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Speaker 1: Welcome to Fear and Greed the week ahead. I'm Sean Almer,

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Speaker 1: and as always this time on a Monday, I'm joined

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Speaker 1: by economist Stephen Kokulis. You'll find team at the cook

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Speaker 1: dot com, t h e k o UK, thecook dot

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Speaker 1: com and on ex using the handle the Cook. Stephen,

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Speaker 1: Good morning.

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Speaker 2: Very good morning, Sean.

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Speaker 1: We look, we have to quickly look at last week,

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Speaker 1: but you know, only in thirty seconds, because what a blockbuster.

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Speaker 1: I reckon, you've done nothing for about a month now, Stephen,

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Speaker 1: But wow, it's all coming home to roost this week,

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Speaker 1: so very quickly. Michelle Bullocks speech last week that was

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Speaker 1: quite significant.

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Speaker 2: It was significant. She sort of outlined why they didn't

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Speaker 2: adjust interstraits at their July meeting and reinforce some of

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Speaker 2: the things that were in the minutes of the board

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Speaker 2: meeting too. That there's still got this residual concern about inflation.

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Speaker 2: They're not sure whether the month of inflation numbers are

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Speaker 2: giving a good guide. And obviously we'll talk about that

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Speaker 2: in the moment because we've got the quartering figures later

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Speaker 2: this week, and the labor market that perennial question. Without

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Speaker 2: drilling into the nitty gritty of economic jar and there's

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Speaker 2: this question are we at full employment or not? So

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Speaker 2: they're the reasons that the governor gave for keeping rates steady.

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Speaker 2: But as I sit here now look at my screens,

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Speaker 2: we've still got rate cuts priced in, including at the

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Speaker 2: next meeting on the twelfth of August.

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Speaker 1: Okay, so let's get into it. Quarterly inflation. This is

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Speaker 1: the big one.

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Speaker 2: Yeah, this is it. This is this is the one

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Speaker 2: that the markets that RBA are all waiting for because

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Speaker 2: it's the comprehensive reading on inflation. It includes all the goods,

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Speaker 2: all the services and the like, so it's a really

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Speaker 2: important indicator. So the bank's going to be looking at

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Speaker 2: the market's going to be looking at. So in terms

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Speaker 2: of the details, look, the headline thing is going to

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Speaker 2: poke up a little bit. Some of the electricity subsidies

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Speaker 2: are coming to an end. So the general consensus for

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Speaker 2: a zero point nine percent increase for the quarter, which

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Speaker 2: still leads annual. The annual inflation art about two point

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Speaker 2: two two point three, so within the band, however, the

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Speaker 2: trims made. This is one of the rare occasions in

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Speaker 2: recent years where the trimmed meat will be lower than

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Speaker 2: the headline thing because you trim out that in that

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Speaker 2: electricity subsidy from the figure. So we're looking at about

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Speaker 2: a point seven for the quarterly increase in the CPI

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Speaker 2: brings the angel figure down to about two point seven

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Speaker 2: two point eight. So the trajectory towards two and a

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Speaker 2: half is still well and truly there, and I think

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Speaker 2: if we get figures at that level, you will take

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Speaker 2: one tenth or so the rate cut on the twelfth

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Speaker 2: of August is still pretty much baked in.

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Speaker 1: Okay, what if we get a higher rate, So what

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Speaker 1: if it comes out point nine one percent? What do

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Speaker 1: we do?

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Speaker 2: That's that's the dilemment because remembering that the RBA has

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Speaker 2: a dual man Dayton, it was only a week or

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Speaker 2: so ago that we saw those unemployment numbers which were

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Speaker 2: a little bit of a warrior unemployment up to four

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Speaker 2: point three, So that sort of kept the fires burning

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Speaker 2: for the rate cup because they have to keep employment

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Speaker 2: at full employment. However, they've also got the mandate on

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Speaker 2: inflation again, as the RBA governor said, I think it

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Speaker 2: was in the Q and A session at the at

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Speaker 2: the speech last week, she mentioned that the best way

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Speaker 2: to chief full employment is to keep inflation lode stable.

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Speaker 2: So if I was to sort of a have a

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Speaker 2: pin from the boundary, I'd sort of say that they

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Speaker 2: probably still have a slightly higher weighting in their own

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Speaker 2: mind to inflation than the unemployment rates. So if we

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Speaker 2: get a one or even a point eight or a

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Speaker 2: point nine on the trin to mean, it does muddy

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Speaker 2: the waters a little, if not a lot, and that

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Speaker 2: would be of course a real concern. You know, do

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Speaker 2: we really need that further interest rate cut? And this

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Speaker 2: is where some of the other economic indicators on spending,

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Speaker 2: on investment, on building or come into play as well.

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Speaker 1: So let's go into those, because we've got a couple

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Speaker 1: of fairly decent partial economic indicators this week, retail spending,

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Speaker 1: building approvals both important.

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Speaker 2: The retail spending we get the well, speaking of quarterly

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Speaker 2: data in the retail sales, this is the second last

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Speaker 2: quarterly retail sales numbers we get becase it's going to

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Speaker 2: be taken over by the House on Spending so they

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Speaker 2: at the end of this year. However, it's still an

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Speaker 2: important indicator that feeds directly to GDP. It's probably going

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Speaker 2: to be about flat in real terms. In the dune quarter.

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Speaker 2: So we consumers in per capita terms of spending less.

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Speaker 2: And even though we've had a couple of rate cuts

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Speaker 2: already in the cycle and real wages are slowly starting

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Speaker 2: to increase, you know, we still have a bit of

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Speaker 2: financial pressure. The various consumer sentiment readings are still more

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Speaker 2: negative than positive, and so it's probably going to be

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Speaker 2: confirming again for the RBA deliberations that consumer spending is

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Speaker 2: still pretty moderate. Building approvals the lifeblood of new housing supply.

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Speaker 2: I've gone on and on and on about this, apologies

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Speaker 2: in advance, but we do need new buildings. So we

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Speaker 2: had a decent sort of pick up during last year.

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Speaker 2: We had a bit of a blip lower in the

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Speaker 2: last couple of months. We had a little bit of

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Speaker 2: an increase last month. So again very volatile series that

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Speaker 2: depends a lot on whether there are these multi unit

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Speaker 2: apartments being built in the big cities, but it'd be

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Speaker 2: lovely to see a bit of an increase in builder construction,

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Speaker 2: both in terms of GDP but in terms of housing supply. Well.

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Speaker 1: While on housing, we also get July prices this week.

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Speaker 2: Yeah, the coatality series, and again we know from their

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Speaker 2: high frequency daily data that it's going to be for

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Speaker 2: the capital cities, an increase of it around ABO zero

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Speaker 2: point six percent. And the interesting thing about that, Shawn,

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Speaker 2: is that it's all cities now that are growing. Last

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Speaker 2: year we had the booms in Perth and Brisbane and

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Speaker 2: Adelaide and Melbourne particular, but also city to some extent

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Speaker 2: in Hobart well the laggards. Now the laguards are starting

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Speaker 2: to increase, and the rate of growth in the strong

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Speaker 2: cities in terms of house prices, it's starting to slow.

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Speaker 2: So we'll watch that with a great deal of interest

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Speaker 2: because again that feeds into the whole house of affordability issue.

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Speaker 2: And as we just alluded to, i'm building approvals, new

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Speaker 2: housing supply.

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Speaker 1: Finally, we have three other big central banks US, Canada

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Speaker 1: and Japan thinking about interest rates this week. But the

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Speaker 1: big one is definitely the FED, and particularly Jerome Powell

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Speaker 1: and the relationship with Donald Trump and that ridiculous, ridiculous

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Speaker 1: saga last week where Trump basically Kibo washed, Kibo washed

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Speaker 1: Powell and Power just went right back in and said, no,

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Speaker 1: you're wrong, this is from you know, you're adding in

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Speaker 1: a number from five years ago. What does the US do?

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Speaker 1: I mean amazing amazing pressure. That means under at the moment.

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Speaker 2: Yeah, look on economic fundamentals, it's on hold. And I

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Speaker 2: think that's what the general consensus is too. If Donald

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Speaker 2: Trump was chair of the Federal Reserve, he'd cut to

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Speaker 2: one percent, so three hundred points of rate cuts. Thankfully

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Speaker 2: he's not, and thankfully Powell is a sort of fairly

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Speaker 2: level head and in very level head in fact, and

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Speaker 2: again fighting this external pressure on him to move rates slower.

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Speaker 2: But look, I think the consensus is on hold, and

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Speaker 2: we've still got this high element of uncertainty about the

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Speaker 2: effect of the tariffs on inflation and even on economic

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Speaker 2: growth too. So it's on the hole with the Fed

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Speaker 2: fund trade at four and quarter percent. But what they

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Speaker 2: one of these classic cases, what they say is going

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Speaker 2: to be just as important and what the various members

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Speaker 2: of the FOMC talk about in terms of risks to

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Speaker 2: employment to inflation, so similar agon to what we're seeing

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Speaker 2: here in Australia.

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Speaker 1: Joy the week, Stephen, Thank you, Sean. There is economist

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Speaker 1: Stephen Kokulis, better known as the Kookie. Can find him

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Speaker 1: at the dot com and follow him on x using

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Speaker 1: the handle of the Kirk. I'm sure I own and

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Speaker 1: this is fear and greed. Weak ahead,