1 00:00:05,200 --> 00:00:07,440 Speaker 1: Welcome to Fear and Greed the week Ahead. I'm Sean Almer, 2 00:00:07,520 --> 00:00:10,240 Speaker 1: and as always I'm joined by the economist Stephen Cooculis. 3 00:00:10,280 --> 00:00:12,160 Speaker 1: You'll find him at the cook dot com and on 4 00:00:12,280 --> 00:00:13,960 Speaker 1: exit using the handle of the Cook Stephen. 5 00:00:14,000 --> 00:00:15,640 Speaker 2: Good morning, Good morning John. 6 00:00:16,000 --> 00:00:17,320 Speaker 1: I got a band to pick with you. I mean, 7 00:00:17,320 --> 00:00:19,520 Speaker 1: we've got so much to talk about politics, economics, but 8 00:00:19,600 --> 00:00:22,800 Speaker 1: let's start with the Melbourne Cup. That was a bad tip. 9 00:00:22,880 --> 00:00:25,680 Speaker 2: That shock. It came second last, so it didn't even 10 00:00:25,720 --> 00:00:28,040 Speaker 2: come last to get your money back like some sweeps have. 11 00:00:28,200 --> 00:00:30,440 Speaker 2: So the map, I still think he's coming around the 12 00:00:30,480 --> 00:00:33,560 Speaker 2: home turn. But I didn't get one hundred to one shot. 13 00:00:33,640 --> 00:00:36,120 Speaker 2: I wish I did, I didn't, And the math well, 14 00:00:36,960 --> 00:00:38,640 Speaker 2: oh well, there's there's always next. 15 00:00:38,520 --> 00:00:41,320 Speaker 1: Year, always next yeim. Okay, We've we've got a little 16 00:00:41,320 --> 00:00:43,920 Speaker 1: bit of talk about for this week. But wow, wow, wow, 17 00:00:43,920 --> 00:00:47,000 Speaker 1: wow wow, what a week last week was between I mean, 18 00:00:47,040 --> 00:00:48,680 Speaker 1: the Reserve Bank would have been big enough, but that 19 00:00:48,840 --> 00:00:50,519 Speaker 1: US election swamped everything. 20 00:00:50,720 --> 00:00:54,080 Speaker 2: It did, and the knee jerk reaction that we've seen 21 00:00:54,760 --> 00:00:56,720 Speaker 2: now in a day or two after it was confirmed 22 00:00:56,720 --> 00:00:59,160 Speaker 2: that Trump has won the election and he's probably got 23 00:00:59,160 --> 00:01:02,760 Speaker 2: a good result in Congress, too, has been that sharp 24 00:01:02,920 --> 00:01:06,520 Speaker 2: jump in sock prizes, although it's uncertain whether that's going 25 00:01:06,520 --> 00:01:09,199 Speaker 2: to be sustained or not. You know, yields, bond yields 26 00:01:09,240 --> 00:01:11,160 Speaker 2: and interest rate markets have sold off, so we've got 27 00:01:11,240 --> 00:01:14,440 Speaker 2: much high yield settings because he's getting big tax cuts 28 00:01:14,440 --> 00:01:17,520 Speaker 2: and tariffs which will be inflationary if he's true to 29 00:01:17,560 --> 00:01:20,720 Speaker 2: his word, and that's certainly an important qualifier. But really 30 00:01:20,800 --> 00:01:23,680 Speaker 2: it was a sunning result, one that shopped the markets. 31 00:01:23,680 --> 00:01:25,720 Speaker 2: And you know, when you get the Dow rising, you know, 32 00:01:25,800 --> 00:01:29,160 Speaker 2: fifteen hundred points in one session, it's telling you something 33 00:01:29,240 --> 00:01:32,400 Speaker 2: about what the market's expectations are. And again, of course 34 00:01:32,560 --> 00:01:35,199 Speaker 2: whether it's sustained is a sixty four million dollar question. 35 00:01:35,600 --> 00:01:38,040 Speaker 1: Yeah, okay, what about the Reserve Bank at board meeting 36 00:01:38,120 --> 00:01:39,800 Speaker 1: last week? We sort of forget about that, but that 37 00:01:39,920 --> 00:01:41,240 Speaker 1: was pretty important to him. 38 00:01:41,120 --> 00:01:44,199 Speaker 2: Very important, and it was one of those ones where 39 00:01:44,760 --> 00:01:47,160 Speaker 2: I don't think there was any surprise. And when Governor 40 00:01:47,200 --> 00:01:50,680 Speaker 2: bought it gave her press conference afterwards, she was asked directly, 41 00:01:50,720 --> 00:01:53,320 Speaker 2: you know, did you consider hiking rates or cutting rates? 42 00:01:53,360 --> 00:01:55,080 Speaker 2: And she said, no, Look, we didn't really, we just 43 00:01:55,200 --> 00:01:57,320 Speaker 2: knew that they were going to be on hold, and 44 00:01:57,520 --> 00:02:00,560 Speaker 2: they sort of war gained scenarios. That's my word is 45 00:02:00,600 --> 00:02:03,200 Speaker 2: not necessarily hers, But they're really just talking about, you know, 46 00:02:03,240 --> 00:02:05,320 Speaker 2: what are they seeing in the economy, what's happening globally. 47 00:02:05,320 --> 00:02:08,160 Speaker 2: You know, we've had rate cuts occurring, including last week, 48 00:02:08,240 --> 00:02:09,920 Speaker 2: you know, around much of the world. So you've got 49 00:02:10,000 --> 00:02:14,520 Speaker 2: this scenario where the RBA is still worried about the 50 00:02:15,080 --> 00:02:17,960 Speaker 2: trimmed mean or the underlying inflation pressures, even though she 51 00:02:18,000 --> 00:02:21,959 Speaker 2: did acknowledge that the headline fall and inflation was a 52 00:02:22,080 --> 00:02:25,640 Speaker 2: welcome development, but they want to get those what do 53 00:02:25,680 --> 00:02:28,200 Speaker 2: we call it, the demand driven the excess demand that 54 00:02:28,280 --> 00:02:30,120 Speaker 2: she still thinks and the RBA boards still think are 55 00:02:30,160 --> 00:02:33,240 Speaker 2: in the economy before they're willing to contemplate a rate cup. 56 00:02:33,639 --> 00:02:37,560 Speaker 2: That said, they said they're willing to be pragmatic when, if, 57 00:02:37,600 --> 00:02:40,080 Speaker 2: and when the numbers change, they'll change as well. So 58 00:02:40,480 --> 00:02:42,680 Speaker 2: not much of this forward guidance. I think the RBA 59 00:02:42,720 --> 00:02:44,880 Speaker 2: has been burnt by that in the past, and there's 60 00:02:44,919 --> 00:02:47,000 Speaker 2: a lot more. While they have their forecasts, of course 61 00:02:47,040 --> 00:02:49,119 Speaker 2: they do, they're a lot more reactive to the news 62 00:02:49,120 --> 00:02:49,720 Speaker 2: that comes through. 63 00:02:50,680 --> 00:02:52,840 Speaker 1: What about I mean, if you put those two things together, 64 00:02:52,840 --> 00:02:56,600 Speaker 1: the US selection and the reserve being thinking about interest rates. 65 00:02:57,040 --> 00:02:59,400 Speaker 1: I presume it's at the margins, it's not so central case. 66 00:02:59,440 --> 00:03:01,720 Speaker 1: But still the idea that US rates are going to 67 00:03:01,720 --> 00:03:04,600 Speaker 1: be higher for longer on the back of bigger deficits. 68 00:03:04,800 --> 00:03:06,040 Speaker 1: Does that plain in to the Reserve Bank? 69 00:03:06,080 --> 00:03:09,520 Speaker 2: Do you think it does? And in fact, the Governor, 70 00:03:09,880 --> 00:03:12,360 Speaker 2: Michelle Puluc she appeared before comedy, was the center of 71 00:03:12,360 --> 00:03:15,960 Speaker 2: House of re Committee hearing late last week two, which 72 00:03:16,160 --> 00:03:17,600 Speaker 2: didn't get a lot of carriage because I think we 73 00:03:17,720 --> 00:03:20,840 Speaker 2: just really reiterated what she said in the quarterly statement 74 00:03:20,880 --> 00:03:23,760 Speaker 2: and in her q and A after the board meeting. 75 00:03:24,120 --> 00:03:26,680 Speaker 2: But she did say, look, it does have an impact. 76 00:03:26,680 --> 00:03:28,960 Speaker 2: You know, the US economy, the dominant economy in the world, 77 00:03:29,440 --> 00:03:32,960 Speaker 2: particularly in terms of capital markets. It's got a probable 78 00:03:33,200 --> 00:03:35,200 Speaker 2: and again she was hedging her words very carefully, which 79 00:03:35,240 --> 00:03:39,480 Speaker 2: is exactly as she should. But a probable inflation spike 80 00:03:39,760 --> 00:03:42,920 Speaker 2: looming if the new president or president elect is true 81 00:03:42,960 --> 00:03:45,480 Speaker 2: to his word on income tax cuts and company tax 82 00:03:45,520 --> 00:03:49,280 Speaker 2: cuts and tariffs, that that will play into sort of 83 00:03:49,320 --> 00:03:52,400 Speaker 2: global trade obviously through the tariff side of the economy, 84 00:03:52,560 --> 00:03:55,520 Speaker 2: and it could just mean the US is stronger for longer, 85 00:03:55,680 --> 00:03:57,880 Speaker 2: rates higher for longer than those sorts of cliches that 86 00:03:57,920 --> 00:03:59,720 Speaker 2: we can use. And yeah, if the US has got 87 00:03:59,760 --> 00:04:03,760 Speaker 2: a highigh inflation, high interest rates, high government debt scenario, 88 00:04:03,880 --> 00:04:07,400 Speaker 2: which is highly probable given the election results, then that 89 00:04:07,440 --> 00:04:09,880 Speaker 2: will feed into the RBA's deliberations to some extent. 90 00:04:09,920 --> 00:04:14,240 Speaker 1: Anyway, Okay, this week all about labor really in terms 91 00:04:14,280 --> 00:04:15,520 Speaker 1: of wages and unemployment. 92 00:04:15,760 --> 00:04:19,080 Speaker 2: Yep, labor force data in broad terms. So the wage 93 00:04:19,120 --> 00:04:23,120 Speaker 2: price index first, which is really interesting because we had 94 00:04:23,360 --> 00:04:26,200 Speaker 2: up until probably six months ago, a concern that the 95 00:04:26,240 --> 00:04:28,560 Speaker 2: types in the labor market, that the unemployment rate being 96 00:04:28,640 --> 00:04:33,359 Speaker 2: very low could feed into wage pressures increasing. Now the 97 00:04:33,400 --> 00:04:36,560 Speaker 2: market is expecting wage pressures to abate a little, so 98 00:04:36,560 --> 00:04:39,279 Speaker 2: we've got the forecast for the quarter on quarter increase 99 00:04:39,320 --> 00:04:41,760 Speaker 2: in the wager price index of about zero point nine 100 00:04:41,839 --> 00:04:44,880 Speaker 2: percent for the quarter, which would bring the annual figure 101 00:04:44,880 --> 00:04:47,160 Speaker 2: down to a round about three point eight percent. So 102 00:04:47,400 --> 00:04:49,360 Speaker 2: it did peak at four point two percent about a 103 00:04:49,440 --> 00:04:52,240 Speaker 2: year ago. So again it's not free falling. It's not 104 00:04:52,720 --> 00:04:56,560 Speaker 2: a massive deceleration and wages goes, but that feed that 105 00:04:56,760 --> 00:05:00,560 Speaker 2: was there on high wages feeding the higher inflation probably 106 00:05:00,960 --> 00:05:03,039 Speaker 2: is going to be thrown out of the window with 107 00:05:03,080 --> 00:05:06,240 Speaker 2: that wage's number and importantly the one that we've all 108 00:05:06,279 --> 00:05:09,120 Speaker 2: been shocked about every single month for the last six months, 109 00:05:09,240 --> 00:05:12,200 Speaker 2: the labor force release. Look, I think everyone's expecting it's 110 00:05:12,240 --> 00:05:15,920 Speaker 2: slowing in the rate of job increase, so around about 111 00:05:15,960 --> 00:05:18,680 Speaker 2: twenty twenty five thousand increase in jobs down from the 112 00:05:18,760 --> 00:05:22,280 Speaker 2: forty to fifty sixty thousand, and every expected underploy rates 113 00:05:22,279 --> 00:05:24,000 Speaker 2: to tick up to four point two percent. But as 114 00:05:24,000 --> 00:05:25,920 Speaker 2: I said, for the last six months, I think it's 115 00:05:25,920 --> 00:05:29,080 Speaker 2: been the labor force numbers have surprised on the upside, 116 00:05:29,120 --> 00:05:31,120 Speaker 2: on the strong side. So but we'll watch out to 117 00:05:31,160 --> 00:05:34,880 Speaker 2: see just whether there's any any signal occurring from a 118 00:05:34,960 --> 00:05:36,239 Speaker 2: stuftening in the labor market. 119 00:05:36,839 --> 00:05:37,880 Speaker 1: Stephen, enjoy your week. 120 00:05:38,160 --> 00:05:38,760 Speaker 2: Thank you, Jean. 121 00:05:39,520 --> 00:05:41,840 Speaker 1: That was economist Stephen Cocole. It's better known as the Kook. 122 00:05:41,880 --> 00:05:43,320 Speaker 1: You can find him at the cook dot com and 123 00:05:43,400 --> 00:05:45,559 Speaker 1: following him on x using the handle of the Kirk. 124 00:05:45,720 --> 00:05:47,600 Speaker 1: I'm Sean Eelmer, and this is fear and greeed the 125 00:05:47,640 --> 00:05:48,200 Speaker 1: week Ahead.