1 00:00:03,490 --> 00:00:06,950 Michael Thompson: It's Monday the 4th of October, 2021. Welcome to Fear 2 00:00:06,950 --> 00:00:09,289 Michael Thompson: And Greed, the business podcast that sets you up for 3 00:00:09,289 --> 00:00:12,730 Michael Thompson: a successful day. I'm Michael Thompson, and good morning, Sean Aylmer. 4 00:00:13,060 --> 00:00:13,710 Sean Aylmer: Good morning, Michael. 5 00:00:14,160 --> 00:00:17,040 Michael Thompson: Tumbling equity markets and what happens next, is our main 6 00:00:17,040 --> 00:00:19,560 Michael Thompson: story this morning. Plus, we look at who the most 7 00:00:19,560 --> 00:00:22,710 Michael Thompson: powerful business leaders are in the country. The COVID numbers 8 00:00:22,710 --> 00:00:25,389 Michael Thompson: in New South Wales fall, and keep rising in Victoria. 9 00:00:25,660 --> 00:00:29,260 Michael Thompson: And house prices just keep running. Then, stay listening for 10 00:00:29,260 --> 00:00:32,680 Michael Thompson: Sean's chat to Michele Romanow. The Canadian entrepreneur that wants 11 00:00:32,680 --> 00:00:35,409 Michael Thompson: to invest a hundred million dollars in Australia, using a 12 00:00:35,409 --> 00:00:38,959 Michael Thompson: very unusual model. Now with half the country on a 13 00:00:38,960 --> 00:00:41,420 Michael Thompson: public holiday today, a bit of a shorter show this morning, 14 00:00:41,420 --> 00:00:44,920 Michael Thompson: but let's get into it. Sean, September lived up to 15 00:00:44,920 --> 00:00:47,449 Michael Thompson: its reputation as being a bad month for shares, with 16 00:00:47,450 --> 00:00:51,220 Michael Thompson: the local market down nearly 3%. That continued on Friday, 17 00:00:51,220 --> 00:00:54,990 Michael Thompson: with the market falling another 2%. What can we expect now 18 00:00:55,000 --> 00:00:56,100 Michael Thompson: as we run into October? 19 00:00:56,500 --> 00:00:59,020 Sean Aylmer: Pretty tough question that one, Michael. What can we expect 20 00:00:59,140 --> 00:01:04,730 Sean Aylmer: in October? You're right. The market was down 2.7% during September. Remember, September, 21 00:01:05,230 --> 00:01:08,010 Sean Aylmer: over the last 35 years has consistently been the worst 22 00:01:08,010 --> 00:01:10,070 Sean Aylmer: month of the year. And it proved that again, this time around. 23 00:01:10,510 --> 00:01:13,130 Sean Aylmer: In the U.S., shares were down nearly 5%. Bond yields rose, and 24 00:01:13,770 --> 00:01:16,740 Sean Aylmer: that reflects fears about inflation and oil prices jumped during 25 00:01:16,740 --> 00:01:20,319 Sean Aylmer: the month. But to answer your question, AMP Capital's Shane Oliver, 26 00:01:20,319 --> 00:01:23,169 Sean Aylmer: put a note out over the weekend. Suggesting that in 27 00:01:23,170 --> 00:01:25,810 Sean Aylmer: the next few weeks, there's still a strong risk of 28 00:01:25,810 --> 00:01:28,720 Sean Aylmer: a severe correction. That means markets falling quite a bit. 29 00:01:28,940 --> 00:01:31,860 Sean Aylmer: He said, being highly sensitive to the global growth cycle, 30 00:01:31,860 --> 00:01:34,929 Sean Aylmer: means the local share market is more vulnerable to some 31 00:01:34,930 --> 00:01:37,669 Sean Aylmer: international concerns, such as the slowdown in China that we 32 00:01:37,670 --> 00:01:40,730 Sean Aylmer: know about. The energy crisis in parts of Europe, particularly 33 00:01:40,770 --> 00:01:45,130 Sean Aylmer: the United Kingdom and Asia. And rising inflationary pressures. Dr. 34 00:01:45,130 --> 00:01:48,900 Sean Aylmer: Oliver also highlighted the need for very, very high vaccination rates, 35 00:01:49,070 --> 00:01:52,670 Sean Aylmer: to prevent spikes in cases. Now we've already seen in 36 00:01:52,670 --> 00:01:57,020 Sean Aylmer: Israel and Singapore, where they've reopened economies at 80% vaccination rates, 37 00:01:57,330 --> 00:01:59,780 Sean Aylmer: big spikes. So that's still ahead of us. It looks 38 00:01:59,780 --> 00:02:03,060 Sean Aylmer: like it will be a rocky path throughout October, for 39 00:02:03,060 --> 00:02:03,850 Sean Aylmer: share markets. 40 00:02:04,620 --> 00:02:06,500 Michael Thompson: How did markets perform over the weekend? 41 00:02:07,050 --> 00:02:09,450 Sean Aylmer: I mentioned the local market, it had a shocker on Friday, 42 00:02:09,450 --> 00:02:14,980 Sean Aylmer: finishing 2% lower. The benchmark index closed on 7,186 points, 43 00:02:15,240 --> 00:02:17,730 Sean Aylmer: back to where it was in late May and off 44 00:02:17,730 --> 00:02:21,610 Sean Aylmer: nearly 6% from its high in mid August. The fall 45 00:02:21,610 --> 00:02:25,490 Sean Aylmer: in the ASX 200 was pretty widespread with many large stocks tumbling. 46 00:02:25,490 --> 00:02:27,280 Sean Aylmer: Commonwealth Bank was the big one. It was off more 47 00:02:27,280 --> 00:02:30,530 Sean Aylmer: than 4%. Really unusual for the biggest company in the 48 00:02:30,530 --> 00:02:34,320 Sean Aylmer: country to drop that much. Aristocrat Leisure is another really 49 00:02:34,320 --> 00:02:37,680 Sean Aylmer: strong performer recently. It was at 4%. Rio Tinto and 50 00:02:37,680 --> 00:02:40,770 Sean Aylmer: Macquarie Group were both down nearly 3%. But the worst 51 00:02:40,770 --> 00:02:42,680 Sean Aylmer: of the day went to Virgin Money. It's actually a 52 00:02:42,690 --> 00:02:46,440 Sean Aylmer: UK based financial services group listed here in Australia. It 53 00:02:46,440 --> 00:02:49,950 Sean Aylmer: tumbled nearly 8%. On the flip side, the gold companies 54 00:02:49,950 --> 00:02:52,290 Sean Aylmer: were among the best on Friday, with Silver Lake Resources 55 00:02:52,290 --> 00:02:54,770 Sean Aylmer: and Gold Road Resources being the best on the bourse, 56 00:02:54,770 --> 00:02:57,660 Sean Aylmer: up around 4%. Northern Star Resources rose two and a 57 00:02:57,660 --> 00:03:01,270 Sean Aylmer: half percent while Newcrest Mining jumped 1%. The price of 58 00:03:01,270 --> 00:03:05,220 Sean Aylmer: gold itself, jumped more than 3% in that last 24 59 00:03:05,220 --> 00:03:07,820 Sean Aylmer: hour period last week. It was a pretty strong finish 60 00:03:07,820 --> 00:03:10,100 Sean Aylmer: over the weekend for Wall Street as well. The Nasdaq was 61 00:03:10,169 --> 00:03:14,239 Sean Aylmer: up 0.7%. But the S&P 500 and Dow Jones Industrial Average, 62 00:03:14,510 --> 00:03:16,880 Sean Aylmer: they were both up more than 1%. Quite the opposite 63 00:03:16,880 --> 00:03:19,500 Sean Aylmer: in Europe, where major indices were lower. And Michael, the 64 00:03:19,500 --> 00:03:21,580 Sean Aylmer: Aussie dollar is trading at 72 and a half U.S. 65 00:03:21,790 --> 00:03:22,299 Sean Aylmer: cents 66 00:03:22,550 --> 00:03:24,230 Michael Thompson: Alright. We'll be back in a moment with the rest 67 00:03:24,230 --> 00:03:30,950 Michael Thompson: of the day's business news. Sean, 68 00:03:30,950 --> 00:03:32,530 Michael Thompson: plenty of stories around this morning. 69 00:03:32,800 --> 00:03:35,520 Sean Aylmer: Sure is, Michael. Let's start on the COVID news. New 70 00:03:35,520 --> 00:03:38,320 Sean Aylmer: South Wales said it was likely to hit the 70% 71 00:03:38,630 --> 00:03:42,010 Sean Aylmer: vaccination target by the middle of this week. Great news 72 00:03:42,010 --> 00:03:44,880 Sean Aylmer: for everyone in that state. It's recorded cases are on 73 00:03:44,880 --> 00:03:47,790 Sean Aylmer: the decline, particularly in the Sydney region though they are 74 00:03:47,790 --> 00:03:50,370 Sean Aylmer: on the rise in rural parts of the state. The 75 00:03:50,370 --> 00:03:53,570 Sean Aylmer: same can't be said of Victoria. Premier Daniel Andrews, said it would 76 00:03:53,570 --> 00:03:55,770 Sean Aylmer: only be a few more weeks until residents of the 77 00:03:55,770 --> 00:04:01,770 Sean Aylmer: state could be freer notwithstanding there were another 1,220 cases recorded yesterday. 78 00:04:02,230 --> 00:04:05,670 Sean Aylmer: There were 38 cases in the ACT, and none in Queensland. 79 00:04:05,670 --> 00:04:07,820 Sean Aylmer: Which of course allowed the football to go ahead last night. 80 00:04:08,020 --> 00:04:11,700 Michael Thompson: Yeah, absolutely. And now Sean, it's also the time of 81 00:04:11,700 --> 00:04:14,280 Michael Thompson: year that the Financial Review releases its list of the 82 00:04:14,280 --> 00:04:17,370 Michael Thompson: most powerful figures in the country. Late last week, we 83 00:04:17,370 --> 00:04:19,360 Michael Thompson: saw the list for politics, and we discussed that a 84 00:04:19,360 --> 00:04:22,279 Michael Thompson: bit yesterday in our Sunday show. But there's also at 85 00:04:22,279 --> 00:04:23,620 Michael Thompson: least for business leaders. 86 00:04:23,990 --> 00:04:26,670 Sean Aylmer: That's right. The business leaders number one, Michael, who do 87 00:04:26,670 --> 00:04:28,760 Sean Aylmer: you think should be the top rated? 88 00:04:29,089 --> 00:04:31,490 Michael Thompson: I'd probably say the CEO of the biggest company, Commonwealth 89 00:04:31,490 --> 00:04:32,739 Michael Thompson: Bank CEO, Matt Comyn. 90 00:04:32,830 --> 00:04:36,010 Sean Aylmer: Yeah. That's exactly right. Matt Comyn seems to have been everywhere. 91 00:04:36,010 --> 00:04:38,460 Sean Aylmer: He's been ranked number one by the Financial Review. And 92 00:04:38,460 --> 00:04:41,029 Sean Aylmer: I think that's probably fair enough. He seems to be 93 00:04:41,029 --> 00:04:44,610 Sean Aylmer: a player in many issues just beyond banking. Some CEOs 94 00:04:44,610 --> 00:04:46,839 Sean Aylmer: like to stick to their knitting. Matt Comyn is one 95 00:04:46,839 --> 00:04:49,560 Sean Aylmer: who's happy to speak out away from it. Number two 96 00:04:49,560 --> 00:04:53,210 Sean Aylmer: is Fortescue's Andrew Forrest. Number three is Rob Scott from Wesfarmers. 97 00:04:53,210 --> 00:04:55,500 Sean Aylmer: I think that's an interesting choice, Rob Scott. But if 98 00:04:55,500 --> 00:04:59,050 Sean Aylmer: you look at Wesfarmers, not just it's retailing at Bunnings, Officeworks, 99 00:04:59,050 --> 00:05:02,589 Sean Aylmer: but also it's chemical works in agricultural businesses. It really 100 00:05:02,770 --> 00:05:06,729 Sean Aylmer: is throughout the economy. Number four is Mike Henry from BHP. 101 00:05:06,730 --> 00:05:09,390 Sean Aylmer: No surprise there, given what he did last month. Totally 102 00:05:09,390 --> 00:05:12,270 Sean Aylmer: changing the direction of the big Australian. Number five is 103 00:05:12,270 --> 00:05:15,600 Sean Aylmer: Brad Banducci from Woolworths. That's probably higher up the list 104 00:05:15,600 --> 00:05:18,240 Sean Aylmer: than normal, but given the role Woolworths and Coles have 105 00:05:18,240 --> 00:05:20,320 Sean Aylmer: played during COVID, that's probably fair enough too. 106 00:05:20,600 --> 00:05:23,760 Michael Thompson: Yeah, it probably makes sense. And Sean, the housing market 107 00:05:23,920 --> 00:05:25,089 Michael Thompson: doesn't want to give up. 108 00:05:25,180 --> 00:05:29,720 Sean Aylmer: No. It doesn't. CoreLogic figures released on Friday, showed that nationally, 109 00:05:29,720 --> 00:05:33,950 Sean Aylmer: house prices rose more than 20% for the year ended September. 110 00:05:34,430 --> 00:05:38,360 Sean Aylmer: And in Sydney, property was up 29%. The medium price 111 00:05:38,420 --> 00:05:43,239 Sean Aylmer: of house in Sydney is now $1.4 million. I have no 112 00:05:43,240 --> 00:05:46,969 Sean Aylmer: idea how people, particularly first home owners, can get into 113 00:05:46,970 --> 00:05:50,720 Sean Aylmer: that market. It's yet another reason why regulators are likely 114 00:05:50,720 --> 00:05:52,870 Sean Aylmer: to jump in, and try and take the heat out 115 00:05:52,870 --> 00:05:55,080 Sean Aylmer: of the market. Incredible price rises. 116 00:05:59,140 --> 00:06:01,589 Michael Thompson: Now running through some of the other stories around over 117 00:06:01,610 --> 00:06:04,450 Michael Thompson: the weekend, there was plenty of follow-on from the shock 118 00:06:04,450 --> 00:06:08,720 Michael Thompson: resignation of New South Wales Premier, Gladys Berejiklian, on Friday. Generally, 119 00:06:08,720 --> 00:06:11,630 Michael Thompson: it's been pretty sympathetic to Ms. Berejiklian, and respectful of 120 00:06:11,630 --> 00:06:14,150 Michael Thompson: the job that she's done running the state. Not just 121 00:06:14,150 --> 00:06:16,669 Michael Thompson: during the COVID crisis, but really for the four and 122 00:06:16,670 --> 00:06:17,710 Michael Thompson: a half years she was premier. 123 00:06:17,980 --> 00:06:19,940 Sean Aylmer: What I loved about it, I think within the first 124 00:06:19,960 --> 00:06:24,330 Sean Aylmer: 24 hours, it was Saint Gladys. Everyone loved Gladys Berejiklian, 125 00:06:24,600 --> 00:06:29,870 Sean Aylmer: and then suddenly it just started to emerge that not everyone loved her. Sunday's media 126 00:06:29,910 --> 00:06:33,950 Sean Aylmer: was much harsher than Saturday's media. The Liberal Party needs 127 00:06:33,950 --> 00:06:37,100 Sean Aylmer: a new leader. Clearly, they're gathering tomorrow, with state treasurer, 128 00:06:37,100 --> 00:06:40,730 Sean Aylmer: Dominic Perrottet, favoured over planning minister, Rob Stokes, to take 129 00:06:40,730 --> 00:06:43,170 Sean Aylmer: the position. The other news out of that state yesterday, 130 00:06:43,170 --> 00:06:46,410 Sean Aylmer: the transport minister, Andrew Constance has quit and will run 131 00:06:46,410 --> 00:06:49,270 Sean Aylmer: for the seat of Gilmore in federal parliament, next election. 132 00:06:50,089 --> 00:06:52,409 Sean Aylmer: Just one other thing, Michael, the outgoing chief executive of 133 00:06:52,410 --> 00:06:56,460 Sean Aylmer: Sigma Healthcare, Mark Hooper, has quit from the board of 134 00:06:56,460 --> 00:07:00,100 Sean Aylmer: the company, but will remain a CEO until January, as planned. 135 00:07:00,570 --> 00:07:04,050 Sean Aylmer: It's really unusual for someone who's CEO and on the 136 00:07:04,050 --> 00:07:07,409 Sean Aylmer: board to quit the board, before they actually quit as CEO. 137 00:07:07,810 --> 00:07:09,930 Sean Aylmer: There's been talk in the market that he wasn't happy 138 00:07:10,090 --> 00:07:13,880 Sean Aylmer: with Sigma's decision to bid for API, its main competitor, 139 00:07:14,120 --> 00:07:17,510 Sean Aylmer: trumping the Wesfarmers offer. Maybe that's what's prompted the decision. 140 00:07:17,820 --> 00:07:20,700 Michael Thompson: Yeah. Interesting one, that one. What's the key overseas news 141 00:07:20,700 --> 00:07:21,130 Michael Thompson: this morning? 142 00:07:21,790 --> 00:07:24,470 Sean Aylmer: The Democrats in the U.S., are still fighting over whether 143 00:07:24,470 --> 00:07:29,010 Sean Aylmer: or not to pass their own US$1.25 trillion infrastructure bill. 144 00:07:29,690 --> 00:07:33,310 Sean Aylmer: It's actually a bipartisan bill. So the Republicans are voting 145 00:07:33,310 --> 00:07:36,640 Sean Aylmer: for it, and the Democrats can't decide whether to vote 146 00:07:36,640 --> 00:07:39,700 Sean Aylmer: for it or not, even though Joe Biden is a Democrat. 147 00:07:40,010 --> 00:07:42,700 Sean Aylmer: They've been given another month and the Democratic speaker of 148 00:07:42,700 --> 00:07:46,740 Sean Aylmer: the House of Representatives, Nancy Pelosi, has urged her colleagues 149 00:07:46,900 --> 00:07:50,530 Sean Aylmer: to stop squabbling. Well said. The infrastructure bill is a 150 00:07:50,530 --> 00:07:54,150 Sean Aylmer: central part of the president's legislative agenda, and really important 151 00:07:54,150 --> 00:07:57,510 Sean Aylmer: for financial markets. And also, Michael, Tesla delivered a better 152 00:07:57,510 --> 00:08:03,230 Sean Aylmer: than expected 241,000 cars worldwide during the September quarter. That's a 153 00:08:03,230 --> 00:08:06,710 Sean Aylmer: record for the electric car maker. Now, whatever Tesla does 154 00:08:06,730 --> 00:08:09,490 Sean Aylmer: is seen as a barometer for consumer demand for EVs, 155 00:08:10,300 --> 00:08:13,990 Sean Aylmer: and it just shows how popular electric vehicles are becoming globally. 156 00:08:14,420 --> 00:08:15,680 Michael Thompson: I don't know about you, Sean, but it's still a 157 00:08:15,680 --> 00:08:18,000 Michael Thompson: bit of a novelty for me whenever I see a 158 00:08:18,000 --> 00:08:20,930 Michael Thompson: Tesla around. I'll never be able to afford one, but 159 00:08:21,000 --> 00:08:21,940 Michael Thompson: I still like to see them. 160 00:08:22,390 --> 00:08:25,000 Sean Aylmer: I'm with you, totally. I would love the idea of 161 00:08:25,010 --> 00:08:26,740 Sean Aylmer: owning one, but I think it's a pipe dream. 162 00:08:27,100 --> 00:08:30,840 Michael Thompson: Absolutely. All right. Up next is the daily interview. And today, Sean, 163 00:08:30,840 --> 00:08:35,520 Michael Thompson: you're talking to Michele Romanow. She's very impressive. Canadian entrepreneur, investor, 164 00:08:35,520 --> 00:08:39,070 Michael Thompson: TV personality in her mid thirties, bringing a brand new 165 00:08:39,070 --> 00:08:41,140 Michael Thompson: funding model for startups to Australia. 166 00:08:41,350 --> 00:08:44,210 Sean Aylmer: Yes, Michael, it's a great interview. Michele is full of energy. 167 00:08:44,580 --> 00:08:47,660 Sean Aylmer: She's bringing her own way of lending to small and 168 00:08:47,660 --> 00:08:50,630 Sean Aylmer: medium sized borrowers into Australia. She calls it a fee. Effectively, 169 00:08:50,630 --> 00:08:53,600 Sean Aylmer: it's an interest rate of 6% on whatever you borrow off her. 170 00:08:53,600 --> 00:08:56,500 Sean Aylmer: But she doesn't take security, she doesn't take equity in it. 171 00:08:56,809 --> 00:08:59,910 Sean Aylmer: It's a really interesting funding model, and potentially will disrupt 172 00:09:00,170 --> 00:09:01,480 Sean Aylmer: lending to SMEs (Small to Medium-sized Enterprises). 173 00:09:01,809 --> 00:09:04,020 Michael Thompson: Yeah, it's a fascinating interview that one. Its up next 174 00:09:04,020 --> 00:09:06,480 Michael Thompson: in the Fear And Greed playlist on your podcast platform, 175 00:09:06,480 --> 00:09:09,870 Michael Thompson: or at fearandgreed.com.au. While you're there, have a listen as 176 00:09:09,870 --> 00:09:11,860 Michael Thompson: well to the Sunday edition from yesterday, which is a 177 00:09:11,860 --> 00:09:13,640 Michael Thompson: bit of a lighter look at some of the news 178 00:09:13,720 --> 00:09:16,329 Michael Thompson: from the last week or so. And also of course, 179 00:09:16,330 --> 00:09:20,210 Michael Thompson: The Week Ahead with our resident economist, Stephen Koukoulas. A bit on this week, Sean. 180 00:09:20,730 --> 00:09:22,470 Sean Aylmer: The Kouk's great when it comes to this sort of stuff. 181 00:09:22,470 --> 00:09:24,559 Sean Aylmer: And he loves any time that there's a week that 182 00:09:24,559 --> 00:09:27,840 Sean Aylmer: the Reserve Bank's talking. It's board meets tomorrow and then 183 00:09:27,890 --> 00:09:30,590 Sean Aylmer: late in the week, its financial stability report comes out. 184 00:09:30,590 --> 00:09:33,069 Sean Aylmer: Stephen gives us a rundown about what to expect. 185 00:09:33,190 --> 00:09:34,530 Michael Thompson: All right. Thank you very much, Sean. 186 00:09:34,670 --> 00:09:35,240 Sean Aylmer: Thanks Michael. 187 00:09:35,360 --> 00:09:38,530 Michael Thompson: It's Monday the 4th of October, 2021. Make sure you're 188 00:09:38,530 --> 00:09:42,329 Michael Thompson: following the podcast. Join us online on LinkedIn, Twitter, and Facebook, 189 00:09:42,550 --> 00:09:45,880 Michael Thompson: and sign up for our free daily newsletter at fearandgreed.com.au. 190 00:09:46,679 --> 00:09:49,010 Michael Thompson: I'm Michael Thompson, and that was Fear And Greed. Have 191 00:09:49,010 --> 00:09:49,569 Michael Thompson: a great day.