1 00:00:05,240 --> 00:00:08,119 Speaker 1: Welcome to Fair and Greed the week Ahead. I'm sure, ailma, 2 00:00:08,280 --> 00:00:12,360 Speaker 1: and I'm delighted to say I'm joined this morning after 3 00:00:12,400 --> 00:00:15,840 Speaker 1: a couple of weeks break by economist Stephen Cocoulis. You'll 4 00:00:15,880 --> 00:00:17,560 Speaker 1: find him at the cook dot com and on exit 5 00:00:17,600 --> 00:00:19,320 Speaker 1: using the handle to cook Stephen. 6 00:00:19,400 --> 00:00:23,880 Speaker 2: How was Europe fantastic? Highly recommended? It was just Italy. 7 00:00:24,600 --> 00:00:26,639 Speaker 2: I don't mean justically it was Italy, but what an 8 00:00:26,720 --> 00:00:30,000 Speaker 2: absolutely fabulous place to visit. You know, the Aussie doll 9 00:00:30,120 --> 00:00:33,199 Speaker 2: was doing okay against the euro so the cost pressions 10 00:00:33,200 --> 00:00:36,680 Speaker 2: were not too bad. Absolute highlight. St. Mark's Square in 11 00:00:36,760 --> 00:00:39,120 Speaker 2: Venice flooded when we were there, so it was sort 12 00:00:39,120 --> 00:00:42,200 Speaker 2: of shin deep in water, sort of fearing how high 13 00:00:42,200 --> 00:00:46,040 Speaker 2: the water. Yeah, so I've been in Smuck Square when 14 00:00:46,040 --> 00:00:48,960 Speaker 2: it flooded, So that was That was one of the many, many, 15 00:00:49,000 --> 00:00:49,880 Speaker 2: many highlights. 16 00:00:50,360 --> 00:00:52,800 Speaker 1: Have you kept a cross what's been going on locally though, 17 00:00:52,800 --> 00:00:54,880 Speaker 1: Stephen most important in the economy? 18 00:00:55,080 --> 00:00:59,040 Speaker 2: Oh, I certainly have. And as was the nature of 19 00:00:58,680 --> 00:01:01,880 Speaker 2: our trip away, he was actually having a bit of 20 00:01:01,880 --> 00:01:04,360 Speaker 2: an afternoon rest and so I don't sleep in the 21 00:01:04,400 --> 00:01:07,880 Speaker 2: afternoon rest. Sign Listen to podcasts including Fear and Greed 22 00:01:08,000 --> 00:01:09,720 Speaker 2: just to keep up to date with what's happening the 23 00:01:09,840 --> 00:01:13,039 Speaker 2: data flows. Yep, so I'm up to speed, and I've 24 00:01:13,040 --> 00:01:14,920 Speaker 2: been back for a few days now, so well and 25 00:01:15,040 --> 00:01:18,000 Speaker 2: truly back in the groove. Longing of the time that 26 00:01:18,120 --> 00:01:21,400 Speaker 2: I was having a lovely cup of coffee in some 27 00:01:21,520 --> 00:01:22,080 Speaker 2: Mark Square. 28 00:01:22,600 --> 00:01:24,839 Speaker 1: Fantastic one thing I've noticed. It means I was away 29 00:01:24,880 --> 00:01:26,680 Speaker 1: for a while while year away, and over the past 30 00:01:26,720 --> 00:01:29,479 Speaker 1: two or three weeks, it just seems that the conversation 31 00:01:29,760 --> 00:01:32,399 Speaker 1: definitely in the US a little bit so in Australia, 32 00:01:32,440 --> 00:01:34,880 Speaker 1: with Sarah Hunter, the chief economists from Reserve Bank speaking 33 00:01:34,959 --> 00:01:37,440 Speaker 1: last week, it's just shifting a little bit from inflation 34 00:01:37,600 --> 00:01:40,199 Speaker 1: to the labor market. The conversation it. 35 00:01:40,160 --> 00:01:42,800 Speaker 2: Is certainly from the FED, and of course the FED 36 00:01:42,840 --> 00:01:45,280 Speaker 2: meets later this week. They're going to be cutting into 37 00:01:45,280 --> 00:01:47,559 Speaker 2: straits is a very high probability that will be twenty 38 00:01:47,560 --> 00:01:51,080 Speaker 2: five basis points, not fifty. But the FED officials over 39 00:01:51,120 --> 00:01:54,840 Speaker 2: the last well week or two or three have been 40 00:01:54,880 --> 00:01:59,440 Speaker 2: saying that yes, we've we've got inflation almost where we 41 00:01:59,480 --> 00:02:02,160 Speaker 2: want it, confident that it will get there. But it's 42 00:02:02,200 --> 00:02:04,640 Speaker 2: the unemployment rate. So the US has had that unemployment 43 00:02:04,720 --> 00:02:07,400 Speaker 2: rate sort of edging up over the last twelve months 44 00:02:07,440 --> 00:02:10,040 Speaker 2: the rate of job growth starting to track a little 45 00:02:10,040 --> 00:02:14,760 Speaker 2: bit lower, not catastrophically so, but it's a similar story 46 00:02:14,760 --> 00:02:17,240 Speaker 2: here in Australia too, where you know our labor force 47 00:02:17,320 --> 00:02:19,000 Speaker 2: numbers which are out later this week as well, which 48 00:02:19,000 --> 00:02:21,720 Speaker 2: will touch on later, are also showing signs of softness 49 00:02:21,760 --> 00:02:25,280 Speaker 2: and maybe, just maybe that'll feed into the RBA changing 50 00:02:25,320 --> 00:02:28,160 Speaker 2: its view and the not too distant future about whether 51 00:02:28,200 --> 00:02:29,440 Speaker 2: a rate cut is needed here. 52 00:02:29,960 --> 00:02:32,320 Speaker 1: So there is a Chief economists Sarah Hunter last week 53 00:02:32,360 --> 00:02:35,640 Speaker 1: was talking about this concept of full employment, which is 54 00:02:36,040 --> 00:02:39,640 Speaker 1: very difficult to pin down, but the idea, Steve just 55 00:02:39,680 --> 00:02:42,160 Speaker 1: explain it. When you have full employment, that's a good thing, 56 00:02:42,200 --> 00:02:44,040 Speaker 1: isn't it. But you don't want too much full employment. 57 00:02:44,680 --> 00:02:46,840 Speaker 2: Like good red wine, there's an optimalm out. If you 58 00:02:46,880 --> 00:02:48,120 Speaker 2: have too much of a good thing, you still get 59 00:02:48,160 --> 00:02:50,600 Speaker 2: to hang over the next day. So full employment, as 60 00:02:50,600 --> 00:02:53,080 Speaker 2: you quite rightly touched on and Sarah touched on in 61 00:02:53,120 --> 00:02:56,360 Speaker 2: her terrific speech I recommend people read it was that 62 00:02:56,520 --> 00:03:01,720 Speaker 2: when everybody who wants a job can find job relatively easily, 63 00:03:02,240 --> 00:03:05,560 Speaker 2: that is full employment. And the way that it's generally 64 00:03:05,639 --> 00:03:09,840 Speaker 2: calculated is with two indicators. One is the unemployment rate, 65 00:03:09,960 --> 00:03:12,320 Speaker 2: So is there a level that the unemployment rate can 66 00:03:12,400 --> 00:03:15,880 Speaker 2: fall to without there being inflation pressures? And that's where 67 00:03:15,880 --> 00:03:18,760 Speaker 2: the second element comes in, which is wages, because if 68 00:03:18,760 --> 00:03:21,359 Speaker 2: you have a what do we call it, over full employment, 69 00:03:21,400 --> 00:03:24,480 Speaker 2: So if the economy is absolutely humming along and roaring along, 70 00:03:24,880 --> 00:03:27,560 Speaker 2: then of course businesses have to pay up more for 71 00:03:27,639 --> 00:03:30,840 Speaker 2: the scarce labor because the unemployment rates so low, causing 72 00:03:30,960 --> 00:03:34,560 Speaker 2: wages to increase, and you get that wage price spiral. 73 00:03:34,600 --> 00:03:38,240 Speaker 2: Now we haven't seen that in Australia at this stage, 74 00:03:38,320 --> 00:03:40,480 Speaker 2: and in fact, if anything, the wages growth are starting 75 00:03:40,480 --> 00:03:42,960 Speaker 2: to sort of taper off a little bit in line 76 00:03:42,960 --> 00:03:46,560 Speaker 2: with the slowing economy. But ideally if you want full employment, yes, 77 00:03:46,600 --> 00:03:49,400 Speaker 2: it's a very very difficult thing to pinpoint. You only 78 00:03:49,440 --> 00:03:51,080 Speaker 2: know really a year after the event whether you got 79 00:03:51,080 --> 00:03:53,240 Speaker 2: there or not. But in the meantime, you know, the 80 00:03:53,360 --> 00:03:56,920 Speaker 2: RBA charter is to grow the economy meet the inflation target, 81 00:03:56,960 --> 00:04:01,160 Speaker 2: of course, but also to maintain economyent full employment. And 82 00:04:01,200 --> 00:04:03,600 Speaker 2: that's the sort of challenge that the markets are now 83 00:04:03,680 --> 00:04:06,320 Speaker 2: mulling over as we consider what happens to THEBA interest 84 00:04:06,360 --> 00:04:10,080 Speaker 2: rates over the next well the next six twelve eighteen months. 85 00:04:10,000 --> 00:04:12,400 Speaker 1: And in a couple of days time we get the 86 00:04:12,840 --> 00:04:15,200 Speaker 1: labor force figures from the Bureau Statistics, which will help 87 00:04:15,280 --> 00:04:17,880 Speaker 1: us work out whether at full employment or not maybe 88 00:04:17,880 --> 00:04:19,600 Speaker 1: a wait, but at least it'll give us a number. 89 00:04:19,880 --> 00:04:23,280 Speaker 2: Another snapshot. So again, this is a fascinating thing, and 90 00:04:23,720 --> 00:04:25,160 Speaker 2: you know, I've been around long enough. I've got to 91 00:04:25,240 --> 00:04:27,200 Speaker 2: change my thinking on some of these things too. But 92 00:04:27,279 --> 00:04:31,440 Speaker 2: the population growth in Australia means that we have to 93 00:04:31,839 --> 00:04:34,599 Speaker 2: have employment of a round about plus thirty five thousand 94 00:04:34,680 --> 00:04:37,839 Speaker 2: per month for the unemployment rate to remain stable. That 95 00:04:37,960 --> 00:04:40,039 Speaker 2: is the growth rate, if you like, of the population 96 00:04:40,080 --> 00:04:43,560 Speaker 2: and the labor force. So if we get anything less 97 00:04:43,560 --> 00:04:45,679 Speaker 2: than that, say we just got a plus ten thousand, 98 00:04:46,080 --> 00:04:48,640 Speaker 2: that's not strong enough and the unemployment rate would creep up. 99 00:04:48,680 --> 00:04:51,960 Speaker 2: So that's a roundabout way of saying that after the 100 00:04:52,000 --> 00:04:54,719 Speaker 2: last couple of months of relatively what appeared to be 101 00:04:54,760 --> 00:04:57,400 Speaker 2: solid employment growth, the market's looking for a bit of 102 00:04:57,400 --> 00:05:00,200 Speaker 2: a pullback and round about plus twenty five to twenty 103 00:05:00,240 --> 00:05:03,679 Speaker 2: thousand in employment growth. Unemployment rate, which is four point 104 00:05:03,680 --> 00:05:06,599 Speaker 2: two is expected to be steady at four point two. 105 00:05:07,000 --> 00:05:10,080 Speaker 2: But as we know with these labor force surveys, from 106 00:05:10,120 --> 00:05:12,480 Speaker 2: the Bureau of Statistics. There can be these little quirks 107 00:05:12,480 --> 00:05:15,039 Speaker 2: that get thrown up every now and then. If there's 108 00:05:15,160 --> 00:05:18,760 Speaker 2: any increase in the unemployment rate or any downside surprise 109 00:05:18,800 --> 00:05:22,320 Speaker 2: to employment, then that rate high speculation that will be 110 00:05:22,360 --> 00:05:25,160 Speaker 2: fueled by the Fed rate cup later this week will 111 00:05:25,200 --> 00:05:26,400 Speaker 2: be sort of a bit more intense. 112 00:05:26,839 --> 00:05:29,240 Speaker 1: It's going to be interesting. Stephen, thank you for joining 113 00:05:29,240 --> 00:05:29,839 Speaker 1: me this morning. 114 00:05:30,160 --> 00:05:30,680 Speaker 2: Thanks Jean. 115 00:05:30,920 --> 00:05:33,280 Speaker 1: There is economist Stephen Corculus, better known as the Kok. 116 00:05:33,320 --> 00:05:35,320 Speaker 1: You can find him at the cook dot com and 117 00:05:35,400 --> 00:05:37,920 Speaker 1: follow him on exit using the handle of the Kirk. 118 00:05:38,000 --> 00:05:40,120 Speaker 2: That's t G k UK the Cook. 119 00:05:40,360 --> 00:05:42,320 Speaker 1: I'm sure aim, and this is fear and greed. The 120 00:05:42,360 --> 00:05:42,920 Speaker 1: week ahead.