1 00:00:05,280 --> 00:00:07,680 Speaker 1: Welcome to Fear and Greed the week ahead. I'm Adam 2 00:00:07,760 --> 00:00:10,200 Speaker 1: Lang and with Sean Aylmer and Stephen could Cool us 3 00:00:10,240 --> 00:00:13,280 Speaker 1: both taking a well earned break. I'm delighted to say 4 00:00:13,320 --> 00:00:16,360 Speaker 1: I'm joined by Scherrell Murphy, chief economist at ey Charrell. 5 00:00:16,440 --> 00:00:19,760 Speaker 1: Good morning, Good morning, Adam. We had a very busy 6 00:00:19,800 --> 00:00:21,760 Speaker 1: week last week, didn't we. 7 00:00:21,760 --> 00:00:26,400 Speaker 2: We certainly did lots of data out there, and very 8 00:00:26,400 --> 00:00:29,960 Speaker 2: interesting consumer price index number for July that's just a 9 00:00:29,960 --> 00:00:32,800 Speaker 2: monthly one, and we also got a couple of what 10 00:00:32,840 --> 00:00:36,360 Speaker 2: we call partial indicators which fit into the GP number. 11 00:00:36,760 --> 00:00:39,600 Speaker 2: Certainly kept us busy during the week. I'm not sure 12 00:00:39,600 --> 00:00:42,159 Speaker 2: that it changed our view too much, but there was 13 00:00:42,200 --> 00:00:44,320 Speaker 2: certainly some devil in the detail there, I think. 14 00:00:45,120 --> 00:00:48,240 Speaker 1: Yeah, so Cherill, we saw that CPI number come from 15 00:00:48,280 --> 00:00:51,080 Speaker 1: three point eight percent in the year to June down 16 00:00:51,120 --> 00:00:54,600 Speaker 1: in those monthly numbers to three point five percent in 17 00:00:54,680 --> 00:00:58,160 Speaker 1: the twelve months to July. But yeah, as you say, 18 00:00:58,200 --> 00:01:00,280 Speaker 1: what impact do you think that has? Does it affect 19 00:01:00,280 --> 00:01:01,000 Speaker 1: any decisions? 20 00:01:01,760 --> 00:01:04,760 Speaker 2: Well, it looks good on the surface, right, and certainly 21 00:01:05,000 --> 00:01:08,600 Speaker 2: from the point of view of impacting inflationary expectations, it's 22 00:01:08,640 --> 00:01:11,920 Speaker 2: it's good for consumers and businesses to see that CPI 23 00:01:12,080 --> 00:01:16,960 Speaker 2: number come down, But unfortunately it's not genuine disinflation. It's 24 00:01:17,160 --> 00:01:21,200 Speaker 2: largely due to that big fall and electricity prices in 25 00:01:21,240 --> 00:01:24,160 Speaker 2: the month of July as the latest rent or federal 26 00:01:24,240 --> 00:01:28,400 Speaker 2: and state rebates started to kick in. Now, electricity prices 27 00:01:28,400 --> 00:01:30,679 Speaker 2: fell six point four percent in the month of July 28 00:01:30,800 --> 00:01:33,960 Speaker 2: as a result of that, so you can see that 29 00:01:33,959 --> 00:01:36,920 Speaker 2: that's had a very kind of big downward weight. If 30 00:01:36,920 --> 00:01:39,720 Speaker 2: we looked at some of the other categories in the CPI, 31 00:01:39,840 --> 00:01:43,000 Speaker 2: they were really awful. Fruit prices, for example, they're up 32 00:01:43,080 --> 00:01:46,800 Speaker 2: nine point four percent in the year. Cakes and biscuits 33 00:01:46,959 --> 00:01:48,840 Speaker 2: are seven point one percent. That's probably good for our 34 00:01:48,880 --> 00:01:54,200 Speaker 2: diets though, right with those takeaway foods still up four 35 00:01:54,240 --> 00:01:56,559 Speaker 2: point three percent, and of course the big one, which 36 00:01:56,600 --> 00:01:59,960 Speaker 2: is really hurting those who are renting those rents are 37 00:02:00,120 --> 00:02:03,040 Speaker 2: up six point nine percent across the country as a whole. 38 00:02:03,120 --> 00:02:05,680 Speaker 2: So still some really ugly numbers in there. 39 00:02:06,440 --> 00:02:08,519 Speaker 1: Yeah, and look later in the week, we saw a 40 00:02:08,639 --> 00:02:12,360 Speaker 1: House of Representatives' Economics Committee appearances by the bank heads, 41 00:02:12,680 --> 00:02:14,919 Speaker 1: all of whom seem to note that cost of living 42 00:02:14,960 --> 00:02:18,040 Speaker 1: pressure coming through on their customers absolutely. 43 00:02:18,160 --> 00:02:21,040 Speaker 2: And you know, we can see I think a bit 44 00:02:21,040 --> 00:02:23,960 Speaker 2: of a dichotomy here, because we've got those at the 45 00:02:24,040 --> 00:02:26,800 Speaker 2: kind of early end of their working lives. Who've you 46 00:02:27,000 --> 00:02:31,000 Speaker 2: got big supermarket trolleys full of nappies and cakes and 47 00:02:31,160 --> 00:02:35,359 Speaker 2: skips and fruit, childcare fees, perhaps some kids in school, 48 00:02:35,800 --> 00:02:39,000 Speaker 2: you know, mortgages. These are the households, These working households 49 00:02:39,000 --> 00:02:41,320 Speaker 2: are the ones that are really feeling it. At the 50 00:02:41,360 --> 00:02:44,440 Speaker 2: other end of the scale, those who are lucky enough 51 00:02:44,440 --> 00:02:47,000 Speaker 2: to have wrote the property we're probably a bit older, 52 00:02:47,120 --> 00:02:50,960 Speaker 2: maybe close to retirement or indeed self funded retirees. The 53 00:02:51,040 --> 00:02:54,200 Speaker 2: world looks different for them. You know, they're not having 54 00:02:54,240 --> 00:02:58,000 Speaker 2: these big expenses related to raising a family. They don't 55 00:02:58,000 --> 00:03:01,280 Speaker 2: have the mortgage repayments. So for them, you know, cost 56 00:03:01,280 --> 00:03:03,640 Speaker 2: of living is not merely so difficult. And we can 57 00:03:03,680 --> 00:03:06,320 Speaker 2: actually even see that the ABDS has some great cost 58 00:03:06,320 --> 00:03:08,440 Speaker 2: of living indexes where we can see this in black 59 00:03:08,480 --> 00:03:11,800 Speaker 2: and white now, and for those working households, the cost 60 00:03:11,800 --> 00:03:14,360 Speaker 2: of living is running kind of closer to seven percent 61 00:03:14,720 --> 00:03:16,839 Speaker 2: rather than the CPI, which is telling us it's three 62 00:03:16,840 --> 00:03:17,320 Speaker 2: and a half. 63 00:03:17,919 --> 00:03:20,639 Speaker 1: Oh that is so interesting, and look, that really wraps 64 00:03:20,720 --> 00:03:24,000 Speaker 1: up the biggest points of last week's data. Scherrelle next week. 65 00:03:24,040 --> 00:03:26,839 Speaker 1: We've got another big week of data. Almost every day 66 00:03:26,840 --> 00:03:29,960 Speaker 1: has something, but probably chiefly is the GDP number. 67 00:03:30,040 --> 00:03:33,880 Speaker 2: Right, Yes, that's right. That's definitely where our focus will be, 68 00:03:34,160 --> 00:03:37,560 Speaker 2: albeit backward looking of course, because it's Dune quarter and 69 00:03:37,600 --> 00:03:40,320 Speaker 2: that seems like quite a long time ago. Now, look, 70 00:03:40,320 --> 00:03:41,960 Speaker 2: this number is not going to be good. It's going 71 00:03:42,040 --> 00:03:44,720 Speaker 2: to be very weak. We can see that from the 72 00:03:44,920 --> 00:03:48,760 Speaker 2: partial indicators that we have so far, that construction work data, 73 00:03:49,240 --> 00:03:53,960 Speaker 2: also the capital expenditure data, they're pretty flat. We're also, 74 00:03:54,040 --> 00:03:56,240 Speaker 2: of course not expecting consumption to be strong for the 75 00:03:56,320 --> 00:03:59,680 Speaker 2: reasons that we've just been talking about. So those parts 76 00:03:59,680 --> 00:04:02,240 Speaker 2: of the economy, which are a huge chunk of the economy, 77 00:04:02,280 --> 00:04:05,840 Speaker 2: of course, they're really going to weigh on the GDP number. 78 00:04:06,480 --> 00:04:09,600 Speaker 2: On the more positive side, we might see some more 79 00:04:09,640 --> 00:04:14,360 Speaker 2: positive numbers in public sector construction in particular. That's obviously okay, 80 00:04:14,480 --> 00:04:17,800 Speaker 2: something that's moving along very quickly. We'll get some more 81 00:04:17,800 --> 00:04:21,560 Speaker 2: indications on what's happening with government spending just before we 82 00:04:21,600 --> 00:04:24,440 Speaker 2: get the GDP number, which will help us get I 83 00:04:24,440 --> 00:04:26,800 Speaker 2: guess a read on what's going to happen on Wednesday. 84 00:04:27,320 --> 00:04:29,960 Speaker 2: But look, overall, it looks like that GDP number could 85 00:04:30,000 --> 00:04:33,680 Speaker 2: be you know, er point eight point nine for the 86 00:04:33,720 --> 00:04:36,640 Speaker 2: whole year. So that's that's clearly very low. 87 00:04:37,320 --> 00:04:38,960 Speaker 1: That is so slow. I mean, we talk about a 88 00:04:39,000 --> 00:04:41,440 Speaker 1: soft landing, and it's good to see the inflation number 89 00:04:41,440 --> 00:04:44,880 Speaker 1: coming down, but the economy is slowing too. This do 90 00:04:44,920 --> 00:04:46,440 Speaker 1: you think it's at a concerning level? 91 00:04:47,120 --> 00:04:48,960 Speaker 2: Well, I suspect that this is going to be the 92 00:04:49,040 --> 00:04:51,760 Speaker 2: low point. Actually we don't know that for sure, but 93 00:04:52,320 --> 00:04:54,800 Speaker 2: it is likely that as we move into the second 94 00:04:54,839 --> 00:04:58,400 Speaker 2: half of the year, because we've got the tax, because 95 00:04:58,440 --> 00:05:02,200 Speaker 2: we've got cost of living measures, real wages arising again. 96 00:05:03,160 --> 00:05:06,080 Speaker 2: You know, even the business capital expenditure numbers looked actually 97 00:05:06,120 --> 00:05:10,280 Speaker 2: pretty okay when we saw those last week. It does 98 00:05:10,360 --> 00:05:12,719 Speaker 2: actually suggest that we will see a little bit more 99 00:05:12,760 --> 00:05:15,840 Speaker 2: momentum into the second half and into twenty twenty five. 100 00:05:16,520 --> 00:05:19,760 Speaker 2: So we're in some ways we're still seeing the worst 101 00:05:19,800 --> 00:05:22,680 Speaker 2: of the interest rate hikes from the last two and 102 00:05:22,680 --> 00:05:26,520 Speaker 2: a half years hit the economy, and potentially from here 103 00:05:26,640 --> 00:05:28,960 Speaker 2: and the economy picks up a bit. What we hope, 104 00:05:29,000 --> 00:05:31,920 Speaker 2: of course, is that that pickup doesn't come with inflation 105 00:05:31,960 --> 00:05:34,360 Speaker 2: which is too high for the IRBA. But you know, 106 00:05:35,120 --> 00:05:37,839 Speaker 2: in terms of where they're thinking things are at inflation 107 00:05:37,920 --> 00:05:41,120 Speaker 2: pressure is still continuing to come down and the economy 108 00:05:41,160 --> 00:05:41,680 Speaker 2: will level o. 109 00:05:41,680 --> 00:05:44,840 Speaker 1: It, so we're still hoping for that soft landing. And 110 00:05:44,880 --> 00:05:47,880 Speaker 1: this is a really interesting context in which we know 111 00:05:47,920 --> 00:05:50,279 Speaker 1: there's a couple of speeches by Reserve Bank Governor Michelle 112 00:05:50,320 --> 00:05:52,120 Speaker 1: Bullock this week. What are you seeing there? 113 00:05:52,760 --> 00:05:55,640 Speaker 2: Yeah, so some really big ones next week. So annually 114 00:05:55,720 --> 00:06:00,200 Speaker 2: she does an event with the Anaka Foundation, really important 115 00:06:00,640 --> 00:06:04,799 Speaker 2: charity there and it's also supported by the Australian Business Economists, 116 00:06:04,800 --> 00:06:08,400 Speaker 2: which I'm very approched i am deputy chair of. And 117 00:06:08,480 --> 00:06:11,600 Speaker 2: that's going to be probably quite a wide ranging speech. 118 00:06:12,320 --> 00:06:14,920 Speaker 2: We'll see what the topic is. It's probably going to 119 00:06:14,960 --> 00:06:17,360 Speaker 2: be peppered with whatever the topic is, she will be 120 00:06:17,400 --> 00:06:21,720 Speaker 2: peppered with questions of course, yeah look and guaranteed how 121 00:06:21,839 --> 00:06:25,320 Speaker 2: firm she is on that comment that she made after 122 00:06:25,400 --> 00:06:28,200 Speaker 2: the August meeting which she said that she doesn't see 123 00:06:28,200 --> 00:06:31,200 Speaker 2: a rate cut this year. And then on the same 124 00:06:31,320 --> 00:06:34,479 Speaker 2: day quite rare actually for the Governor to appear twice 125 00:06:34,480 --> 00:06:36,839 Speaker 2: in one day. But on that same day she will 126 00:06:36,880 --> 00:06:39,760 Speaker 2: also be speaking to the Women and Banking Finance Awards. 127 00:06:40,240 --> 00:06:42,279 Speaker 2: That will be more of a fireside chat or rather 128 00:06:42,279 --> 00:06:45,400 Speaker 2: than a forward speech. But you can bet that again, 129 00:06:45,600 --> 00:06:48,000 Speaker 2: every single word that she says will be scrutinized by 130 00:06:48,000 --> 00:06:52,080 Speaker 2: the media and market economists, and we'll be looking for 131 00:06:52,279 --> 00:06:57,000 Speaker 2: some indication of where she's thinking about rates going forward. 132 00:06:57,560 --> 00:07:01,000 Speaker 1: Yeah, those GDP numbers leading into those beaches, it's going 133 00:07:01,040 --> 00:07:02,920 Speaker 1: to be very interesting. There's one other thing we've got 134 00:07:02,960 --> 00:07:05,159 Speaker 1: to mention, Sharill a very important date on the calendar. 135 00:07:05,520 --> 00:07:08,120 Speaker 1: It's your birthday, So happy birthday for the day I have, 136 00:07:09,520 --> 00:07:10,280 Speaker 1: thank you very much. 137 00:07:10,360 --> 00:07:13,480 Speaker 2: I will be looking forward to my glass of wine 138 00:07:13,480 --> 00:07:14,320 Speaker 2: after those peeches. 139 00:07:14,800 --> 00:07:17,120 Speaker 1: You'll have earned it. Cherrell, have a cracking week. 140 00:07:17,400 --> 00:07:17,760 Speaker 2: Thank you. 141 00:07:18,280 --> 00:07:21,120 Speaker 1: That was Cherrell Murphy, chief economist at e Y. I'm 142 00:07:21,120 --> 00:07:23,440 Speaker 1: Adam Lang and this is Beer and Greed the week ahead. 143 00:07:23,640 --> 00:07:25,320 Speaker 1: Have a great day.