1 00:00:05,200 --> 00:00:07,480 Speaker 1: Welcome to Fear and Greed the week Ahead. I'm Suan Alma, 2 00:00:07,600 --> 00:00:11,000 Speaker 1: and as always I'm joined by economist Stephen Kokulis. You'll 3 00:00:11,039 --> 00:00:13,200 Speaker 1: find here at the Cook dot com, t h E 4 00:00:13,320 --> 00:00:16,720 Speaker 1: k O UK, thecook dot com and on X using 5 00:00:16,880 --> 00:00:18,560 Speaker 1: the handle the Kirk Stephen. 6 00:00:18,680 --> 00:00:23,240 Speaker 2: Good morning, A very good morning. Now, Stephen, I don't. 7 00:00:23,000 --> 00:00:24,520 Speaker 1: Make too fine a point on it, but I reckon, 8 00:00:24,560 --> 00:00:26,600 Speaker 1: you've done not much in the last week. You've had 9 00:00:26,600 --> 00:00:29,800 Speaker 1: a weekend off. There was no economic data out last week. 10 00:00:30,200 --> 00:00:32,559 Speaker 1: Nothing happened. Well, that's not quite right. We had some 11 00:00:32,600 --> 00:00:35,600 Speaker 1: reserve being board minutes. We're actually sort of interesting given 12 00:00:35,640 --> 00:00:39,280 Speaker 1: this week's CPI figure. But have you relaxed? I suppose 13 00:00:39,280 --> 00:00:40,479 Speaker 1: that's where I'm getting to here. 14 00:00:40,800 --> 00:00:42,680 Speaker 2: Got of relaxing. Yeah, there wasn't much out. There are 15 00:00:42,680 --> 00:00:45,839 Speaker 2: bits and bobs from overseas, you know. We add the 16 00:00:45,960 --> 00:00:48,680 Speaker 2: video results during the week, which of course everyone's very 17 00:00:48,680 --> 00:00:50,800 Speaker 2: excited about because there's such a big company. But at 18 00:00:50,840 --> 00:00:52,519 Speaker 2: the end of the day that sort of was not 19 00:00:52,640 --> 00:00:56,480 Speaker 2: really that big anyway. So a lovely quiet week. I 20 00:00:56,560 --> 00:00:58,800 Speaker 2: got a chance to over the weekend to watch the cricket, 21 00:00:58,800 --> 00:01:00,960 Speaker 2: which has been very exciting. Of course, now that the 22 00:01:01,040 --> 00:01:03,920 Speaker 2: whole spacing sort of dying down a little bit and 23 00:01:04,200 --> 00:01:06,360 Speaker 2: ready for this week, which will be an absolute beauty. 24 00:01:07,080 --> 00:01:12,000 Speaker 1: So on that the monthly CPI figures are out this week, 25 00:01:12,319 --> 00:01:15,000 Speaker 1: what do we think about that, particularly given what the 26 00:01:15,040 --> 00:01:17,479 Speaker 1: Reserving Board minutes said last week about and in two 27 00:01:17,640 --> 00:01:21,080 Speaker 1: quarters of lower CPI to make a change. 28 00:01:20,800 --> 00:01:22,440 Speaker 2: Yeah, the Board just sort of put a little bit 29 00:01:22,480 --> 00:01:25,280 Speaker 2: more flesh around those bones that we've been hearing from 30 00:01:25,680 --> 00:01:28,480 Speaker 2: from the governor other senior RBA officials when they really 31 00:01:28,560 --> 00:01:32,680 Speaker 2: want to get that trimmed mean underlying inflation rate lower. 32 00:01:33,600 --> 00:01:36,080 Speaker 2: Also the headline rate low off along the two I 33 00:01:36,080 --> 00:01:38,759 Speaker 2: think is what they want to see. So the monthly 34 00:01:38,800 --> 00:01:41,480 Speaker 2: figures are sort of interesting, they're important. There're another little 35 00:01:41,600 --> 00:01:46,200 Speaker 2: tick along that timeline of lower inflation, and interestingly, for 36 00:01:46,240 --> 00:01:49,520 Speaker 2: the numbers that come out later this week, market expectations 37 00:01:49,520 --> 00:01:52,400 Speaker 2: are for an annual increase of about two point three percent, 38 00:01:53,120 --> 00:01:55,160 Speaker 2: So it'll be the third month in a row that 39 00:01:55,200 --> 00:01:57,360 Speaker 2: it's been within the two to three target ban. Now 40 00:01:57,400 --> 00:02:01,040 Speaker 2: we all know it's largely exclud but largely due to 41 00:02:01,080 --> 00:02:04,800 Speaker 2: those electricity substies trimming quite a bit off. So the 42 00:02:04,840 --> 00:02:07,680 Speaker 2: trimmed main measure is probably going to be a tick 43 00:02:07,760 --> 00:02:10,280 Speaker 2: or two above three percent, so the RBI will be 44 00:02:10,280 --> 00:02:14,600 Speaker 2: probably content but not convinced that that's the trigger they 45 00:02:14,639 --> 00:02:16,120 Speaker 2: need to cut rates. 46 00:02:16,520 --> 00:02:18,760 Speaker 1: I know as last week National Australia Bank in Westpac. 47 00:02:18,840 --> 00:02:21,880 Speaker 1: The economics teams are both those organizations. Westpac, of course 48 00:02:21,919 --> 00:02:23,919 Speaker 1: he is Lucy Ellis, who used to be chief economist 49 00:02:23,960 --> 00:02:26,680 Speaker 1: at the Reserve Bank. They've pushed back their forecast for 50 00:02:26,760 --> 00:02:30,120 Speaker 1: rate cuts until at least May. I mean, Knab said May. 51 00:02:30,240 --> 00:02:31,560 Speaker 1: Westpac said at least May. 52 00:02:32,440 --> 00:02:34,400 Speaker 2: They have, and I think the others, many others in 53 00:02:34,400 --> 00:02:36,720 Speaker 2: the financial markets are also pushing them back, and I 54 00:02:36,800 --> 00:02:39,960 Speaker 2: think finally that rhetoric from the IBA is sort of 55 00:02:40,240 --> 00:02:42,760 Speaker 2: gaining some traction with them. But also what we're seeing 56 00:02:42,760 --> 00:02:45,960 Speaker 2: from overseas and the Trump election win, as say, US 57 00:02:45,960 --> 00:02:49,639 Speaker 2: bond yields and even US monetary policy expectations being scaled 58 00:02:49,639 --> 00:02:53,040 Speaker 2: back and pushed further into twenty twenty five, partly because 59 00:02:53,040 --> 00:02:55,440 Speaker 2: of the inflation effects of what we think he's going 60 00:02:55,520 --> 00:02:59,200 Speaker 2: to deliver tariff increases and great big company tax cuts 61 00:02:59,240 --> 00:03:01,359 Speaker 2: and the like, which are very stimulatory to the economy 62 00:03:01,440 --> 00:03:05,000 Speaker 2: or inflationary. So the US market's been in a sense 63 00:03:05,080 --> 00:03:08,720 Speaker 2: providing the lead the local market's been following suit. And 64 00:03:08,760 --> 00:03:11,400 Speaker 2: again we should remember that labor force number from what 65 00:03:11,480 --> 00:03:14,239 Speaker 2: was it two weeks ago now that confirmed unemployment in 66 00:03:14,280 --> 00:03:17,240 Speaker 2: the low fours four point one percent, and that's part 67 00:03:17,280 --> 00:03:19,160 Speaker 2: of the mandate. So in a sense we celebrate low 68 00:03:19,160 --> 00:03:22,040 Speaker 2: and employment, of course we do, but if it's coming 69 00:03:22,320 --> 00:03:24,160 Speaker 2: at these sort of low levels, with interest rates where 70 00:03:24,200 --> 00:03:26,880 Speaker 2: they are, the feeling is we don't need to cut 71 00:03:26,919 --> 00:03:29,720 Speaker 2: rates because we've got the economy rolling along at an 72 00:03:29,720 --> 00:03:32,239 Speaker 2: okay pace, even though some people are feeling a little 73 00:03:32,240 --> 00:03:34,320 Speaker 2: bit of financial squeeze right now. Okay. 74 00:03:34,360 --> 00:03:36,360 Speaker 1: Capital expenditure figures are out this week. They're the ones 75 00:03:36,400 --> 00:03:38,240 Speaker 1: that every month and they come out. I say to you, Stephen, 76 00:03:38,280 --> 00:03:40,680 Speaker 1: please explain them, because I just reckon, they're hard. 77 00:03:41,240 --> 00:03:42,440 Speaker 2: They're hard, but they're fun. 78 00:03:44,880 --> 00:03:48,560 Speaker 1: That is the fundamental difference, Duren, you and I. You 79 00:03:48,600 --> 00:03:50,520 Speaker 1: are happy to go for the hard stuff, not me. 80 00:03:50,960 --> 00:03:53,880 Speaker 2: Yep, this is These are great because what they basically 81 00:03:53,920 --> 00:03:58,400 Speaker 2: do in summary, they reveal how much the private sector 82 00:03:58,760 --> 00:04:02,960 Speaker 2: is investing in machine and equipment and buildings and structures. 83 00:04:03,000 --> 00:04:04,440 Speaker 2: There's a couple of other little bits and bobs, but 84 00:04:04,480 --> 00:04:07,680 Speaker 2: they're the main two things. So are we building office blots? Hotels, 85 00:04:07,720 --> 00:04:13,520 Speaker 2: shopping centers, factories, warehouses, or buying computers, lays, trucks and 86 00:04:13,640 --> 00:04:17,560 Speaker 2: these sorts of things. Machinery and equipment really really important 87 00:04:17,600 --> 00:04:19,359 Speaker 2: part of the economy in any sense, but when you 88 00:04:19,400 --> 00:04:24,360 Speaker 2: wanted to get productivity, obviously productivity requires some capital dejection too. 89 00:04:24,760 --> 00:04:27,200 Speaker 2: That's what they show. Now, these things will show the 90 00:04:27,279 --> 00:04:30,880 Speaker 2: quarterly change in CAPEX for the September quarter. This is 91 00:04:30,880 --> 00:04:33,320 Speaker 2: one of the building blocks into the GDP numbers. So 92 00:04:33,360 --> 00:04:35,960 Speaker 2: the expectations are for a very small rise. Last quarter 93 00:04:36,200 --> 00:04:39,360 Speaker 2: it fell, so just a little bit of a statistical rebound, 94 00:04:39,400 --> 00:04:42,680 Speaker 2: nothing big, so hoping it's a positive sign. But they 95 00:04:42,720 --> 00:04:45,280 Speaker 2: also include this is where the fun part is Sean, 96 00:04:45,440 --> 00:04:48,280 Speaker 2: but that you really get your teeth into is they 97 00:04:48,279 --> 00:04:51,200 Speaker 2: have expectations. So the firms say how much are you 98 00:04:51,320 --> 00:04:55,559 Speaker 2: expecting to invest in machinery, equipment, building and structures next 99 00:04:55,600 --> 00:04:58,840 Speaker 2: financial year. So as that number goes up and down, 100 00:04:59,520 --> 00:05:01,760 Speaker 2: the just company XYZ says, oh, we're going to the 101 00:05:01,839 --> 00:05:04,680 Speaker 2: best two point three billion dollars on machinery, We're going 102 00:05:04,680 --> 00:05:07,640 Speaker 2: to build a new hotel. Whatever. Those times going to 103 00:05:07,640 --> 00:05:10,880 Speaker 2: those expectations numbers, and as they change from quarter to quarter, 104 00:05:11,640 --> 00:05:13,600 Speaker 2: we get a better feel for what the business sector 105 00:05:13,680 --> 00:05:17,240 Speaker 2: is thinking about cap X. So that's why they are important. 106 00:05:17,240 --> 00:05:20,039 Speaker 2: I know the Reserve Bank looks at them very very closely, 107 00:05:20,360 --> 00:05:23,000 Speaker 2: even though they might not be as sexy and as 108 00:05:23,040 --> 00:05:26,240 Speaker 2: prominent as inflation and unemployment and GDP and these sorts 109 00:05:26,240 --> 00:05:26,640 Speaker 2: of things. 110 00:05:26,800 --> 00:05:28,800 Speaker 1: I'm sold totally just before we go around of time. 111 00:05:28,839 --> 00:05:30,880 Speaker 1: But the Reserve Bank of New Zealand meet this week. 112 00:05:31,000 --> 00:05:33,839 Speaker 2: Yeah quickly on rbn Z. They've already cut rates a 113 00:05:33,880 --> 00:05:37,359 Speaker 2: few times they're meeting, and given the economies in a 114 00:05:37,360 --> 00:05:41,840 Speaker 2: pretty dice space over there, we're looking for over twenty 115 00:05:41,839 --> 00:05:44,760 Speaker 2: five or fifty the juries out what what they cut. 116 00:05:44,760 --> 00:05:46,960 Speaker 2: But a cut is almost baked into the cake. It's 117 00:05:46,960 --> 00:05:49,240 Speaker 2: just whether it's twenty five or fifty basis points. 118 00:05:49,000 --> 00:05:51,600 Speaker 1: Everyone saying to be cutting except for us, Stephen. 119 00:05:51,279 --> 00:05:53,960 Speaker 2: Except us with a lone range at the moment. Yeah, 120 00:05:54,000 --> 00:05:56,480 Speaker 2: well maybe that'll change, but let's see what happens to 121 00:05:56,520 --> 00:05:57,640 Speaker 2: our local data as well. 122 00:05:58,080 --> 00:06:01,440 Speaker 1: Who knows, Steven. Enjoy your week, Sean. That was Economist 123 00:06:01,440 --> 00:06:03,440 Speaker 1: Stephen cookulis better known as the Kok. You can find 124 00:06:03,520 --> 00:06:05,159 Speaker 1: him at the cook dot com and follow him on 125 00:06:05,520 --> 00:06:07,920 Speaker 1: X using the handle the Kirk. I'mb Sean al Matt 126 00:06:07,920 --> 00:06:09,640 Speaker 1: and this is fear and greed. A weak ahead