1 00:00:03,550 --> 00:00:07,330 Michael Thompson: It's Monday, the 20th of September 2021. Welcome to Fear 2 00:00:07,330 --> 00:00:09,750 Michael Thompson: and Greed, the business podcast that sets you up for 3 00:00:09,750 --> 00:00:12,559 Michael Thompson: a successful day. I'm Michael Thompson and good morning to 4 00:00:12,560 --> 00:00:13,450 Michael Thompson: you, Sean Aylmer. 5 00:00:13,570 --> 00:00:14,460 Sean Aylmer: Good morning, Michael. 6 00:00:14,840 --> 00:00:17,930 Michael Thompson: Today, global equity markets tumble from Wall Street to London 7 00:00:17,930 --> 00:00:21,970 Michael Thompson: and Australia. That's our main story. Also, Victorian Premier, Daniel Andrews, 8 00:00:21,989 --> 00:00:24,680 Michael Thompson: outlines his plan to shift the state out of lockdown. 9 00:00:25,050 --> 00:00:27,130 Michael Thompson: One of the most senior cabinet ministers in the Morrison 10 00:00:27,130 --> 00:00:30,310 Michael Thompson: Government is forced to resign, and Alan Joyce, the Qantas boss, 11 00:00:30,410 --> 00:00:32,960 Michael Thompson: takes a pay cut. And there's a few changes here at 12 00:00:32,960 --> 00:00:35,370 Michael Thompson: Fear and Greed. I will be joining you every morning, 13 00:00:35,370 --> 00:00:37,839 Michael Thompson: as well as Sean takes us through the top business 14 00:00:37,840 --> 00:00:40,930 Michael Thompson: stories of the day and why they matter. But plenty 15 00:00:40,930 --> 00:00:43,979 Michael Thompson: isn't changing. New episodes every day by 6:00 AM, the 16 00:00:43,979 --> 00:00:47,470 Michael Thompson: market report every afternoon at 5:30 PM, and every day, Sean 17 00:00:47,470 --> 00:00:50,409 Michael Thompson: is still interviewing business leaders and experts like today he's 18 00:00:50,409 --> 00:00:54,380 Michael Thompson: talking to Geoff Wilson, one of Australia's sharpest investors. But 19 00:00:54,380 --> 00:00:56,279 Michael Thompson: enough of the housekeeping, let's get on with the news. 20 00:00:56,550 --> 00:00:59,750 Michael Thompson: Big story today is the markets. Plenty of big losses 21 00:00:59,750 --> 00:01:00,700 Michael Thompson: across the board, Sean. 22 00:01:01,020 --> 00:01:03,390 Sean Aylmer: Sure was Michael. The crux of it is investors are 23 00:01:03,390 --> 00:01:06,759 Sean Aylmer: getting very nervous about COVID again. 18 months in, and 24 00:01:06,760 --> 00:01:10,170 Sean Aylmer: there are still regions across the globe where cases numbers 25 00:01:10,170 --> 00:01:13,040 Sean Aylmer: are rising, thanks to the Delta strain. Death rates are 26 00:01:13,040 --> 00:01:15,819 Sean Aylmer: rising in parts of the US. Florida, for example, had 27 00:01:15,819 --> 00:01:19,190 Sean Aylmer: a record number of deaths last week. Germany, it's case 28 00:01:19,190 --> 00:01:21,690 Sean Aylmer: numbers are surging. Well, it was until the last few 29 00:01:21,690 --> 00:01:25,619 Sean Aylmer: days. Singapore's rising fast again. Amid all of this, we have 30 00:01:25,620 --> 00:01:28,830 Sean Aylmer: central banks, particularly the federal reserve in the US, talking 31 00:01:28,830 --> 00:01:32,860 Sean Aylmer: about reducing bond purchases. That's the first part of tightening 32 00:01:32,900 --> 00:01:36,009 Sean Aylmer: monetary policy. Federal Reserve Bank is due to meet tomorrow 33 00:01:36,010 --> 00:01:38,440 Sean Aylmer: night. Later in the week, the Bank of Japan and 34 00:01:38,440 --> 00:01:40,970 Sean Aylmer: Bank of England are also meeting. The Reserve Bank board 35 00:01:40,970 --> 00:01:44,540 Sean Aylmer: minutes come out this week. Investors are just slightly worried 36 00:01:44,680 --> 00:01:47,920 Sean Aylmer: that regulators are going to tighten monetary policy. The other 37 00:01:47,920 --> 00:01:50,670 Sean Aylmer: big unknown for share markets at the moment is China. 38 00:01:51,100 --> 00:01:53,660 Sean Aylmer: Now the United States might be the biggest economy, but 39 00:01:53,660 --> 00:01:58,140 Sean Aylmer: China is the most influential economy, especially for Australia. Economic 40 00:01:58,140 --> 00:02:01,230 Sean Aylmer: data out of China is just a bit soft. Some 41 00:02:01,230 --> 00:02:03,210 Sean Aylmer: of the steel mills have also been told to cap 42 00:02:03,210 --> 00:02:06,250 Sean Aylmer: production. That's obviously hurting iron ore, which really matters to 43 00:02:06,310 --> 00:02:09,990 Sean Aylmer: Australians. And we're also seeing cases of COVID in China. 44 00:02:10,389 --> 00:02:12,730 Sean Aylmer: Over the weekend, Wall Street fell by the most in 45 00:02:12,730 --> 00:02:15,030 Sean Aylmer: a month. The tech stocks led the way down which 46 00:02:15,030 --> 00:02:18,019 Sean Aylmer: is a bit unusual given they've done best during COVID. 47 00:02:18,210 --> 00:02:21,190 Sean Aylmer: European markets were also lower, and the Australian mining stocks, 48 00:02:21,410 --> 00:02:22,521 Sean Aylmer: Michael, they got hammered on Friday. 49 00:02:22,520 --> 00:02:24,700 Michael Thompson: Yeah, I was going to ask you about that. How 50 00:02:24,700 --> 00:02:28,389 Michael Thompson: much of that has come from those problems with China 51 00:02:28,389 --> 00:02:31,080 Michael Thompson: in terms of steel mills being told to cut production? 52 00:02:31,300 --> 00:02:33,910 Sean Aylmer: Very much. The price of iron ore has fallen. That's 53 00:02:33,910 --> 00:02:37,620 Sean Aylmer: hurt BHP, Fortescue, which was down 11% on Friday, and 54 00:02:37,620 --> 00:02:41,160 Sean Aylmer: Rio Tinto, iron ore prices were down 20% last week. 55 00:02:41,450 --> 00:02:43,490 Sean Aylmer: They're less than a half of what they were back 56 00:02:43,490 --> 00:02:46,239 Sean Aylmer: in May and that's because steel mills just don't want 57 00:02:46,240 --> 00:02:49,130 Sean Aylmer: iron ore, which is the main ingredient to create steel. 58 00:02:49,480 --> 00:02:51,570 Sean Aylmer: It's certainly a long way from four weeks ago when 59 00:02:51,570 --> 00:02:55,440 Sean Aylmer: BHP, Fortescue and Rio Tinto all announced record profits and 60 00:02:55,440 --> 00:02:57,960 Sean Aylmer: record dividends for the full year to the end of 61 00:02:57,960 --> 00:02:59,870 Sean Aylmer: June 30. Now, of course, they were on the back 62 00:02:59,870 --> 00:03:02,640 Sean Aylmer: of very, very high iron ore prices and that's dissipated. 63 00:03:02,870 --> 00:03:06,560 Sean Aylmer: Not helping, investment bank analysts are downgrading their outlooks for 64 00:03:06,560 --> 00:03:08,609 Sean Aylmer: those stocks on the back of those iron ore prices. 65 00:03:08,860 --> 00:03:10,960 Sean Aylmer: That just adds momentum to the sell- off. 66 00:03:11,430 --> 00:03:11,841 Michael Thompson: And what about gold prices? 67 00:03:11,841 --> 00:03:15,370 Sean Aylmer: Gold prices also dropped sharply last week. An ounce of 68 00:03:15,370 --> 00:03:19,370 Sean Aylmer: the precious metal is now worth about $US1,750 an ounce. 69 00:03:19,620 --> 00:03:22,590 Sean Aylmer: That's hit all the big gold miners. The leaders, Newcrest 70 00:03:22,860 --> 00:03:25,929 Sean Aylmer: and Northern Star, were both off around 3% on Friday, but 71 00:03:25,930 --> 00:03:28,660 Sean Aylmer: a bunch of them hit 52 week lows. St Barbara, 72 00:03:28,660 --> 00:03:32,870 Sean Aylmer: Evolution Mining, Regis Resources. Perseus and Chalice, along with Regis, 73 00:03:33,100 --> 00:03:34,900 Sean Aylmer: were all down 4% on Friday. 74 00:03:35,250 --> 00:03:38,420 Michael Thompson: It's something I've often heard you mention on the podcast 75 00:03:38,420 --> 00:03:40,820 Michael Thompson: is about gold being a bit of a store of 76 00:03:40,820 --> 00:03:44,370 Michael Thompson: value and a safe haven. So really while everyone else 77 00:03:44,610 --> 00:03:46,690 Michael Thompson: is in a bit of trouble and markets are dropping, 78 00:03:46,690 --> 00:03:49,310 Michael Thompson: there's a chance that there could, in fact, be a 79 00:03:49,310 --> 00:03:50,960 Michael Thompson: bit of a rally this week in gold? 80 00:03:51,300 --> 00:03:53,330 Sean Aylmer: You'd think that. Gold is a store of value. It's 81 00:03:53,330 --> 00:03:56,290 Sean Aylmer: a safe haven. People go there when other parts of 82 00:03:56,290 --> 00:03:59,010 Sean Aylmer: the market aren't doing so well. That didn't happen last 83 00:03:59,010 --> 00:04:02,330 Sean Aylmer: week, so perhaps that will happen this week. It's very difficult 84 00:04:02,330 --> 00:04:04,790 Sean Aylmer: when there's so much uncertainty around global markets though to 85 00:04:04,790 --> 00:04:06,130 Sean Aylmer: know exactly what's going to happen. 86 00:04:06,560 --> 00:04:08,750 Michael Thompson: Is it going too far to say that it was 87 00:04:08,750 --> 00:04:11,500 Michael Thompson: carnage in the resources sector last Friday? 88 00:04:12,610 --> 00:04:15,780 Sean Aylmer: I think it was carnage. Outside the iron ore miners, outside the gold miners, 89 00:04:16,070 --> 00:04:18,630 Sean Aylmer: the coal miners got hammered. White Haven was down six and 90 00:04:18,770 --> 00:04:23,529 Sean Aylmer: a half percent. Yancoal was down 5.7%. AGL Energy was off 91 00:04:23,529 --> 00:04:26,670 Sean Aylmer: more than 5%. It's down more than 60% over the last year. 92 00:04:26,890 --> 00:04:29,839 Sean Aylmer: Cannot find a friend, that one. Interesting, not that it's 93 00:04:29,839 --> 00:04:32,740 Sean Aylmer: a resource stock, but AMP, which was once an icon in 94 00:04:32,740 --> 00:04:35,800 Sean Aylmer: the business community, it fell below a dollar for the 95 00:04:35,800 --> 00:04:38,440 Sean Aylmer: first time ever on Friday. It hit 99 cents before 96 00:04:38,440 --> 00:04:41,969 Sean Aylmer: bouncing back and it closed at a dollar. 20 years ago, 97 00:04:41,970 --> 00:04:43,529 Sean Aylmer: this company was worth $13. 98 00:04:43,940 --> 00:04:45,120 Michael Thompson: That's extraordinary, isn't it? 99 00:04:45,339 --> 00:04:47,520 Sean Aylmer: Sure is. In the end, the only sectors to really 100 00:04:47,520 --> 00:04:50,510 Sean Aylmer: show much resilience were the tech and healthcare stocks. Slight 101 00:04:50,510 --> 00:04:53,000 Sean Aylmer: irony there of course, is that tech stocks were sold 102 00:04:53,000 --> 00:04:55,110 Sean Aylmer: off on Wall Street over the weekend. In the end, 103 00:04:55,110 --> 00:05:01,570 Sean Aylmer: the S&P/ASX 200 finished almost 1% lower on Friday closing at 7,403 points. 104 00:05:01,880 --> 00:05:03,900 Sean Aylmer: That made sure the bourse finished the week well below where 105 00:05:03,900 --> 00:05:06,200 Sean Aylmer: it started. It's certainly going to be an interesting week 106 00:05:06,200 --> 00:05:06,650 Sean Aylmer: coming up shortly. 107 00:05:06,960 --> 00:05:09,500 Michael Thompson: Sure is. We will be watching it very closely. Now, 108 00:05:09,500 --> 00:05:11,380 Michael Thompson: you've been having a look around this morning at all 109 00:05:11,380 --> 00:05:14,210 Michael Thompson: the papers and the websites, what's making news this morning? 110 00:05:14,440 --> 00:05:17,940 Sean Aylmer: Well, the Financial Review is reporting the toll road group, Transurban, 111 00:05:18,210 --> 00:05:21,779 Sean Aylmer: will take full control over Sydney motorways company, WestConnex in 112 00:05:21,779 --> 00:05:28,010 Sean Aylmer: a $10 billion deal to be announced today. Transurban already owns 51% of WestConnex; 113 00:05:28,010 --> 00:05:30,590 Sean Aylmer: the other 49% is owned by the New South Wales Government. 114 00:05:30,980 --> 00:05:33,729 Sean Aylmer: It means that Transurban will well and truly become the 115 00:05:33,730 --> 00:05:36,640 Sean Aylmer: dominant toll road group in Australia. The same paper, The 116 00:05:36,640 --> 00:05:39,719 Sean Aylmer: Fin', is also saying this morning that Australia plans to lease 117 00:05:39,820 --> 00:05:44,190 Sean Aylmer: and share existing nuclear powered submarines well before acquisition. That 118 00:05:44,190 --> 00:05:46,810 Sean Aylmer: will reduce the risk that American subs arrive too late 119 00:05:47,029 --> 00:05:50,960 Sean Aylmer: to counter China's rapid military expansion. More on subs in a moment. 120 00:05:51,339 --> 00:05:54,279 Sean Aylmer: And finally, the Australians Newspoll is out this morning. It 121 00:05:54,279 --> 00:05:57,910 Sean Aylmer: shows popular support for Federal Labor has fallen amid a 122 00:05:57,910 --> 00:06:01,850 Sean Aylmer: decline in personal support for Anthony Albanese. That's bad news 123 00:06:01,850 --> 00:06:05,750 Sean Aylmer: for Albo. He's slipped to his lowest net satisfaction ratings 124 00:06:05,950 --> 00:06:09,460 Sean Aylmer: since becoming Opposition Leader. On a two- party- preferred basis, 125 00:06:09,520 --> 00:06:12,609 Sean Aylmer: Labor still remains ahead though, 53 to 47%. 126 00:06:13,130 --> 00:06:14,890 Michael Thompson: Alrighty, we'll be back in a moment with the rest 127 00:06:14,890 --> 00:06:15,780 Michael Thompson: of the day's business news. 128 00:06:21,260 --> 00:06:23,730 Michael Thompson: Alright, Sean, let's check the other news around. The COVID 129 00:06:23,730 --> 00:06:26,570 Michael Thompson: news isn't good, but at least it's getting a little better. 130 00:06:26,810 --> 00:06:30,219 Sean Aylmer: I think so. I think so. Victoria had 507 cases 131 00:06:30,220 --> 00:06:33,420 Sean Aylmer: yesterday and one death. There were 535 cases in the 132 00:06:33,420 --> 00:06:36,570 Sean Aylmer: state on Saturday and one death. Premier Daniel Andrews outlined the 133 00:06:36,670 --> 00:06:39,409 Sean Aylmer: reopening plans yesterday. Pretty exciting for everyone that lives in 134 00:06:39,410 --> 00:06:44,490 Sean Aylmer: Victoria and even those outside. Once 70% of Victorians over 135 00:06:44,490 --> 00:06:47,469 Sean Aylmer: the age of 16 are vaccinated, and that's expected to 136 00:06:47,470 --> 00:06:51,870 Sean Aylmer: occur late October, outdoor gatherings of 10 fully vaccinated people 137 00:06:51,870 --> 00:06:55,360 Sean Aylmer: will be allowed. Venues can reopen outdoors with 50 people. 138 00:06:55,750 --> 00:06:58,260 Sean Aylmer: The construction industry will reopen, and that's really important because 139 00:06:58,260 --> 00:07:02,390 Sean Aylmer: it's a big employer. Community sport will start again. Masks 140 00:07:02,460 --> 00:07:05,790 Sean Aylmer: will be mandatory and vaccines will be mandatory for all 141 00:07:05,790 --> 00:07:10,560 Sean Aylmer: authorised workers, including teachers, childcare workers, parents of childcare students, which 142 00:07:10,560 --> 00:07:14,670 Sean Aylmer: I think's interesting, hospitality staff and patrons. Now, the parents 143 00:07:14,670 --> 00:07:17,330 Sean Aylmer: will want to know about this one. Schools will have 144 00:07:17,330 --> 00:07:21,570 Sean Aylmer: a staggered reopening from October 5 and by October 26, 145 00:07:21,920 --> 00:07:24,260 Sean Aylmer: all the kids should be back in the classroom at 146 00:07:24,260 --> 00:07:26,970 Sean Aylmer: least two or three days a week, potentially five days 147 00:07:26,970 --> 00:07:30,870 Sean Aylmer: a week. In Victoria, the vacs rates are it's almost 71% 148 00:07:30,870 --> 00:07:33,390 Sean Aylmer: for one jab and 44% for two jabs. 149 00:07:33,650 --> 00:07:35,870 Michael Thompson: Yeah, it's interesting, isn't it, because Victoria has come out 150 00:07:35,870 --> 00:07:38,130 Michael Thompson: of lockdown plenty of times before, but this is the first time 151 00:07:38,130 --> 00:07:42,119 Michael Thompson: the roadmap has been looking at how to deal with 152 00:07:42,160 --> 00:07:43,700 Michael Thompson: COVID still being in the community. 153 00:07:43,920 --> 00:07:46,570 Sean Aylmer: That's right, and Victoria's about two or three weeks behind 154 00:07:46,570 --> 00:07:49,260 Sean Aylmer: where New South Wales is. That state had more than 155 00:07:49,260 --> 00:07:52,980 Sean Aylmer: a thousand cases yesterday, including 13 deaths. That's the largest 156 00:07:52,980 --> 00:07:55,830 Sean Aylmer: number of deaths in any 24 hour period during the 157 00:07:55,830 --> 00:07:59,080 Sean Aylmer: current outbreak. The numbers in terms of vaccinations in New 158 00:07:59,080 --> 00:08:02,060 Sean Aylmer: South Wales are almost the best across the country. 82% 159 00:08:02,060 --> 00:08:05,030 Sean Aylmer: of people have a single jab, and 52% of people are 160 00:08:05,030 --> 00:08:06,270 Sean Aylmer: now fully vaccinated. 161 00:08:06,620 --> 00:08:09,610 Michael Thompson: Yeah, nationally, I think we're now sitting at 71% for 162 00:08:09,610 --> 00:08:13,070 Michael Thompson: one dose and 46% for two doses, so we certainly 163 00:08:13,070 --> 00:08:14,990 Michael Thompson: have come a long way in the last few months. 164 00:08:15,390 --> 00:08:17,960 Michael Thompson: Now, the big story doing the rounds yesterday afternoon in 165 00:08:17,960 --> 00:08:21,230 Michael Thompson: terms of federal politics was Christian Porter has resigned from 166 00:08:21,230 --> 00:08:23,510 Michael Thompson: the front bench over who paid a million dollars into 167 00:08:23,510 --> 00:08:25,790 Michael Thompson: a blind trust account. Now this was to help pay 168 00:08:25,790 --> 00:08:28,710 Michael Thompson: for his defamation case against the ABC, which was really 169 00:08:28,710 --> 00:08:30,580 Michael Thompson: a case that he neither won nor lost. 170 00:08:30,850 --> 00:08:35,660 Sean Aylmer: That's right. The ABC reported that a minister was involved 171 00:08:35,660 --> 00:08:38,670 Sean Aylmer: in rape allegations back in 1988. The woman who made 172 00:08:38,670 --> 00:08:42,490 Sean Aylmer: the allegations has since died. Christian Porter came out himself and said 173 00:08:42,800 --> 00:08:47,809 Sean Aylmer: it was him, but sued ABC for defamation over the report. Subsequently, 174 00:08:47,860 --> 00:08:51,080 Sean Aylmer: many media who have jumped on and named Mr. Porter, obviously, 175 00:08:51,080 --> 00:08:54,010 Sean Aylmer: as the person since he outed himself. Mr. Porter, who 176 00:08:54,010 --> 00:08:58,940 Sean Aylmer: was former Attorney General, sued the ABC. Getting involved in 177 00:08:58,940 --> 00:09:02,830 Sean Aylmer: defamation cases is very expensive. Now, someone put a million 178 00:09:02,830 --> 00:09:05,840 Sean Aylmer: dollars in a blind trust, which Mr. Porter accessed to 179 00:09:05,840 --> 00:09:08,770 Sean Aylmer: pay for some of his legal expenses, but in effect 180 00:09:08,770 --> 00:09:11,040 Sean Aylmer: what he's doing, he's actually taking money from someone he 181 00:09:11,040 --> 00:09:14,770 Sean Aylmer: has no idea about. There's huge potential for conflict of interest. 182 00:09:14,950 --> 00:09:17,700 Sean Aylmer: When you talk about ministerial standards that doesn't pass the 183 00:09:17,700 --> 00:09:21,510 Sean Aylmer: pub test by any stretch. Prime Minister, Scott Morrison, whilst 184 00:09:21,510 --> 00:09:24,790 Sean Aylmer: he didn't actually criticise Mr. Porter, I don't think he 185 00:09:24,790 --> 00:09:26,459 Sean Aylmer: was real happy the fact that he had taken that 186 00:09:26,460 --> 00:09:29,120 Sean Aylmer: million dollars from the blind trust. Anyway, end of the day, 187 00:09:29,120 --> 00:09:31,510 Sean Aylmer: he was forced to resign yesterday and he'll be replaced 188 00:09:31,679 --> 00:09:33,609 Sean Aylmer: as Industry Minister by Angus Taylor. 189 00:09:33,809 --> 00:09:37,010 Michael Thompson: Yeah, Christian Porter's presence on the front bench has been 190 00:09:37,010 --> 00:09:40,880 Michael Thompson: pretty controversial now for a while. Is there any chance 191 00:09:40,880 --> 00:09:43,370 Michael Thompson: at all that this will now cauterise the issue for 192 00:09:43,370 --> 00:09:45,870 Michael Thompson: the Prime Minister and he'll get some clear air over it? 193 00:09:46,250 --> 00:09:48,460 Sean Aylmer: We've got an election within nine or 10 months. I 194 00:09:48,460 --> 00:09:50,210 Sean Aylmer: think we're going to hear a lot more about this. 195 00:09:50,580 --> 00:09:52,500 Michael Thompson: Yeah, I think you're probably right. Now, the fallout from 196 00:09:53,010 --> 00:09:55,679 Michael Thompson: the nuclear submarine deal continues. This was big news towards 197 00:09:55,679 --> 00:09:57,699 Michael Thompson: the end of last week, and it's going to be 198 00:09:57,700 --> 00:09:59,160 Michael Thompson: big news for some time to come. 199 00:09:59,540 --> 00:10:03,650 Sean Aylmer: Sure is. Over the weekend, France called back their envoys 200 00:10:03,650 --> 00:10:06,740 Sean Aylmer: to Canberra and Washington. This, of course, followed the fact 201 00:10:06,740 --> 00:10:09,809 Sean Aylmer: that Australia decided to dump a $90 billion deal with 202 00:10:10,320 --> 00:10:13,559 Sean Aylmer: Paris to build 12 conventional subs, and instead it signed 203 00:10:13,559 --> 00:10:15,890 Sean Aylmer: a deal with the US and UK to build eight 204 00:10:16,170 --> 00:10:20,010 Sean Aylmer: conventional subs plus other weapons. That's an $80 billion deal. 205 00:10:20,010 --> 00:10:23,530 Sean Aylmer: France is furious, not surprisingly, but yesterday Defense Minister, Peter 206 00:10:23,530 --> 00:10:27,329 Sean Aylmer: Dutton said Australia had been upfront and French knew of 207 00:10:27,330 --> 00:10:30,030 Sean Aylmer: its concerns. I don't really think that's the point. I 208 00:10:30,030 --> 00:10:31,900 Sean Aylmer: think the point is, did we actually tell France that 209 00:10:31,900 --> 00:10:34,000 Sean Aylmer: we were pulling the pin or did they just hear 210 00:10:34,000 --> 00:10:35,780 Sean Aylmer: it after we had assigned a deal with the US 211 00:10:35,780 --> 00:10:38,559 Sean Aylmer: and UK? One thing Mr. Dutton did say yesterday was 212 00:10:38,559 --> 00:10:42,069 Sean Aylmer: that Australia should be prepared for more aggressive behaviour from China. 213 00:10:42,290 --> 00:10:45,620 Sean Aylmer: He wasn't just talking about warfare though. He was talking 214 00:10:45,840 --> 00:10:48,280 Sean Aylmer: about things like cyber attacks, and we're likely to see 215 00:10:48,280 --> 00:10:52,130 Sean Aylmer: more of that. Interestingly, the decision to pull the plug 216 00:10:52,200 --> 00:10:55,309 Sean Aylmer: on the France deal and put it towards UK and US, 217 00:10:55,309 --> 00:10:58,590 Sean Aylmer: has pretty much been applauded back home amongst policymakers, but 218 00:10:58,590 --> 00:11:00,900 Sean Aylmer: not amongst people selling stuff to China. 219 00:11:01,350 --> 00:11:04,340 Michael Thompson: How much worse could it actually get in terms of 220 00:11:04,410 --> 00:11:07,570 Michael Thompson: trade with China, because it's been a pretty ordinary 18 months 221 00:11:07,700 --> 00:11:10,000 Michael Thompson: with a lot of tariffs and a lot of issues 222 00:11:10,000 --> 00:11:12,850 Michael Thompson: there? Could it actually still get worse? Is kind of 223 00:11:12,850 --> 00:11:14,679 Michael Thompson: iron ore the big risk there? 224 00:11:14,880 --> 00:11:17,290 Sean Aylmer: It could get worse. Iron ore is definitely the big risk. 225 00:11:17,510 --> 00:11:21,050 Sean Aylmer: China has been trying to develop mining in Mongolia and 226 00:11:21,050 --> 00:11:23,420 Sean Aylmer: within China itself, but at the end of the day, 227 00:11:23,420 --> 00:11:26,330 Sean Aylmer: Brazil and Australia, the two biggest iron ore miners, the 228 00:11:26,330 --> 00:11:28,300 Sean Aylmer: quality of the iron ore is better, that's kind of 229 00:11:28,300 --> 00:11:32,010 Sean Aylmer: what's needed. Interestingly, late last week, China said it was 230 00:11:32,010 --> 00:11:36,130 Sean Aylmer: interested in joining a trade pact, which includes Australia, Japan, 231 00:11:36,290 --> 00:11:40,090 Sean Aylmer: New Zealand, seven other countries, and trying to create a 232 00:11:40,309 --> 00:11:43,579 Sean Aylmer: trade grouping, which of course means that a lot of 233 00:11:43,580 --> 00:11:45,630 Sean Aylmer: these issues that we've faced over the last 18 months 234 00:11:45,790 --> 00:11:48,589 Sean Aylmer: should fall away. It could get worse, Michael, but I'm 235 00:11:48,590 --> 00:11:50,140 Sean Aylmer: an optimist. I'm hoping it'll get better. 236 00:11:50,559 --> 00:11:51,960 Michael Thompson: And one story I've been keeping a bit of an 237 00:11:51,960 --> 00:11:56,179 Michael Thompson: eye on, the boss Qantas, Alan Joyce, took home $1.9 million 238 00:11:56,610 --> 00:12:00,840 Michael Thompson: last financial year. That's up on the $1.7 million the previous year 239 00:12:00,840 --> 00:12:04,720 Michael Thompson: when he forfeited three months salary. It's well below what 240 00:12:04,940 --> 00:12:07,100 Michael Thompson: some other CEOs are getting, for example, the boss of 241 00:12:07,120 --> 00:12:10,829 Michael Thompson: Macquarie Group. Arguably, you could say that he had a 242 00:12:11,320 --> 00:12:12,240 Michael Thompson: tougher time of it. 243 00:12:12,570 --> 00:12:15,910 Sean Aylmer: The irony in all this, of course, is that Alan Joyce, whose 244 00:12:15,970 --> 00:12:19,500 Sean Aylmer: remuneration is tied to share price. Alan Joyce, I reckon 245 00:12:19,500 --> 00:12:22,870 Sean Aylmer: has earned his money this year and last financial year, 246 00:12:23,000 --> 00:12:26,059 Sean Aylmer: more than ever. In 2019, he took home $10 million. 247 00:12:26,850 --> 00:12:30,490 Sean Aylmer: This last financial year, he took home $ 1.9 million, but I'm 248 00:12:30,490 --> 00:12:32,770 Sean Aylmer: sure he had a much tougher time of it. The 1.9 249 00:12:33,300 --> 00:12:35,319 Sean Aylmer: he took home, as you mentioned, it's a lot less 250 00:12:35,320 --> 00:12:40,160 Sean Aylmer: than Macquarie Group's Shemara Wikramanayake's $16 million, and arguably Mr. 251 00:12:40,160 --> 00:12:42,770 Sean Aylmer: Joyce actually had to work harder for it. One thing 252 00:12:42,770 --> 00:12:46,350 Sean Aylmer: I did note from the announcement last Friday from Qantas is 253 00:12:46,350 --> 00:12:49,790 Sean Aylmer: that it actually wants to offer staff a bonus on 254 00:12:49,790 --> 00:12:54,120 Sean Aylmer: completion of its COVID-19 recovery plan. They've got some great 255 00:12:54,120 --> 00:12:57,130 Sean Aylmer: people in Qantas and they need to somehow retain them. If 256 00:12:57,130 --> 00:12:59,140 Sean Aylmer: you're sitting in Qantas and you're looking at the world 257 00:12:59,140 --> 00:13:01,550 Sean Aylmer: in front of you, you really are thinking whether it's 258 00:13:01,550 --> 00:13:03,590 Sean Aylmer: time to get out. Mr. Joyce knows he needs to 259 00:13:03,590 --> 00:13:04,530 Sean Aylmer: keep some of those people. 260 00:13:04,830 --> 00:13:07,929 Michael Thompson: Yeah, it makes a lot of sense. Now take over offers. 261 00:13:08,000 --> 00:13:10,240 Michael Thompson: Usually fair bit of noise around them, but one of 262 00:13:10,240 --> 00:13:15,150 Michael Thompson: the quieter ones has been around private equity group, EQT's 263 00:13:15,150 --> 00:13:18,740 Michael Thompson: bid for financial software platform business, Iress. What's happened? 264 00:13:19,040 --> 00:13:23,000 Sean Aylmer: It's gone very quiet because EQT's pulled the $2.3 billion bid; 265 00:13:23,000 --> 00:13:26,320 Sean Aylmer: it did that on Friday. EQT said it liked Iress. 266 00:13:26,320 --> 00:13:29,470 Sean Aylmer: It liked its technology, its market share, its loyal customer base, 267 00:13:29,840 --> 00:13:33,370 Sean Aylmer: but it just didn't meet its investment hypothesis. When you 268 00:13:33,370 --> 00:13:35,710 Sean Aylmer: start seeing that happen, when someone goes in and does 269 00:13:35,710 --> 00:13:38,530 Sean Aylmer: due diligence and then pulls out, it does make you wonder. 270 00:13:38,910 --> 00:13:43,250 Michael Thompson: Now Australian Super funds are getting more aggressive around environmental, 271 00:13:43,250 --> 00:13:46,660 Michael Thompson: social and governance proposals from large companies. This is according 272 00:13:46,660 --> 00:13:49,880 Michael Thompson: to a report last week from the Australasian Centre for 273 00:13:49,880 --> 00:13:51,140 Michael Thompson: Corporate Responsibility. 274 00:13:51,290 --> 00:13:54,530 Sean Aylmer: The top 50 Super funds in Australia are starting to vote 275 00:13:54,600 --> 00:13:59,069 Sean Aylmer: for different ESG shareholder proposals; ESG, as you mentioned, environmental, 276 00:13:59,070 --> 00:14:01,640 Sean Aylmer: social and governance proposals. They've always come up, but they're 277 00:14:01,640 --> 00:14:05,309 Sean Aylmer: coming up in much larger numbers now at AGMs, and 278 00:14:05,309 --> 00:14:08,350 Sean Aylmer: Super funds are voting for them. It's a really interesting 279 00:14:08,350 --> 00:14:11,100 Sean Aylmer: trend and it just shows that business needs to take 280 00:14:11,100 --> 00:14:14,590 Sean Aylmer: the environment very, very seriously if it wants the support of 281 00:14:14,590 --> 00:14:15,559 Sean Aylmer: its big investors. 282 00:14:16,440 --> 00:14:19,170 Michael Thompson: And not great news for some property investors. The vacancy 283 00:14:19,170 --> 00:14:23,180 Michael Thompson: rate for rental apartments, this is in Sydney's CBD, jumped 1.1% 284 00:14:23,180 --> 00:14:27,940 Michael Thompson: to 7.8% last month. Brisbane it rose to seven and 285 00:14:27,940 --> 00:14:30,900 Michael Thompson: a half percent and Melbourne edged slightly higher to 8.3% 286 00:14:31,730 --> 00:14:32,210 Michael Thompson: as well. 287 00:14:32,490 --> 00:14:36,450 Sean Aylmer: Figures were from SQM Research. It isn't good news. Apartment owners 288 00:14:36,450 --> 00:14:39,680 Sean Aylmer: and apartment investors have had a rough time of it while 289 00:14:39,680 --> 00:14:42,810 Sean Aylmer: we've all seen house prices, and these are freestanding dwellings, 290 00:14:43,120 --> 00:14:45,820 Sean Aylmer: going through the roof. That hasn't happened with the apartment 291 00:14:45,890 --> 00:14:49,330 Sean Aylmer: market and the CBDs have been hit particularly hard. People 292 00:14:49,330 --> 00:14:51,270 Sean Aylmer: are rethinking where they want to live. Do they really 293 00:14:51,270 --> 00:14:52,910 Sean Aylmer: want to live in the middle of the city if 294 00:14:52,910 --> 00:14:54,910 Sean Aylmer: they're not going into the office every day? We don't 295 00:14:54,910 --> 00:14:57,720 Sean Aylmer: have the international students. We don't have the international travellers. 296 00:14:58,010 --> 00:15:00,240 Sean Aylmer: Tough market, the CBD apartment market. 297 00:15:00,650 --> 00:15:03,350 Michael Thompson: Yeah, absolutely. Now this one's an interesting one. A lot 298 00:15:03,350 --> 00:15:06,700 Michael Thompson: of the big banks have been selling off some of 299 00:15:06,700 --> 00:15:08,710 Michael Thompson: the other parts of their business to really kind of 300 00:15:08,710 --> 00:15:12,070 Michael Thompson: focus on the core business of being a bank. Westpac 301 00:15:12,150 --> 00:15:13,580 Michael Thompson: has hit a bit of a hurdle. Tell me about 302 00:15:13,580 --> 00:15:13,900 Michael Thompson: that one. 303 00:15:14,390 --> 00:15:16,910 Sean Aylmer: It does. It owns up an operation in PNG and 304 00:15:16,910 --> 00:15:19,350 Sean Aylmer: Fiji which it was hoping to sell to a crowd 305 00:15:19,350 --> 00:15:23,750 Sean Aylmer: called Kina Securities, but the PNG regulator knocked that back. It 306 00:15:23,750 --> 00:15:27,860 Sean Aylmer: means it can't offload the PNG and Fiji business. It 307 00:15:27,860 --> 00:15:30,270 Sean Aylmer: means it has to go back to the drawing board on it, which 308 00:15:30,270 --> 00:15:33,130 Sean Aylmer: for Westpac is tricky because it really has been, as 309 00:15:33,130 --> 00:15:36,070 Sean Aylmer: you mentioned, trying to simplify its business ever since the 310 00:15:36,070 --> 00:15:38,460 Sean Aylmer: Royal Commission; as many of the other banks have been 311 00:15:38,460 --> 00:15:41,030 Sean Aylmer: doing. This one, though, it needs to rethink. 312 00:15:41,360 --> 00:15:43,760 Michael Thompson: And let's have a quick look at international news. An 313 00:15:43,760 --> 00:15:47,300 Michael Thompson: incredible story from Honda about the amount of cars they're 314 00:15:47,300 --> 00:15:48,130 Michael Thompson: actually producing. 315 00:15:48,530 --> 00:15:52,930 Sean Aylmer: Yeah. They're only producing 40% of their normal monthly output, 316 00:15:53,180 --> 00:15:57,050 Sean Aylmer: basically because of the shortage in semiconductor chips. Now that's 317 00:15:57,050 --> 00:15:59,920 Sean Aylmer: a major problem for car makers around the world. They 318 00:15:59,920 --> 00:16:02,060 Sean Aylmer: just can't get enough of these chips to put in 319 00:16:02,060 --> 00:16:05,120 Sean Aylmer: the cars. And of course, cars nowadays are full of 320 00:16:05,310 --> 00:16:08,020 Sean Aylmer: electronics and computers. So that's why when you buy a 321 00:16:08,020 --> 00:16:10,440 Sean Aylmer: new car in Australia, it can take six months for 322 00:16:10,440 --> 00:16:12,900 Sean Aylmer: it to actually be delivered. The other interesting thing, if 323 00:16:12,900 --> 00:16:16,010 Sean Aylmer: you're trying to sell your old car, your secondhand car, 324 00:16:16,010 --> 00:16:17,830 Sean Aylmer: you're getting a much better price now than you did 325 00:16:17,830 --> 00:16:20,560 Sean Aylmer: a couple of years ago, simply because of that delay 326 00:16:20,620 --> 00:16:22,230 Sean Aylmer: in people buying new cars. 327 00:16:22,480 --> 00:16:24,160 Michael Thompson: What else is happening overseas? 328 00:16:24,620 --> 00:16:27,240 Sean Aylmer: There's an interesting story from Bloomberg saying that the Biden 329 00:16:27,240 --> 00:16:32,360 Sean Aylmer: Administration is about to buy 500 million, 500 million COVID 330 00:16:32,360 --> 00:16:36,370 Sean Aylmer: vaccines from Pfizer and donate them globally to poorer countries. 331 00:16:36,560 --> 00:16:39,570 Sean Aylmer: We talked about this last week. We need poorer countries 332 00:16:39,570 --> 00:16:44,450 Sean Aylmer: to be vaccinated because otherwise mutant strains of COVID will 333 00:16:44,450 --> 00:16:47,989 Sean Aylmer: be created and spread in rich and poor countries. It's 334 00:16:47,990 --> 00:16:50,360 Sean Aylmer: just good that the US is thinking about this and 335 00:16:50,360 --> 00:16:53,620 Sean Aylmer: is prepared to actually send vaccines to poorer nations. 336 00:16:53,910 --> 00:16:55,440 Michael Thompson: Yeah, and hopefully it puts a bit of pressure on 337 00:16:55,440 --> 00:16:57,640 Michael Thompson: other wealthy countries to do the same. 338 00:16:57,810 --> 00:16:58,910 Sean Aylmer: Absolutely. Yeah. 339 00:16:59,120 --> 00:17:02,970 Michael Thompson: And finally, all eyes are on China and a big story 340 00:17:02,970 --> 00:17:05,260 Michael Thompson: that's developing there. It's been developing for a few weeks. 341 00:17:05,540 --> 00:17:07,940 Sean Aylmer: It has. Evergrande is the company. It's a property group. 342 00:17:08,150 --> 00:17:12,950 Sean Aylmer: It has $US300 billion, so let's say 400 billion Aussie (dollars), 343 00:17:13,470 --> 00:17:17,240 Sean Aylmer: of liabilities. It holds about 6.5% of the Chinese property 344 00:17:17,240 --> 00:17:21,260 Sean Aylmer: sector debt. That is massive. It's already told its banks 345 00:17:21,300 --> 00:17:24,870 Sean Aylmer: it has to defer repayments, and this week holders of 346 00:17:24,910 --> 00:17:28,830 Sean Aylmer: Evergrande bonds are supposed to receive a coupon payment. If 347 00:17:28,830 --> 00:17:32,170 Sean Aylmer: it doesn't make it, it could well signal the collapse 348 00:17:32,170 --> 00:17:35,480 Sean Aylmer: of one of the biggest companies ever, though I must say, 349 00:17:35,480 --> 00:17:37,500 Sean Aylmer: I suspect Beijing will step in. 350 00:17:37,810 --> 00:17:38,379 Michael Thompson: Big week. 351 00:17:38,550 --> 00:17:41,300 Sean Aylmer: Sure. It's a great week. I mean, I mentioned before the US Federal 352 00:17:41,300 --> 00:17:43,609 Sean Aylmer: Reserve and Bank of Japan and Bank of England are 353 00:17:43,609 --> 00:17:45,550 Sean Aylmer: all meeting this week. We get the Reserve Bank minutes 354 00:17:45,550 --> 00:17:48,780 Sean Aylmer: out, and Michael, most importantly, because I know that you 355 00:17:48,780 --> 00:17:50,170 Sean Aylmer: are a streamer from way back- 356 00:17:50,350 --> 00:17:51,100 Michael Thompson: Certainly am. 357 00:17:51,230 --> 00:17:53,730 Sean Aylmer: The Emmy's are on later this morning. What's your tip? 358 00:17:53,900 --> 00:17:55,680 Michael Thompson: Oh, see, I know the one that everyone is talking 359 00:17:56,140 --> 00:17:56,960 Michael Thompson: about is Ted Lasso. 360 00:17:57,400 --> 00:17:58,040 Sean Aylmer: Oh, love Ted. 361 00:17:58,170 --> 00:18:00,609 Michael Thompson: I still haven't seen it. I'm always about a year 362 00:18:00,619 --> 00:18:03,460 Michael Thompson: or two behind where the Emmy's are. By the time 363 00:18:03,460 --> 00:18:06,780 Michael Thompson: something wins and basically scoops the pool I'll check it 364 00:18:06,780 --> 00:18:07,859 Michael Thompson: out about two years later. 365 00:18:08,170 --> 00:18:10,420 Sean Aylmer: No. Get your money on Ted. Loved Ted Lasso. 366 00:18:10,720 --> 00:18:13,389 Michael Thompson: Will do. Now, up next is our daily interview, and 367 00:18:13,390 --> 00:18:15,730 Michael Thompson: I mentioned this one earlier. Today you're talking to Geoff 368 00:18:15,730 --> 00:18:18,250 Michael Thompson: Wilson, the founder of Wilson Asset Management. 369 00:18:18,580 --> 00:18:21,570 Sean Aylmer: Geoff is a great investor, a great activist investor, always 370 00:18:21,609 --> 00:18:25,240 Sean Aylmer: thinking ahead, always thinking about stocks to invest in, and 371 00:18:25,240 --> 00:18:26,480 Sean Aylmer: he talks all about it today. 372 00:18:26,840 --> 00:18:28,949 Michael Thompson: Terrific. That's in the Fear and Greed playlist on your 373 00:18:28,950 --> 00:18:32,900 Michael Thompson: podcast platform or at fearandgreed.com.au. And of course, while you're there 374 00:18:32,900 --> 00:18:34,700 Michael Thompson: as well, make sure you check out The Week Ahead 375 00:18:34,700 --> 00:18:37,590 Michael Thompson: with Sean and Stephen Koukoulas, which is out every Monday. 376 00:18:37,680 --> 00:18:39,560 Michael Thompson: Thank you, Sean. Have a great day. Enjoy the Emmy's. 377 00:18:39,670 --> 00:18:40,810 Sean Aylmer: I will do. Thanks, Michael. 378 00:18:41,050 --> 00:18:44,149 Michael Thompson: It's Monday the 20th of September 2021. Make sure you 379 00:18:44,150 --> 00:18:46,859 Michael Thompson: follow Fear and Greed on LinkedIn, Twitter and Facebook, and 380 00:18:46,859 --> 00:18:50,899 Michael Thompson: you can always find more info at fearandgreed.com.au. I'm Michael 381 00:18:50,900 --> 00:18:53,300 Michael Thompson: Thompson and that was Fear and Greed. Enjoy your day.