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Speaker 1: Welcome to fear and greed the week ahead. I'm sure

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Speaker 1: in Alma, and with Stephen Coucoulis taking a will earned break.

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Speaker 1: While he said it was will earn, I'm not so

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Speaker 1: sure myself. I'm joined instead by the great Schoell Murphy,

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Speaker 1: chief economist at EY and a great supporter of our show.

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Speaker 2: Choel, good morning, Good morning, Sean. Yes, the cook gets

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Speaker 2: a holiday in Europe and I get an extra early

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Speaker 2: Monday morning luck.

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Speaker 1: You mean, yeah, that's right, that's right, you are the winner.

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Speaker 1: Plenty coming up during the next few days, but just quickly.

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Speaker 1: The Reserve been board minutes last week. We didn't expect

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Speaker 1: much from them, but perhaps once they came out, everyone thought, Wow,

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Speaker 1: the Reserve really is worried about the economy growing too fast.

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Speaker 2: Suddenly, That's what it looked like, didn't it. They were

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Speaker 2: definitely a bit more hawkish, I think, than we had expected,

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Speaker 2: and they seemed to be a little closer to pressing

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Speaker 2: the button to a rate hike than perhaps we had

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Speaker 2: expected to. You know, they're clearly concerned about that gap

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Speaker 2: between supply and demand, in the sense that demand isn't

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Speaker 2: kind of falling fast enough to meet supply, which has

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Speaker 2: been constrained by a number of factors, including low productivity.

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Speaker 2: So it does seem that they were close. But of

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Speaker 2: course when they were meeting and we saw this in

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Speaker 2: the minutes, that was when we had all the volatility

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Speaker 2: in the markets, and so I think that's probably one

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Speaker 2: of the factors which caused them to go, hang on

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Speaker 2: a sec let's just see how this unfolds before we

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Speaker 2: get too carried away. Probably a good thing they did,

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Speaker 2: because yeah, that volatility did settle down.

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Speaker 1: Yeah, sure, I mean it's all about inflation still the

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Speaker 1: main game. In this week we have the monthly CPI.

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Speaker 1: Figure out what do you think of these monthly figures generally,

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Speaker 1: and what do you think this week's will tell us.

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Speaker 2: It can be a bit confusing, Sean, actually, because each

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Speaker 2: month kind of effectively is measuring different things, and so

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Speaker 2: you don't really get a lengthful like comparison, which means

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Speaker 2: that their usefulness engaging inflation across the economy as a

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Speaker 2: whole is really quite limited. And of course it's made

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Speaker 2: even harder by the fact that even really tiny little

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Speaker 2: movements in the CPI can have big implications for policy.

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Speaker 2: So as be sure, Paul, look's been saying for quite

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Speaker 2: some times she's really looking forward to getting that comprehensive picture.

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Speaker 2: But nevertheless, we and all the markets, all those participants

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Speaker 2: in the markets, we'll be looking really closely at those

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Speaker 2: July numbers to see what's happening with the CPI, which

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Speaker 2: you'll remember in the June quarter was showing a headline

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Speaker 2: rate of three point eight percent.

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Speaker 1: Okay, I mean, do you think the trend is down

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Speaker 1: or do you think it's flat lined? Please don't say

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Speaker 1: it's going up.

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Speaker 2: No, I think it is coming down. It's just the

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Speaker 2: speed at which it is coming down, which is clearly

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Speaker 2: the point of concern for the Reserve Bank as well.

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Speaker 2: But look, it clearly has. We're getting inflation in some

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Speaker 2: categories actually falling in know, the some goods which are

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Speaker 2: neatly in that Reserve banks two to three percent target bound,

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Speaker 2: but unfortunately not enough goods and services are including a

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Speaker 2: lot of the mystically generated services. And that's the real

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Speaker 2: CrOx of the problem.

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Speaker 1: Okay. There's also capital expenditure figures this week. They're kind

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Speaker 1: of good for getting an inside how business is going.

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Speaker 2: That's right. So these one's probably the most complicated data

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Speaker 2: to read in the markets, because you get not only

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Speaker 2: an actual investment number for CAPEX, but you also get

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Speaker 2: the expectations number for the coming year.

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Speaker 1: I've got to tell a story here. Charelle Charell and

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Speaker 1: I used to sit next to each other for a

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Speaker 1: brief period. Charell worked at the Australian Financial Review and

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Speaker 1: I sat next to her, and I remember once Cape's

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Speaker 1: figures coming out and just turning around and saying, what

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Speaker 1: the hell did these mean? And you were very generous.

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Speaker 1: You explain them to me slowly, you did, you did,

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Speaker 1: And I just remember, like I will always thank you

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Speaker 1: for that, Schuell, because they are there are hard to understand, They.

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Speaker 2: Are quite tricky and we didn't have the safe word

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Speaker 2: back then. Sean sou So, Yeah, this one will contain

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Speaker 2: the third estimate given by firms as to how much

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Speaker 2: they're going to spend in the twenty four to twenty

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Speaker 2: five year and the good news is that these numbers

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Speaker 2: have kind of been looking reasonably Okay, they're not super strong,

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Speaker 2: but when we look at what they firms are saying,

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Speaker 2: particularly non mining firms, about what they're going to say

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Speaker 2: as sorry spend on buildings and structures, machinery and equipment.

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Speaker 2: It's looking all right. So I guess we'll be hoping

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Speaker 2: that that continues in these figures because, as you know,

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Speaker 2: other parts of the economy, including the consumer, are very weak.

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Speaker 2: So you know, we like to see a bit of

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Speaker 2: activity here which is kind of keeping the economy motoring along.

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Speaker 1: In retail trade figures this week as well.

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Speaker 2: Yes, retail trade figures for July, now these are these

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Speaker 2: actually were quite strong in June, although the ABS did

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Speaker 2: suggest that a lot of that was due to discanting

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Speaker 2: activity in the month. So again we'll be kind of

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Speaker 2: looking at that to see whether or not that continues.

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Speaker 2: I I suspect that with July being the first month

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Speaker 2: of the tax cut, you might actually see something reasonable

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Speaker 2: people starting to see their real wages move up again.

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Speaker 2: That's something that is kind of a bit of a

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Speaker 2: reversal from recent times. Those factors could actually lead to

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Speaker 2: you know, hopefully a small positive number there, but certainly

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Speaker 2: if we get a negative, you know that's not going

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Speaker 2: to be a good indication that has also are coping

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Speaker 2: very well. I guess with the continued tightness of the

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Speaker 2: economy due to the Reserve Bank's high rate on the

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Speaker 2: cash rate.

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Speaker 1: Okay, so It's an exciting week coming up, Shreyl, but

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Speaker 1: of course not as exciting as a following week, because

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Speaker 1: the following week is GDP which people like you must love.

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Speaker 1: GDP days, National Accounts Days.

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Speaker 2: Look, you know, I'll wait for these once every three months.

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Speaker 2: It's it's incredibly exciting. I don't know if I'm quite

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Speaker 2: as excited as the like now.

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Speaker 1: It's as excited as a cook practically frothing at the moment.

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Speaker 1: We'll talk to you about that in seven days, Chuelle.

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Speaker 1: Enjoy your week.

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Speaker 2: Thank you, Sean, and have a great week too.

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Speaker 1: That was Sheryl Murphy, chief economist at e Y. I'm

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Speaker 1: Shane Elmer, and this is fear and greed, the weak

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Speaker 1: ahead