Central Bank a reason not

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Speaker 2: to move on interest rates. Good day all round.

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Speaker 1: Yeah, indeed, and you get some great insights, some great analysis.

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Speaker 1: After the show, you've got an interview coming up with

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Speaker 1: Gareth Ed, head of Australian Economics at the Commonwealth Bank.

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Speaker 2: I shall do. He is another person who thinks that

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Speaker 2: the first cut might be in November. We've got the

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Speaker 2: head of Australian economics at the Commonwealth Bank and the

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Speaker 2: head of economics at Westpac both talking late this year.

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Speaker 2: I think we probably should put some merit in what

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Speaker 2: they're saying. So it's definitely worth listening to my chat

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Speaker 2: with Gareth.

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Speaker 1: Yeah, he is fantastic to listen to. On all of

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Speaker 1: these things, and we love talking to him after any

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Speaker 1: of this data comes through because he really does just

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Speaker 1: put it into plain English as to what the outcome

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Speaker 1: might be. Now, how did the share market respond to

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Speaker 1: the inflation figures?

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Speaker 2: Oh, I loved it. They're very excited about the idea

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Speaker 2: that they won't be an interest rate hike next week.

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Speaker 2: And the SMPAX surged one point eight percent to close

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Speaker 2: at eight and ninety two points, a new record, regaining

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Speaker 2: all those losses of recent days. Some of the interest

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Speaker 2: straight sensitive stocks did best. Consumer discretionary groups like Wes Farmers, JB,

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Speaker 2: hi Fi and Harvey Norman all did well. The banks

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Speaker 2: did well, led by Westpac, which rose two and a

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Speaker 2: half percent. Nation An Australian Bank and A and Said

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Speaker 2: both jumped around two percent. Comonwealth Bank was up one percent.

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Speaker 2: Tech stocks outperformed, with zero, Iria and weistet Global all

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Speaker 2: doing well. The energy companies also did well, as oil

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Speaker 2: rallied following unrest in the Middle East. More on that shortly.

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Speaker 2: A strong performance by Rio, we'll talk about that one

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Speaker 2: later too. That pushed up the share prices of BHP

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Speaker 2: and fortes qu Metals, as well as the company itself.

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Speaker 1: And what about international markets, what's happening there? More broad

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Speaker 1: there's a very broad question, isn't it just what's happening

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Speaker 1: in the rest of the world.

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Speaker 2: Really, Yeah, well, plenty going on. China's manufacturing activity fell

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Speaker 2: for a third consecutive month in July, according to an

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Speaker 2: official survey, increasing pressure to speed up stimulus measures to

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Speaker 2: boost the world's second biggest economy. China's pop euro this

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Speaker 2: week called for faster implementation of a stimulus program, and

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Speaker 2: the central Bank has cut interest rates as the government

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Speaker 2: tries to meet its economic growth target of five percent

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Speaker 2: for this year, very important for the global economy, but

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Speaker 2: especially the Australian economy. In Japan, the central bank lifted

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Speaker 2: its benchmark interest rate said it would lower bond purchases. Now. Japan,

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Speaker 2: among the major economies, has had one of the most

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Speaker 2: accommodative for easy monasty policy stances, so it hiked rates

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Speaker 2: yesterday to zero point two five percent. So we're not

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Speaker 2: talking about restrictive monetary policy here anyway. It's had easy

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Speaker 2: money for a long time. It's starting to change on that.

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Speaker 2: On Wall Street and Video shares tumbled seven percent most

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Speaker 2: ince April, and the group has now lost twenty three

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Speaker 2: percent of its value in three weeks. It was the

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Speaker 2: main reason the NASDAK lost one point three percent yesterday morning,

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Speaker 2: while you Broader SMP five hundred close down half percent.

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Speaker 2: Not helping was a disappointing result from Microsoft. I'll tell

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Speaker 2: you about that later in the bulletin as well.

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Speaker 1: Something else that's coming up later, Sean. When I say later,

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Speaker 1: I mean a fair bit later. At midday is the

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Speaker 1: next bonus episode of Ask, Fear and Greed, which is

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Speaker 1: the podcast a short podcast, it's only three or four

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Speaker 1: or five minutes or so where we take listener questions

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Speaker 1: and answer them or do you. I ask you and

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Speaker 1: you answer them. And today we've got a great question

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Speaker 1: coming from Duncan and I won't spoil it, but it

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Speaker 1: gets into polity, it gets into economics, it gets into

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Speaker 1: all kinds of things, and it's a really fascinating one.

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Speaker 1: And we had a good question earlier in the week

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Speaker 1: as well from Joey about the ASX two hundred and

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Speaker 1: what the index actually means, what the points actually refer to.

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Speaker 1: We've had a bunch of great questions come in since

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Speaker 1: we started this a few weeks ago. So if you've

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Speaker 1: got a question that you would like us to answer.

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Speaker 1: It can be anything about business, the economy, anything to

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Speaker 1: do with finance. Really, send it on through via Facebook, Instagram,

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Speaker 1: LinkedIn or the website fearangreed dot com today you and

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Speaker 1: will pop it on the list to answer it.

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Speaker 2: Yeah, and I like this question today, Well worth a

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Speaker 2: list in this one.

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Speaker 1: Yeah, it's a cracker. It's coming up at midday fair

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Speaker 1: but to get through before that though, Sean, we'll be

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Speaker 1: back in a moment with the rest of the day's

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Speaker 1: business news. Sean. National home values rose by zero point

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Speaker 1: five percent in July, the eighteenth consecutive month of increases

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Speaker 1: and prices of more than thirteen percent higher than early

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Speaker 1: last year. But it isn't all good news.

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Speaker 2: No. The Australian market is now split in two, with Perth,

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Speaker 2: Brisbane and Adelaide soaring while Melbourne, Hobud and Darwin are struggling.

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Speaker 2: To say the least. That's according to core Logic figures,

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Speaker 2: Sydney is sitting somewhere in between. House prices fell during

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Speaker 2: the last three months in Melbourne. Now in Sydney they're

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Speaker 2: up just one percent during that rolling three month period,

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Speaker 2: much slower than the five percent pace this time last year.

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Speaker 2: Core Logic's research director Tim Lawler says it's clear momentum

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Speaker 2: has come out of the market in most cities. It's

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Speaker 2: a supply and demand story. The cities where supplies below average,

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Speaker 2: that's Perth, Brisbane and Adelaide are the cities where prices

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Speaker 2: are soaring, and vice versa for the struggling cities. What's

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Speaker 2: interesting is affordability problems are really kicking in. The fastest

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Speaker 2: growth across the nation over the past three months comes

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Speaker 2: from the lowest quartole of house prices, so we're talking

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Speaker 2: about the cheapest house prices where you're getting most growth.

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Speaker 2: Price growth among very expensive homes is much much lower. Also,

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Speaker 2: unit prices are now rising faster than house prices across

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Speaker 2: most capitals, with the exceptions being Dalwin and Capital. That

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Speaker 2: also reflects that affordability factor. A lot going on in

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Speaker 2: the market. Really fascinating to watch now.

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Speaker 1: I mentioned this one at the top of the show.

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Speaker 1: Sean Rio Tinto made a net profit of nearly nine

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Speaker 1: billion dollars over the six months to June, but rather

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Speaker 1: than boost dividends to shareholders, the country's third largest minor

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Speaker 1: will spend more on growth projects.

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Speaker 2: The five point eight billion at US dollar profit was

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Speaker 2: close to expectations and up fourteen percent on a year earlier.

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Speaker 2: It was driven by improved earnings in its copper and

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Speaker 2: aluminium operations. Sign All business though well that's the breadwinner.

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Speaker 2: Although the segment's profit was down ten percent on a

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Speaker 2: year earlier, Boss Jakub Stausholm said the company was consistently

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Speaker 2: very profitable and growing. The dividend of a dollar seventy

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Speaker 2: seven US a share is slightly lower than expected, though

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Speaker 2: it's still the fourth biggest interim dividend in the minus

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Speaker 2: one hundred and fifty one year history. The money it's

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Speaker 2: saving or the money it's not giving back to shareholders

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Speaker 2: will mostly go on investment. Rio share price closed up

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Speaker 2: two percent yesterday.

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Speaker 1: Shown About six hundred jobs are at risk at troubled

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Speaker 1: airline Regional Express after the company's shares were suspended yesterday

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Speaker 1: and flights between Capital cities canceled.

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Speaker 2: Workers were told the business that services seventy three seven

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Speaker 2: flights and Capital cities will cease to operate and three

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Speaker 2: hundred and sixty jobs will go. Another two hundred and

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Speaker 2: fifty jobs are at risk on regional routes, according to

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Speaker 2: the Financial Review. Both Quants and virgin have committed to

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Speaker 2: pick up as many jobs as possible. Federal treasure Jim

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Speaker 2: Chalmers yesterday stopped short of agreeing that the government should

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Speaker 2: take in equity stake in REX. Others in the industry

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Speaker 2: said the crisis at the regional airline should be a

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Speaker 2: catalyst for reform. A white paper into Sydney Airport for example,

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Speaker 2: that's well overed you. That's a federal government white paper.

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Speaker 2: It's well overed you. Sydney Airport Chief Executive Scott Charlton

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Speaker 2: was out yesterday talking about Rex's demise. He said it

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Speaker 2: demonstrates we need to change some things in the australiviation

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Speaker 2: market for competition to thrive, because recent history suggests the

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Speaker 2: barriers are too high.

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Speaker 1: Shawany had some interesting things to say in yesterday's newsletter,

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Speaker 1: the Fear and Greed newsletter, which comes out every Wednesday,

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Speaker 1: just about the importance of REX to Regional Australia and

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Speaker 1: really why maybe this is a case where there should

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Speaker 1: be perhaps additional support.

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Speaker 2: Yeah. I'm not a great believer in government intervention, particularly

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Speaker 2: into listed companies, but in this instance it's happened before,

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Speaker 2: so it happened in the banking crisis when there's definitely

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Speaker 2: government intervention to help or help some of the smaller

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Speaker 2: banks and pressure some of the larger banks to take

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Speaker 2: over the smaller banks. So it does happen sometimes, and

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Speaker 2: I think you know, in terms of transport and airlines

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Speaker 2: in regional Australia, that's somewhere where the government does have

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Speaker 2: a role to play.

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Speaker 1: Yeah, interesting comments. And if you haven't signed up for

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Speaker 1: the Fear and Greed weekly newsletter, do so at Fearangreed

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Speaker 1: dot com today you Now, the Federal government will accept

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Speaker 1: one hundred and thirty out of one hundred and seventy

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Speaker 1: two recommendations in principle, but only thirteen in full of

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Speaker 1: the Disability Royal Commission's findings.

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Speaker 2: The Albanezi government will focus on improving job pathways for

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Speaker 2: Australians with disabilities as part of a broad three hundred

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Speaker 2: and seventy one million dollar package that comes in response

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Speaker 2: to the I suppose what can only be described as

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Speaker 2: harrowing stories that emerged from the Royal Commission Now. According

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Speaker 2: to a report in the Guardian, the long awaited response

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Speaker 2: to the Royal Commission into Violence, abuse, neglect, the exploitation

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Speaker 2: of people with Disability comes ten months after the final

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Speaker 2: report just showed how terrible the situation was. Human rights

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Speaker 2: was at the center of the landmark report, recommending urgent

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Speaker 2: reforms across housing, education, health, employment, criminal justice and disability

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Speaker 2: services to make Australia a more inclusive society. The principles

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Speaker 2: the government agreed to in full include a review of

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Speaker 2: the National Disability Strategy, improvements to the Employment Services model,

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Speaker 2: and transition guidelines for NDIS participants entering custody and returning

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Speaker 2: to the community.

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Speaker 1: A and Z has officially taken control of sun Corpse

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Speaker 1: banking operations after a seven hundred and forty three day,

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Speaker 1: four point nine billion dollar saga.

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Speaker 2: I'm sure it's a relief for both ain Z and

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Speaker 2: sun Corp this one. The deal was initially rejected by

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Speaker 2: the Australian Competition and Consumer Commission. That decision was reversed

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Speaker 2: after ain Z appealed it. The Melbourne based bank now

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Speaker 2: becomes a much bigger player in home mortgages, particularly in Queensland.

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Speaker 2: The Brisbane based Suncourt becomes a pure insurance play, thus

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Speaker 2: ending the only major player left in the bank. Assurance

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Speaker 2: trend started a few decades ago when I was first

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Speaker 2: a banking writer at the financial Review, it was all

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Speaker 2: about bank assurance. You know, banks insurance working together. That's

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Speaker 2: fallen away. Ain Z has plenty on its plate. Obviously

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Speaker 2: it has sun Corps banking operations now, but it's also

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Speaker 2: under pressure on the back of the bond trading scandal

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Speaker 2: that's hit the bank. Its job now is to deal

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Speaker 2: with that scandal while it integrates sun Corpse customers to

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Speaker 2: AIMS and Z. I think I'll leave it to the

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Speaker 2: share market to have the final comment on this deal

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Speaker 2: since it went through so since the Appeals Tribunal agreed

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Speaker 2: to it. A and Z's share price is up six percent.

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Speaker 2: Sun Corp is up twenty five percent.

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Speaker 1: Well there you go. One more Sean Westpac customers will

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Speaker 1: be able to speak to staff at their bank via

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Speaker 1: its banking app using a verified call, in a move

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Speaker 1: that the company hopes will help reduce the hundreds of

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Speaker 1: millions of dollars that Australians are losing to banking scams

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Speaker 1: every year.

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Speaker 2: In a bid to block ever more sophisticated impersonation scams,

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Speaker 2: Westpac will roll out a new security product in partnership

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Speaker 2: with Optus that allows customers to receive Westpac branded calls

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Speaker 2: via the bank's app, which is used by three point

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Speaker 2: six million people each month. The calls, which will be

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Speaker 2: verified by Optis, will also show the reason for the

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Speaker 2: bank getting in touch with the customer. According to a

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Speaker 2: report in The Cinema Herald and Age, Westpac chief executive

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Speaker 2: Peter King said it should provide customers with the confident

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Speaker 2: and send out of security to help beat scammers and

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Speaker 2: know that they're actually talking to their bank, not someone

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Speaker 2: trying to scam them. As estimates that in twenty twenty three,

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Speaker 2: more than thirty one thousand banking customers had between them

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Speaker 2: lost five hundred and fifty eight million dollars. Interesting story,

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Speaker 2: because you and I were just talking about this in

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Speaker 2: the last twenty four hours. Just how many scams you

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Speaker 2: get each day, how many phone calls you get each day.

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Speaker 1: It's actually reached the point, Sean, where I reckon I

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Speaker 1: get more scams than legitimate phone calls now.

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Speaker 2: But you don't have many friends, Michael.

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Speaker 1: Thank you for reading between the lines on that one.

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Speaker 1: Seohan quite savagely as well. Hush goodness. This seems like

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Speaker 1: a good move, though, doesn't it. I mean, it's anything

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Speaker 1: that's going to help reduce the number of people who

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Speaker 1: are actually being ripped off by scammers.

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Speaker 2: Has got to at least help totally. I mean, you hope.

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Speaker 2: So it's to the point when you don't know the

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Speaker 2: phone number on your phone, you tend not to answer

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Speaker 2: or I tend not to answer it, and it's yeah,

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Speaker 2: it's a real problem. I like the idea of some

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Speaker 2: of westpacketting in touch with me via my app.

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Speaker 1: Yeah, yeah, just adds that a little bit of extra security.

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Speaker 1: Now turning to international news. Now, the crisis in the

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Speaker 1: Middle East is escalating after Israel said it had killed

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Speaker 1: a senior Hesbalah commander and an air strike on Beirut

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Speaker 1: and is suspected of assassinating the leader of Hamas in Iran.

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Speaker 2: Israel said the operation in Beirut was retaliation against the

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Speaker 2: individual responsible for a deadly rocket attack on the Israeli

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Speaker 2: occupied goal in Heights last weekend. The Israeli military said

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Speaker 2: foul Would Sukkhur died in the attack on an area

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Speaker 2: of southern Beirut that is a Hesbela stronghold. The Israeli

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Speaker 2: Defense Forces described mister Sukkah as Hesbela's most senior military commander.

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Speaker 2: Now the strike marks the first time Israel has targeted

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Speaker 2: a Hesblah figure in Beirut since hostilities erupted between the

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Speaker 2: two sides after the Palestinian military group Hamas launched its

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Speaker 2: attack on the Jewish state on October seven. Also yesterday,

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Speaker 2: the leader of Hamas Ismael Haniya, was assassinated in Tehran.

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Speaker 2: No one immediately claimed responsibility, but suspicion fell on Israel.

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Speaker 2: A Hemas official set it's chiefs assassination is a cowardly

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Speaker 2: act that will not go unpunished. Both incidents come as

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Speaker 2: the US continues to lead diplomatic efforts to de escalate

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Speaker 2: the situation, but at the moment it is very very

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Speaker 2: close to erupting into a major conflict.

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Speaker 1: Shawn. Growth in Microsoft's Azure cloud service business slowed last quarter,

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Speaker 1: disappointing investors who are anxious to see a payoff from

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Speaker 1: huge investments in artificial intelligence products.

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Speaker 2: Total revenue in the three months to the end of

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Speaker 2: June increased fifteen percent to sixty five billion US dollars,

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Speaker 2: has nearly one hundred billion Aussie dollars for the three months.

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Speaker 2: But the Azure cloud computing service has been Microsoft's main

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Speaker 2: engine growth and it is slowing. At least a pace

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Speaker 2: of growth is decelerating from thirty one to twenty nine percent.

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Speaker 2: Great numbers still, I agree, but Wall Street investors want

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Speaker 2: exceptional numbers. At the moment, Microsoft shares for about six

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Speaker 2: percent in extended training. Alongside peers such as Amazon and Google.

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Speaker 2: Microsoft has been constructing new data centers to meet demand

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Speaker 2: for cloud computing and power hungry AI services, but in

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Speaker 2: recent weeks investors have been less patient with tech companies

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Speaker 2: efforts to make money out of their cloud computing and

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Speaker 2: AI investments.

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Speaker 1: All right, very big day. Up next is the Fear

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Speaker 1: and Greed Daily Interview. Your guest today is Gareth Aired

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Speaker 1: from the Commonwealth Bank.

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Speaker 2: Yeah, primarily about what happens to interest rates. Now we

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Speaker 2: got that inflation data yesterday where the underlying inflation was

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Speaker 2: slightly lower than expected. Gareth, he tells us what he

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Speaker 2: thinks will happen and when he thinks the next interest

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Speaker 2: rate cut will be.

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Speaker 1: It's a great chat. It is up next in the

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Speaker 1: Fear and Greed playlist on your podcast platform or at

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Speaker 1: Fearangreed dot com today you and don't forget to keep

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Speaker 1: an eye on your playlist around about midday today for

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Speaker 1: the next installment of Ask Fear and Greed with a

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Speaker 1: cracker of a question from a listener by the name

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Speaker 1: of Duncan. Thank you very much, Sean, Thank you, Michael.

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Speaker 1: It is Thursday, the first of August 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 as well on LinkedIn, Instagram, x TikTok and Facebook.

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Speaker 1: On Michael Thompson. That was Fear and Greed. Have a

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Speaker 1: great date.