1 00:00:05,340 --> 00:00:07,410 Sean Aylmer: Welcome to Fear and Greed - The Week Ahead. I'm Sean 2 00:00:07,470 --> 00:00:10,738 Sean Aylmer: Aylmer, and as always, I'm joined by economist, Stephen Koukoulas. 3 00:00:10,740 --> 00:00:13,500 Sean Aylmer: You'll find him @ thekouk. com, T- H- E- K- O- U- 4 00:00:13,500 --> 00:00:16,710 Sean Aylmer: K, thekouk. com. And on X, using the handle @ TheKouk. 5 00:00:16,920 --> 00:00:18,000 Sean Aylmer: Stephen, good morning. 6 00:00:18,329 --> 00:00:19,169 Stephen Koukoulas: Good morning, Sean. 7 00:00:19,890 --> 00:00:22,920 Sean Aylmer: Look, it's been a funny couple of weeks because not 8 00:00:22,920 --> 00:00:25,200 Sean Aylmer: a lot of economic data is out, but wow, the 9 00:00:25,200 --> 00:00:27,719 Sean Aylmer: stuff that is out matters. So let's start last week 10 00:00:27,719 --> 00:00:28,890 Sean Aylmer: with the Labor Force figures. 11 00:00:29,160 --> 00:00:31,710 Stephen Koukoulas: Yeah, domestically, we had our Labor Force numbers for the 12 00:00:31,710 --> 00:00:35,129 Stephen Koukoulas: month of March, and they were broadly as expected, which 13 00:00:35,129 --> 00:00:37,979 Stephen Koukoulas: is very rare for economists to get it right. So 14 00:00:38,729 --> 00:00:42,659 Stephen Koukoulas: employment was down 6, 500 in the month of March. 15 00:00:42,900 --> 00:00:46,800 Stephen Koukoulas: Unemployment crept up from 3. 7% to 3. 8%. So 16 00:00:46,800 --> 00:00:49,138 Stephen Koukoulas: you might think, " Oh gee, that's bad news," but, and it's 17 00:00:49,440 --> 00:00:53,219 Stephen Koukoulas: a really important but, the context of that was that 18 00:00:53,219 --> 00:00:57,030 Stephen Koukoulas: the previous month we had that stellar increase in unemployment... 19 00:00:57,120 --> 00:01:01,770 Stephen Koukoulas: Well, was revised to 117, 000 jobs plus, and the 20 00:01:01,770 --> 00:01:05,340 Stephen Koukoulas: unemployment rate had fallen from 4. 1% to 3. 7%. 21 00:01:05,580 --> 00:01:08,370 Stephen Koukoulas: So it gave up some of those... What do we 22 00:01:08,370 --> 00:01:13,080 Stephen Koukoulas: call them? Statistically odd results. And when you put trend 23 00:01:13,080 --> 00:01:16,980 Stephen Koukoulas: lines through, moving averages through the numbers, it confirms the 24 00:01:16,980 --> 00:01:21,179 Stephen Koukoulas: economy's slowing down. But it's not, I repeat, not heading 25 00:01:21,179 --> 00:01:23,940 Stephen Koukoulas: for a hard landing or recession at this stage. The 26 00:01:23,940 --> 00:01:28,020 Stephen Koukoulas: Labor market is still quite resilient. It is cooling off, 27 00:01:28,319 --> 00:01:31,470 Stephen Koukoulas: but it is not yet at a level that would 28 00:01:31,590 --> 00:01:35,790 Stephen Koukoulas: be sparking huge concerns for policymakers, including our friends at 29 00:01:35,790 --> 00:01:36,450 Stephen Koukoulas: the RBA. 30 00:01:36,840 --> 00:01:39,690 Sean Aylmer: Well, the Reserve Bank will be watching the Consumer Price 31 00:01:39,690 --> 00:01:43,020 Sean Aylmer: Index for March quarter this week very closely, Stephen. This 32 00:01:43,020 --> 00:01:43,649 Sean Aylmer: is the big one. 33 00:01:44,099 --> 00:01:47,250 Stephen Koukoulas: Oh, it's the biggie. The quarterly one is really important. 34 00:01:47,250 --> 00:01:51,210 Stephen Koukoulas: And given what's happened globally as well with inflation, particularly 35 00:01:51,210 --> 00:01:54,990 Stephen Koukoulas: in the US where they've got a really stubborn inflation 36 00:01:54,990 --> 00:01:58,290 Stephen Koukoulas: rate, they had no trouble getting it down to 3%, 3. 37 00:01:58,290 --> 00:02:02,879 Stephen Koukoulas: 5%, but it's still 3%, 3. 5%, and their target 38 00:02:02,880 --> 00:02:05,789 Stephen Koukoulas: is for 2% at the US Federal Reserve. So we 39 00:02:05,789 --> 00:02:08,940 Stephen Koukoulas: look at things such as the UK. While the inflation 40 00:02:08,940 --> 00:02:12,089 Stephen Koukoulas: rate edged down, it wasn't as much as markets expected. 41 00:02:12,090 --> 00:02:15,780 Stephen Koukoulas: This was last week, by the way. Canada's inflation down 42 00:02:15,780 --> 00:02:18,030 Stephen Koukoulas: a bit, but again, not within the Bank of Canada's 43 00:02:18,030 --> 00:02:21,179 Stephen Koukoulas: target. And so the Reserve Bank here, when they see 44 00:02:21,179 --> 00:02:25,590 Stephen Koukoulas: their March quarterly number, which comprises all of the goods 45 00:02:25,590 --> 00:02:28,470 Stephen Koukoulas: and services, so it's a better guide to inflation, the 46 00:02:28,470 --> 00:02:31,530 Stephen Koukoulas: monthly indicator, it's probably going to be a bit lower 47 00:02:31,620 --> 00:02:35,910 Stephen Koukoulas: than in quarterly terms about 0.7%, 0. 8%. There's a bit 48 00:02:35,910 --> 00:02:39,629 Stephen Koukoulas: of a petrol effect in there. Headline probably down to 49 00:02:39,630 --> 00:02:44,429 Stephen Koukoulas: about 3.6%, 3. 7%, down from 4. 1%. So the inflation 50 00:02:44,430 --> 00:02:47,760 Stephen Koukoulas: rate's moving in the right direction, tick. But is it 51 00:02:47,760 --> 00:02:50,340 Stephen Koukoulas: moving fast enough to get to the 2% to 3% 52 00:02:50,610 --> 00:02:53,250 Stephen Koukoulas: target band? Well, it's a great big question mark. 53 00:02:54,240 --> 00:02:58,109 Sean Aylmer: So Reserve Bank Governor, Michelle Bullock has spoken at a 54 00:02:58,230 --> 00:03:01,950 Sean Aylmer: press conferences saying that she is happy to shift on 55 00:03:01,950 --> 00:03:04,230 Sean Aylmer: rates even if we're not in the 2% to 3% 56 00:03:04,530 --> 00:03:06,990 Sean Aylmer: target band, on the back of having confidence that they 57 00:03:06,990 --> 00:03:09,599 Sean Aylmer: will get there. Do you think what's happened overseas, and 58 00:03:09,599 --> 00:03:12,300 Sean Aylmer: you just ran through a bunch of them, gives them 59 00:03:12,360 --> 00:03:15,750 Sean Aylmer: a pause for thought about how hard it is, that 60 00:03:15,750 --> 00:03:16,440 Sean Aylmer: last little bit? 61 00:03:16,919 --> 00:03:18,660 Stephen Koukoulas: That last little bit, yes, and I think that is 62 00:03:18,690 --> 00:03:21,900 Stephen Koukoulas: really interesting. I genuinely thought they'd be cutting interest rates 63 00:03:21,900 --> 00:03:23,880 Stephen Koukoulas: around the middle of the year this year, like in 64 00:03:23,880 --> 00:03:26,970 Stephen Koukoulas: the next... If not in May, then in late June 65 00:03:27,300 --> 00:03:30,540 Stephen Koukoulas: because the economy was weakening and inflation around the world 66 00:03:30,660 --> 00:03:33,809 Stephen Koukoulas: was falling sharply. Now, we've had that resilience in commodity 67 00:03:33,809 --> 00:03:36,270 Stephen Koukoulas: prices. Oil and petrol are the big headline one. But 68 00:03:36,660 --> 00:03:39,540 Stephen Koukoulas: if you look at things like copper prices, cocoa prices, 69 00:03:40,290 --> 00:03:42,690 Stephen Koukoulas: these sorts of things, coffee prices, they're all gone up, 70 00:03:42,720 --> 00:03:45,750 Stephen Koukoulas: they're commodities that feed into the inflation rate. And if 71 00:03:45,750 --> 00:03:47,700 Stephen Koukoulas: they're going up, then it's just a matter of time 72 00:03:47,700 --> 00:03:50,849 Stephen Koukoulas: before we see some of those price pressures showing up 73 00:03:50,849 --> 00:03:54,000 Stephen Koukoulas: in global inflation. And of course here, and particularly with 74 00:03:54,000 --> 00:03:57,720 Stephen Koukoulas: the Aussie dollar being hammered into the below 65 cents in 75 00:03:57,960 --> 00:04:01,470 Stephen Koukoulas: the past week, then you've got this inflation pressure building. 76 00:04:01,470 --> 00:04:05,820 Stephen Koukoulas: So for Michelle Bullock and the RBA, as you said, 77 00:04:06,030 --> 00:04:08,460 Stephen Koukoulas: they're not rolling anything or anything out when it comes 78 00:04:08,460 --> 00:04:11,160 Stephen Koukoulas: to interest rate settings and the outlook of their forecasts 79 00:04:11,160 --> 00:04:14,430 Stephen Koukoulas: and projections for interest rates. But they do want to 80 00:04:14,430 --> 00:04:18,270 Stephen Koukoulas: see, I think for a rate cut. Well, don't want 81 00:04:18,270 --> 00:04:20,040 Stephen Koukoulas: to see a really weak economy, but for them to 82 00:04:20,040 --> 00:04:22,589 Stephen Koukoulas: deliver a rate cut, I should say, they probably need 83 00:04:22,589 --> 00:04:26,219 Stephen Koukoulas: to see a real deterioration in the labor market, which 84 00:04:26,219 --> 00:04:30,510 Stephen Koukoulas: as we just said, isn't yet showing up, and further 85 00:04:30,510 --> 00:04:34,920 Stephen Koukoulas: progress on inflation. So the jury's out, and as the market 86 00:04:34,920 --> 00:04:37,860 Stephen Koukoulas: pricing has shown, Sean, look, it's been an absolutely fascinating 87 00:04:37,860 --> 00:04:42,089 Stephen Koukoulas: couple of weeks for me. Here, US, Canada, New Zealand, 88 00:04:42,089 --> 00:04:45,270 Stephen Koukoulas: you name it, they've pushed out the timing for the first- 89 00:04:45,270 --> 00:04:48,570 Stephen Koukoulas: rate cut in all of those countries, and they've scaled 90 00:04:48,570 --> 00:04:51,060 Stephen Koukoulas: back the magnitude of rate cuts over the next couple 91 00:04:51,060 --> 00:04:54,600 Stephen Koukoulas: of years. So they're still cuts priced in, but not 92 00:04:54,600 --> 00:04:57,330 Stephen Koukoulas: many. And they're going to be starting later rather than sooner. 93 00:04:57,570 --> 00:04:58,769 Sean Aylmer: Stephen, enjoy your week. 94 00:04:59,130 --> 00:04:59,910 Stephen Koukoulas: Will do. Thank you. 95 00:05:00,420 --> 00:05:02,969 Sean Aylmer: That was Economist, Stephen Koukoulas, better known as The Kouk. You 96 00:05:02,969 --> 00:05:05,159 Sean Aylmer: can find him at thekouk. com and follow him on 97 00:05:05,160 --> 00:05:08,040 Sean Aylmer: X using the handle @ TheKouk. I'm Sean Aylmer, and this 98 00:05:08,040 --> 00:05:09,570 Sean Aylmer: is Fear and Greed - The Week Ahead.