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Speaker 1: The Australian economy slows to its lowest pace in more

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Speaker 1: than thirty years outside the COVID pandemic. Get ready for

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Speaker 1: a shortage of eggs and while some of the biggest

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Speaker 1: names in retailing are thinking about cutting prices, Welcome to

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Speaker 1: Fear and Greed. Daily business news for people who make

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Speaker 1: their own decisions. It is Thursday, the sixth of June

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Speaker 1: twenty twenty four. I'm Michael Thompson and good morning, Sean Aylmer.

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Speaker 2: Good morning Michael.

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Speaker 1: Sean will get to the interview in a moment, because

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Speaker 1: it is all about the main story today. The annual

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Speaker 1: pace of economic growth has fallen to one point one percent,

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Speaker 1: the slowest rate in more than thirty years outside the pandemic.

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Speaker 2: And once again, Michael, on a per capita basis, growth

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Speaker 2: went backwards. That's five quarters in a row where that's happened.

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Speaker 2: For the March quarter, the economy group by zero point

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Speaker 2: one percent on the back of government spending, a build

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Speaker 2: up in inventories and a somewhat surprising jump in consumption

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Speaker 2: that reflected high spending on necessary household items like electricity

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Speaker 2: and rent. The long run average for economic growth in

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Speaker 2: Australia is somewhere between two point seven two point eight,

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Speaker 2: maybe up to about three percent yesday came at one

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Speaker 2: point whe It just demonstrates how weak those figures were

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Speaker 2: in terms of the different parts of the economy. Households

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Speaker 2: are spending more on essential items, less on discretionary items.

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Speaker 2: Notwithstanding a bit of a tailor swift if one effect,

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Speaker 2: which actually did come out in the numbers yesterday. Government

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Speaker 2: spending remains strong, reflecting more money particularly in health and energy.

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Speaker 2: Residential investment is a shock, a very very weak. Business investment,

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Speaker 2: which had been okay, actually fell sharply during the quarter.

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Speaker 2: Inventories were built up again. That adds to growth. There

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Speaker 2: was also a jump in imports and that detracts from

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Speaker 2: the final figure. The household savings rate fell to less

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Speaker 2: than one percent below pre pandemic levels. Treasure Jym charmers

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Speaker 2: and the GDP figures show that the government's got the

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Speaker 2: budget it right. Well that's probably a political statement, but

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Speaker 2: he did warn of another week quarter when the June

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Speaker 2: figures are released.

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Speaker 1: Sean I alluded to our daily interview and your guest

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Speaker 1: today after the show stick around for this because you're

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Speaker 1: speaking with Gareth ed head of Australian economics at the

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Speaker 1: Commonwealth Bank.

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Speaker 2: He explains exactly what's going on in the economy, what

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Speaker 2: it means not just for inflation builth to the labor force.

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Speaker 2: When he thinks interest rates will be cut. He still

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Speaker 2: does think interest rates will be cut later this year.

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Speaker 2: It's just a fantastic chat to Gareth about what exactly

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Speaker 2: what's going on in the economy. Is also informed by

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Speaker 2: the fact that Commonwealth Bank has real time data. So

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Speaker 2: this GDP figure, the National Accounts figure is a bit

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Speaker 2: backwards looking up until the end of March, but Commonwealth

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Speaker 2: know what their customers are doing since then, and so

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Speaker 2: it's a great chat.

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Speaker 1: Yeah, it's just really really good analysis. It is worth

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Speaker 1: a listen. It's coming up after the show. Sewan. You

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Speaker 1: mentioned interest rates and of course the weak number adds

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Speaker 1: ammunition to those calling for rate cuts sooner rather than

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Speaker 1: that is of course up to the Reserve Bank and

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Speaker 1: the Governor. Michelle Bullock was before centered estimates yesterday. What

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Speaker 1: did she say?

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Speaker 2: She once again said the Reserve Bank will raise rates

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Speaker 2: if it fears inflation is getting out of control and

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Speaker 2: not heading back towards its preferred two to three percent target.

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Speaker 2: When I asked for that she lift rates during the elections,

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Speaker 2: Bullock said the board would always put inflation first and

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Speaker 2: if the data says do it well, they will do it.

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Speaker 2: Ms Bullock also said that she preferred quarterly inflation figures

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Speaker 2: to monthly data. Now last week April figures showed a

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Speaker 2: rise in inflation. What she was saying, what the governor

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Speaker 2: was saying, was that she perversed to look at the

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Speaker 2: three monthly figures they are broader. She also said that

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Speaker 2: the federal government's three hundred dollars energy rebate and other

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Speaker 2: state government rebates would broadly be ignored when the bank

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Speaker 2: thought about inflation and interest rates. Bottom line from Michelle

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Speaker 2: Bullock the economy is still on a narrow path to

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Speaker 2: getting inflation back under control without large job losses, but

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Speaker 2: there are plenty of uncertainties out there.

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Speaker 1: Massive twenty four hours for the economy and especial for

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Speaker 1: a business podcast like Fear and Greed. Turning to local markets, Now, Sean,

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Speaker 1: how did things go yesterday?

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Speaker 2: Well? Snpasx two hundred was buoyed buy the weak growth

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Speaker 2: figures because it adds to the argument to hold back

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Speaker 2: on rate rises and made think more about cuts so

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Speaker 2: interstraight sensitive stocks did well. The real estate companies, for example, jumped.

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Speaker 2: Some of the less straight sensitive sectors did ak as well,

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Speaker 2: Telco's healthcare and consum staples. They were somewhat offset by

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Speaker 2: weakness in energy and mining companies, which fell on the

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Speaker 2: back of lower iron and energy prices globally. The net

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Speaker 2: effect is that the SMPAX two hundred closed up zero

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Speaker 2: point four percent yesterday to seven seven hundred and sixty

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Speaker 2: nine points. Among the large caps, Goodman Group, Aristocrat, Leisure,

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Speaker 2: and Cochlear all jump by two percent or Moreria, Weistech, Global, Woollies, Transurban, Telstra,

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Speaker 2: and CSL also jumped. They all did more than one percent.

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Speaker 2: Rea Tinto, BHP FORESCU Metals, Woodside, and Santos were all

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Speaker 2: lower just quickly. In corporate news online job marketplace, c

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Speaker 2: it's share price rose five after a degree to sell

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Speaker 2: its majority stake in its Mexican and Latin American businesses

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Speaker 2: for about one hundred and twenty eight million dollars. It

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Speaker 2: went into that market about sixteen years ago. It's now ended.

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Speaker 2: It's four a into that region.

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Speaker 1: Sure, and I know this is high risk me offering

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Speaker 1: commentary on anything, right, but Is this kind of another

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Speaker 1: another example of what you were talking about last week

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Speaker 1: about Australian businesses kind of struggling a little bit to

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Speaker 1: kind of take their business model overseas and starting to

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Speaker 1: just pull back a little bit as we saw with

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Speaker 1: land Lease. Is this now happening kind of with SEK

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Speaker 1: kind of getting out of the Mexican and Latin American areas.

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Speaker 2: Ah? Yes, Seek has a lot of debt, so I

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Speaker 2: think shareholders wanted it to pay down debt. I don't

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Speaker 2: think you could say that it failed in Latin America

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Speaker 2: or Mexico because it's been there for sixteen years and

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Speaker 2: it's had a good business there. I think it's probably

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Speaker 2: I don't know how much shareholder activism was involved in this,

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Speaker 2: but you know, obviously they think that focusing more on

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Speaker 2: Australia and New Zealand is a better option than loadin America.

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Speaker 2: So there has to be some sense of what you're

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Speaker 2: saying in it.

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Speaker 1: I think I got out of that one fairly well

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Speaker 1: on scale. I took a bit of a punt. I

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Speaker 1: think I paid.

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Speaker 2: Off very well done.

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Speaker 1: I'm mildly kind of surprised at that. What about international markets?

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Speaker 1: What's going on?

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Speaker 2: I have to tell you about Nvidia. It continues. It's

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Speaker 2: a climb, and on Wall Street, chip mank it is

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Speaker 2: now worth two point eight six trillion dollars, not far

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Speaker 2: from the market capitalization of Apple. It's about two point

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Speaker 2: nine to five trillion US dollars. I get that they're

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Speaker 2: big numbers, right, So the gap between two point eighty

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Speaker 2: six trillion and two point ninety five trillion is still

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Speaker 2: a lot of money, but in percentage terms, it ain't much.

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Speaker 2: The Aussie dollar Michael is down a touch, buying sixty

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Speaker 2: six point six US since one, I said. Benefiting from

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Speaker 2: all the speculation about lower rates, particularly in the US,

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Speaker 2: is Bitcoin, which popped up above seventy thousand US dollars

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Speaker 2: a unit that is now five straight sessions of games,

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Speaker 2: the best run in three months. It's still about five

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Speaker 2: percent below its all time high hit in mid March.

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Speaker 2: Other cryptos have also done pretty well in recent sessions,

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Speaker 2: including Ether, the Solana, and B and B. Also, Michael,

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Speaker 2: some of the meme coins are doing well. Oh yeah,

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Speaker 2: I don't understand why people buy meme coins. It is

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Speaker 2: totally beyond me. But doge coin, which is the sort

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Speaker 2: of original and best meme coin that's doing well. Shiba

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Speaker 2: Unu is doing well, Peppy is doing well. My personal favorite,

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Speaker 2: dog with hat, the dog with Hat meme coin is

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Speaker 2: doing well also.

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Speaker 1: I think I'm going to mark this state on the calendar.

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Speaker 1: Sure sixth of June, the day you said dog with

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Speaker 1: hat and it's with A with an F.

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Speaker 2: Yeah, it's a D A G W I F H

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Speaker 2: A T.

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Speaker 1: Dog with hat yep, someone with with what. I would

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Speaker 1: like to describe you as having extreme levels of credibility,

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Speaker 1: and here you are now talking about things like doge

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Speaker 1: coin and dog with hat.

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Speaker 2: Me the coins are basically created out of thin air

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Speaker 2: because they look good. They're memes. And we've also had

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Speaker 2: Roaring Kitty back in the market, you know, on Game

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Speaker 2: Stop and that, so some of that speculation is probably

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Speaker 2: encouraged by Roaring Kitty. Maybe I'm trying to find a

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Speaker 2: reason why these things would go up, and I have

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Speaker 2: absolutely no clue.

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Speaker 1: I just love you saying dog with hat, dog with hat.

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Speaker 1: It's kind of cute.

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Speaker 2: All right.

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Speaker 1: We'll be back in a moment with the rest of

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Speaker 1: the day's business news. John Australia's privacy watchdog. We'll take

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Speaker 1: legal action against Medibank private for failing to protect the

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Speaker 1: medical details of nine point seven million Australians which were

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Speaker 1: accessed by Russian cyber criminals back in twenty twenty two.

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Speaker 2: The fines in the civil action could theoretically exceed twenty

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Speaker 2: one point five trillion dollars. They won't, but it's just

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Speaker 2: a good number. In proceedings filed in the Federal Court,

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Speaker 2: the Officer of the Australian Information Commissioner alleges contraventions of

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Speaker 2: Section thirteen G the Privacy Act for each of Medibank's

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Speaker 2: nine point seven million customers, with a maximum civil penalty

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Speaker 2: of up to two two h twenty dollars each, hence

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Speaker 2: the twenty one point five trillion dollars. Medibank yesterday said

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Speaker 2: in a statement it intended to defend the proceedings. The

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Speaker 2: office alleges Medibank failed to take reasonable steps to protect

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Speaker 2: personal information it held, given its size, resources, the nature

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Speaker 2: and volume of the sensitive and personal information it handled,

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Speaker 2: and the risk of serious harm for an individual in

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Speaker 2: the case of a breach. Should the case succeed, it

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Speaker 2: would be up to the court to deem the number

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Speaker 2: of contraventions and how big a fine each should attract.

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Speaker 2: Rather than sticking to the company crushing maximum fines that's

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Speaker 2: actually in.

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Speaker 1: The claim twenty one point five trillion dollars. That is

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Speaker 1: just extraordinary. Now Business has warned that the Albanesi government

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Speaker 1: will struggle to meet its aggressive emissions reduction targets because

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Speaker 1: of the many hurdles that industry needs to overcome to

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Speaker 1: deliver the energy transition.

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Speaker 2: These hurdles include building transmission lines, a pause in the

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Speaker 2: growth of electric vehicle sales, rising costs, and a shifting

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Speaker 2: community attitudes. The Financial Review has been holding an ESG

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Speaker 2: summit gathering many of the major players in the sector.

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Speaker 2: MPOLE chief executive Matthew Halliday is quoted as saying there's

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Speaker 2: a huge challenge to secure connections to the grid for

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Speaker 2: fast charging stations for evs, while poor resale values of

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Speaker 2: the electric vehicles are hampering take up. David Gillespie, They're

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Speaker 2: Managing director of Gas and Electricity Infrastructure Company, Demeanor says

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Speaker 2: delays in the building of transmission lines required to carry

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Speaker 2: electricity from renewable sources such as wind and solar are

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Speaker 2: stretching up to five years, and there's insufficient attention paid

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Speaker 2: to the use of gas made from plant and other

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Speaker 2: organic waste. Basically, business does not think we are on

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Speaker 2: track to hit our targets. Now. Australia has a twenty

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Speaker 2: thirty emissions target of forty three percent below the two

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Speaker 2: thousand and five raiming for net zero greenhouse emissions by

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Speaker 2: twenty fifty. The consensus is that Australia will struggle to

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Speaker 2: meet it.

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Speaker 1: Sewn Treasury Wine Estates share price jumped to more than

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Speaker 1: five percent yesterday after it said it was confident of

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Speaker 1: meeting internal forecasts.

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Speaker 2: Investors have been worried about the performance of its newly

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Speaker 2: acquired Californian luxury wine business, Dow Vineyards. Treasury paid one

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Speaker 2: point six billion dollars last year for that business, but

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Speaker 2: management recons Dow will contribute to earnings and in line

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Speaker 2: with what they expected. Over All, the group forecasts mid

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Speaker 2: to high single digit earnings growth. Meant Treasury was one

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Speaker 2: of the best performing stocks on the market yesterday.

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Speaker 1: That's a bit of good news. Now, two smaller lenders

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Speaker 1: beyond Bank and Police and Nurses will merge, creating one

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Speaker 1: of the country's largest mutual financial institutions.

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Speaker 2: The new group will hold assets around forty billion dollars

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Speaker 2: and have a customer base of four hundred and fifty

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Speaker 2: thousand people. Financial institutions are not cheap businesses to run,

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Speaker 2: with significant capital and regulatory requirements and top of investments

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Speaker 2: needed in tech and cybersecurity and digital banking, all those

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Speaker 2: sorts of things. As a result, thinks small isn't always

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Speaker 2: a great option. The chair of both groups basically came

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Speaker 2: out and said they will create value for customers because

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Speaker 2: bigger is better. Quite a few of these smaller institutions

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Speaker 2: have or are looking at merging to remain viable in

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Speaker 2: that financial institution's world.

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Speaker 1: Now, Sean I mentioned this one at the top of

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Speaker 1: the show. There could be a shortage of eggs available

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Speaker 1: on supermarket shelves and coming days and weeks. After more

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Speaker 1: than six hundred thousand laying hands were culled in an

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Speaker 1: effort to limit the spread of avian flu.

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Speaker 2: There's now been three cases in Victoria, though fortunately the

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Speaker 2: strain of bird flu in each is different from the

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Speaker 2: one spreading wildly in parts of the US. There are

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Speaker 2: more than twenty one million hens in the national egg

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Speaker 2: flock and more than one hundred egg farms in Victoria.

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Speaker 2: The six hundred thousand make up about three percent of

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Speaker 2: the brood. The impact is all already hitting retailers. THEO

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Speaker 2: industry members said, customers can shop around, you should still

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Speaker 2: be able to find eggs. New South Wales and Queensland

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Speaker 2: produced about two hundred and sixty six million dozen eggs

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Speaker 2: each year two hundred and sixty six million dozen eggs.

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Speaker 2: Victoria produces about eighty five million dozen. Now this is

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Speaker 2: one of those stories that just occurs to me. Why

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Speaker 2: do we sell eggs? Why don't we talk about a

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Speaker 2: dozen eggs?

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Speaker 1: It doesn't make a huge amount of sense, does it.

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Speaker 2: I mean, I did rely. I googled nicely and found

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Speaker 2: out so I know the answer. Do you have any idea? No?

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Speaker 1: And if I was to say something, I would just

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Speaker 1: be making it up about kind of We used to

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Speaker 1: have twelve fingers and we evolved away from that.

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Speaker 2: Let me tell you it's actually a combination of old

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Speaker 2: Anglo Saxon and Roman systems of measurement became known as

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Speaker 2: English units. Eggs were sold by the dozen because one

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Speaker 2: egg was sold for a penny, and they are twelve

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Speaker 2: pennies in a shilling, so a shilling worth of eggs

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Speaker 2: was twelve eggs became a dozen eggs. Simple as that,

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Speaker 2: and it.

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Speaker 1: Stuck around, and it stuck around, even though it makes

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Speaker 1: a heck of a lot more sense to sell them

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Speaker 1: in units of ten, does it, though? Yeah, and one

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Speaker 1: per finger. Clearly, I've got an obsession with measuring eggs

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Speaker 1: using my fingers here, Sean.

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Speaker 2: So I I never knew. That's why it doesn't eggs.

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Speaker 2: That's why a dozen eggs because it's a dozen pennies

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Speaker 2: in a shilling.

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Speaker 1: No, well, confession time, I didn't realize that there were

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Speaker 1: a dozen pennies in a shilling. And I should not

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Speaker 1: admit this because this is highly incriminating. But I once

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Speaker 1: walked into a subway restaurant and asked them how much

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Speaker 1: longer a foot long was than the six inch?

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Speaker 2: Were you serious of you being?

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Speaker 1: Oh, Michael, can we get to the international news please, Sean?

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Speaker 2: Yeah, please, let's go. Thank you.

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Speaker 1: I think I've got no hope. I've got no hope

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Speaker 1: of salvaging any credibility here. Today, US retailers, Sean, having

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Speaker 1: spent three years pushing prices higher, are now lowering tickets

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Speaker 1: in an effort to attract price conscious consumers.

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Speaker 2: So big pharmacy group Walgreens last week said it will

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Speaker 2: lower prices on over one thousand items. Target recently announced

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Speaker 2: price cuts on five thousand food products and household goods.

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Speaker 2: Target being not just a department store, but a supermarket

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Speaker 2: as well. In the US. In April, Walmart introduced a

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Speaker 2: private label food line and said more than seventy percent

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Speaker 2: of the products will cost less than five dollars, and

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Speaker 2: furniture stores like Ikea have also said they'll drop prices

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Speaker 2: on popular items. This is all according to a story

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Speaker 2: in The New York Times. During the recent March quarter

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Speaker 2: earnings updates, some companies said they planned to slow price

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Speaker 2: increases and find other ways to expand profits simply because

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Speaker 2: people are not spending as much money. Starbucks and Coca Cola,

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Speaker 2: for example, reported flat sales volumes, though in the case

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Speaker 2: of Coca Colon, the actual total amount was higher, but

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Speaker 2: volumes were flat. Fast food group Wendy's earlier in the

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Speaker 2: year floated the idea of pricing goods differently at different

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Speaker 2: times on the day depending on peak demand periods. Didn't happen,

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Speaker 2: but really fascinating idea. Even McDonald's is struggling. It's facing

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Speaker 2: a massive consumer backlash in the US because the average

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Speaker 2: cost of a Big Mac has gone from four dollars

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Speaker 2: thirty nine the US dollars to five dollars twenty nine today.

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Speaker 2: That's up twenty one percent. There you go, that is huge.

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Speaker 2: It's just really interesting that all these well known brands

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Speaker 2: are starting to cut prices because of the consumer habits

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Speaker 2: of stopping buying stuff.

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Speaker 1: Another one Sean, This one is fascinating as well. To

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Speaker 1: Beers is synonymous with diamonds, of course, but now it

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Speaker 1: wants to become known as a retailer, competing with the

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Speaker 1: likes of Cartier and Tiffany.

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Speaker 2: In an interview with The Financial Times, the head of

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Speaker 2: de Beers says he aims to transform the diamond minor

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Speaker 2: into a leading luxury retailer. This follows its worst year

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Speaker 2: more than two decades. Chief executive Al Cook says the

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Speaker 2: future of diamonds is way beyond mining. To be Is

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Speaker 2: suffered from a big slump in diamond sales last year

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Speaker 2: as high interest rates and inflation hurt earnings. There's also

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Speaker 2: plenty of competition from synthetic, lab grown gemstones that hit

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Speaker 2: demand for the diamonds mind by the group. The company

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Speaker 2: estimates four point five billion US dollars of cheaper lab

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Speaker 2: grown diamond sales last year deprived mind diamonds of about

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Speaker 2: seven billion dollars worth of sales in the US alone.

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Speaker 2: Now India, which is set to become the second largest

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Speaker 2: diamond market, is a target geography to be is, of course,

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Speaker 2: is one of the four divisions of Anglo American, which

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Speaker 2: until last week could well have been part of the

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Speaker 2: HP sean.

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Speaker 1: I know we're finished, but just one final quick point

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Speaker 1: to make. Did you know that in nineteen seventy the

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Speaker 1: Metric Conversion Act was passed, which meant that the metric

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Speaker 1: system was the sole system of measurement in Australia. I

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Speaker 1: was in nineteen seventy. Sixteen years later, in nineteen eighty six,

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Speaker 1: I was born, Which is why, Which is why I

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Speaker 1: was not aware that there were twelve inches in a foot.

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Speaker 2: But just going into a subway, I mean to be honest,

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Speaker 2: I don't know that I knew that twelve inches was afoot.

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Speaker 2: But if I w into a subway and it's like

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Speaker 2: you get half one, which is six inches, you'd imagine

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Speaker 2: that twelve inches.

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Speaker 1: To be fair, it was also my first time in subway.

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Speaker 1: This was many, many many years ago and very new

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Speaker 1: to the whole expra right right? Does any of this

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Speaker 1: improve the outlook for me?

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Speaker 2: No? He doth protest too much.

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Speaker 1: I think I might. All right, Up next is the

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Speaker 1: Fear and Greed Daily Interview. You're speaking today with Gareth Aired,

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Speaker 1: head of Australian Economics at Commonwealth Bank.

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Speaker 2: All about yesterday's thinking iment, growth figures and what it

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Speaker 2: means four inchest RAITs.

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Speaker 1: Yeah, it is up next in the Fear and Greed

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Speaker 1: playlist on your podcast platform or at Fearangreed dot com

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Speaker 1: dot au. Thank you very much, Sean, Thank you.

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Speaker 2: Michael.

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Speaker 1: It is Thursday, the sixth of June twenty twenty four.

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Speaker 1: Make sure you following the podcast and please join us

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Speaker 1: online on LinkedIn, Instagram, x TikTok and Facebook. A'm Michael

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Speaker 1: Thompson and that was Fear and Greed. Have a great day.