1 00:00:05,160 --> 00:00:07,760 Speaker 1: Welcome to Fear and Greed the week Ahead. I'm Sean Aylmer, 2 00:00:07,800 --> 00:00:10,319 Speaker 1: and as always I'm joined by economist Stephen Kokula. Still 3 00:00:10,360 --> 00:00:12,119 Speaker 1: find herem at the Cook dot com, t h e 4 00:00:12,200 --> 00:00:15,200 Speaker 1: k O uk dot com and on X using the 5 00:00:15,240 --> 00:00:18,640 Speaker 1: handle the Kirk Stephen. Have you gotten over last week's 6 00:00:18,880 --> 00:00:20,520 Speaker 1: non decision by the Reserve Bank? 7 00:00:21,040 --> 00:00:23,840 Speaker 2: No, I don't think I Bill, and I don't think 8 00:00:23,840 --> 00:00:26,840 Speaker 2: I'm the lone ranger on this one too. But look, 9 00:00:27,000 --> 00:00:29,760 Speaker 2: we've had now what five or six days to digest 10 00:00:29,800 --> 00:00:32,599 Speaker 2: what the RBA did, and we've had a chance to 11 00:00:32,640 --> 00:00:36,800 Speaker 2: analyze what the RBA governor said, both in her press 12 00:00:36,920 --> 00:00:39,839 Speaker 2: release and in the press conference, and look, a lot 13 00:00:39,840 --> 00:00:42,000 Speaker 2: of us are still scratching our heads a little bit 14 00:00:42,040 --> 00:00:44,680 Speaker 2: about why they waited this extra five weeks until the 15 00:00:44,720 --> 00:00:48,320 Speaker 2: August meeting. We know there's the June quarter inflation data, 16 00:00:48,360 --> 00:00:51,680 Speaker 2: which is more comprehensive than the monthly numbers. That said, 17 00:00:52,120 --> 00:00:55,639 Speaker 2: the monthly numbers still contain an awful lot of information 18 00:00:55,720 --> 00:00:59,240 Speaker 2: on price that will be actually incorporating to the quarterly figure, 19 00:00:59,280 --> 00:01:04,160 Speaker 2: and when it was basically ninety five odd percent priced 20 00:01:04,160 --> 00:01:05,880 Speaker 2: into the markets, it did cause a lot of us 21 00:01:05,920 --> 00:01:09,520 Speaker 2: to be a little shocked or a lot shocked. And 22 00:01:10,680 --> 00:01:12,880 Speaker 2: our mistake, I guess, was looking at the data and 23 00:01:12,920 --> 00:01:14,360 Speaker 2: not looking at the nuances of. 24 00:01:17,720 --> 00:01:21,120 Speaker 1: You know what was interesting. We had Lucy Ellis on 25 00:01:21,160 --> 00:01:22,880 Speaker 1: the show last week. I saw the unscary of course, 26 00:01:22,959 --> 00:01:25,920 Speaker 1: used to be chief economist, and she exactly same what 27 00:01:25,959 --> 00:01:28,039 Speaker 1: you've said. She said, I just don't understand. It's not 28 00:01:28,080 --> 00:01:29,840 Speaker 1: like they're getting a lot more information over the next 29 00:01:29,840 --> 00:01:31,759 Speaker 1: five weeks. It's going to make much of a difference. 30 00:01:32,240 --> 00:01:34,160 Speaker 1: And I said, do you think it's the board, the 31 00:01:34,160 --> 00:01:37,800 Speaker 1: board being much more independent? She said, well, you know, 32 00:01:37,880 --> 00:01:43,160 Speaker 1: the board weren't patsies previously. All that's okay, so that's fine, 33 00:01:43,280 --> 00:01:47,040 Speaker 1: but it does really for the first time show the 34 00:01:47,080 --> 00:01:51,000 Speaker 1: world is different and the Reserve Bank Management can't get 35 00:01:51,040 --> 00:01:52,800 Speaker 1: its way necessarily. 36 00:01:52,840 --> 00:01:55,320 Speaker 2: That's true. And the fact that they did release the 37 00:01:55,720 --> 00:01:58,160 Speaker 2: aggregate voting because there are nine members of the RBA 38 00:01:58,320 --> 00:02:01,280 Speaker 2: Monetary Policy Board and they vote should we put them 39 00:02:01,360 --> 00:02:03,520 Speaker 2: up down or leave them steady and all these other things, 40 00:02:03,600 --> 00:02:07,080 Speaker 2: and it was six to three, so six said on 41 00:02:07,200 --> 00:02:10,360 Speaker 2: hold three set of cuts. So there was obviously some 42 00:02:10,440 --> 00:02:14,560 Speaker 2: pretty fullsome discussion, let's say, And had Lucy and I 43 00:02:14,600 --> 00:02:17,280 Speaker 2: have been on the board Heaven forbid me. You know 44 00:02:17,320 --> 00:02:20,040 Speaker 2: we would have cut rates because again, and just to 45 00:02:20,080 --> 00:02:22,760 Speaker 2: take a step back, you're getting back to the initial 46 00:02:22,800 --> 00:02:25,720 Speaker 2: point of your first question. We do know that on 47 00:02:25,760 --> 00:02:29,280 Speaker 2: the monthly basis trimmed mean inflations I put a lot 48 00:02:29,320 --> 00:02:32,080 Speaker 2: side headline for a moment is two point four percent 49 00:02:32,160 --> 00:02:34,440 Speaker 2: below the midpoint of the target range. We do know 50 00:02:34,480 --> 00:02:37,320 Speaker 2: that the GDP growth rates under one and a half percent. 51 00:02:37,440 --> 00:02:41,239 Speaker 2: We do know that things like consumers spending building approvals 52 00:02:41,400 --> 00:02:45,160 Speaker 2: are pretty subdued. And we also know that the current 53 00:02:45,320 --> 00:02:48,640 Speaker 2: three point eight five percent cash right is restrictive, and 54 00:02:48,680 --> 00:02:53,280 Speaker 2: that means, in simple terms, it's putting more negative influence 55 00:02:53,320 --> 00:02:55,639 Speaker 2: on the economy than positive. And we needed to get 56 00:02:55,680 --> 00:02:59,480 Speaker 2: neutral at the very least, and that's still fifty basis 57 00:02:59,480 --> 00:03:02,120 Speaker 2: points low than we currently are. So moving to neutral 58 00:03:02,560 --> 00:03:04,799 Speaker 2: is sort of the the fault position that I've still 59 00:03:04,800 --> 00:03:07,000 Speaker 2: got for the RBA policy over the next couple of months. 60 00:03:07,240 --> 00:03:09,799 Speaker 1: Yeah, so when the upshot of that, though, the upshot 61 00:03:09,800 --> 00:03:12,079 Speaker 1: of last week is that Michelle Bullock, the governor, did 62 00:03:12,200 --> 00:03:14,680 Speaker 1: say rates are still going to come down. It's a 63 00:03:14,680 --> 00:03:16,600 Speaker 1: timing issue, not a directional issue. 64 00:03:16,720 --> 00:03:18,560 Speaker 2: Yes, she was at pains to say that, So I 65 00:03:18,639 --> 00:03:21,640 Speaker 2: think she was sort of probably just really wanting to 66 00:03:21,680 --> 00:03:24,440 Speaker 2: reinforce at the RBA board and particularly with global issues. 67 00:03:24,440 --> 00:03:26,760 Speaker 2: By the way, again, over the weekend we've seen more 68 00:03:27,080 --> 00:03:30,200 Speaker 2: Trump tariffs being announced and there's sort of a bit of 69 00:03:30,200 --> 00:03:32,520 Speaker 2: a scattergun approach, and you know, the RBA is of 70 00:03:32,560 --> 00:03:36,160 Speaker 2: the assessment and quite rightly that these tariffs, even though 71 00:03:36,200 --> 00:03:40,000 Speaker 2: they don't directly impact Australia by huge amount, the effect 72 00:03:40,080 --> 00:03:44,120 Speaker 2: on international trade will be significant. And again Australia, with 73 00:03:44,400 --> 00:03:47,600 Speaker 2: roughly a quarter of our economy being export focused, if 74 00:03:47,600 --> 00:03:50,640 Speaker 2: the world economy China in particular, but Asia more generally, 75 00:03:50,680 --> 00:03:53,680 Speaker 2: is then we'll get a bit of a negative backwash 76 00:03:53,760 --> 00:03:55,680 Speaker 2: on that. So that's what the RBA is thinking too. 77 00:03:55,720 --> 00:03:59,119 Speaker 2: So again, yeah, there's rake cuts are still coming, there's 78 00:03:59,120 --> 00:04:01,040 Speaker 2: still pr us into them. I was just looking at 79 00:04:01,080 --> 00:04:05,240 Speaker 2: my future's curve this morning. We've still got about seventy 80 00:04:05,440 --> 00:04:08,800 Speaker 2: five ish maybe one hundred points priced in by this 81 00:04:08,880 --> 00:04:11,800 Speaker 2: time next year. That of course can change, but the 82 00:04:11,840 --> 00:04:14,240 Speaker 2: market's still looking for eight cuts even though we had 83 00:04:14,240 --> 00:04:16,159 Speaker 2: the shock decision last week. 84 00:04:16,520 --> 00:04:19,200 Speaker 1: Okay, the next few days, labor force figures is probably 85 00:04:19,200 --> 00:04:19,760 Speaker 1: the big one. 86 00:04:20,200 --> 00:04:23,160 Speaker 2: They're BIGGI yeah, always and again bigger because it's important 87 00:04:23,560 --> 00:04:25,640 Speaker 2: in a social sense, but important because it's part of 88 00:04:25,680 --> 00:04:28,479 Speaker 2: the RBA dual mandate. They have an eye on full 89 00:04:28,480 --> 00:04:33,760 Speaker 2: employment and to the credits. The labor market's been very 90 00:04:33,800 --> 00:04:36,640 Speaker 2: resilient in the last couple of years. We've had employment 91 00:04:36,680 --> 00:04:40,440 Speaker 2: growth well monthly. It's incredibly volatile. Putting a trend line 92 00:04:40,480 --> 00:04:44,559 Speaker 2: through that, we've got decent employment growth. We're expecting another 93 00:04:44,560 --> 00:04:47,960 Speaker 2: twenty odd thousand jobs on Thursday when the numbers are released, 94 00:04:48,000 --> 00:04:50,520 Speaker 2: and the unemployment rate's been sort of really fly paper 95 00:04:50,600 --> 00:04:53,000 Speaker 2: to four point one percent. Can't move from that level. 96 00:04:53,160 --> 00:04:55,080 Speaker 2: It will one day, but I think at six months 97 00:04:55,080 --> 00:04:58,440 Speaker 2: in four point one the market's expecting that to be repeated. 98 00:04:58,480 --> 00:05:00,880 Speaker 2: But again I think they're sort of if they were 99 00:05:00,880 --> 00:05:02,719 Speaker 2: to say, where are the risks, it's probably that we 100 00:05:02,760 --> 00:05:05,280 Speaker 2: get a four point two or four point three unemployment rate, 101 00:05:05,279 --> 00:05:09,760 Speaker 2: which will just reinforce the expectation that in early August 102 00:05:10,400 --> 00:05:12,280 Speaker 2: our friends at the RBA will trim rates again. 103 00:05:12,560 --> 00:05:14,760 Speaker 1: And what do you expect from the National Australian Bank 104 00:05:14,800 --> 00:05:15,840 Speaker 1: Business Survey this week? 105 00:05:15,920 --> 00:05:19,320 Speaker 2: Yeah, more information there. It's sort of a little few 106 00:05:19,360 --> 00:05:22,679 Speaker 2: grounds for sort of mixed views. Again, the rate cuts 107 00:05:22,680 --> 00:05:26,320 Speaker 2: that we've seen in the past have been helpful, but again, 108 00:05:26,440 --> 00:05:28,720 Speaker 2: global conditions. It's all about global conditions. I think for 109 00:05:28,760 --> 00:05:31,800 Speaker 2: the business sector they're not quite as interstraight sensitive as 110 00:05:31,920 --> 00:05:35,200 Speaker 2: US household, as US consumers. They're more looking at big 111 00:05:35,200 --> 00:05:39,000 Speaker 2: picture policy issues, global issues. So yeah, we'll see. 112 00:05:39,000 --> 00:05:40,000 Speaker 1: Stephen and Joy the week. 113 00:05:40,200 --> 00:05:40,680 Speaker 2: Thanks Sean. 114 00:05:41,040 --> 00:05:43,200 Speaker 1: That's economist Stephen cookulis better known as the Kok. You 115 00:05:43,240 --> 00:05:45,440 Speaker 1: can find him at the cook dot com and follow 116 00:05:45,520 --> 00:05:48,279 Speaker 1: him on X using the handle the Kirk. I'm Sean 117 00:05:49,200 --> 00:05:50,320 Speaker 1: fearing Greed The week ahead.