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Speaker 1: Today on Fear and Greed. The value of agricultural production

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Speaker 1: in Australia heads towards one hundred billion dollars, but the

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Speaker 1: shadow of tariff's looms. Large retail sales jump as the

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Speaker 1: Reserve Bank warns there is no certainty about another interest

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Speaker 1: rate cut, and local insurance stocks get hit as cyclone

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Speaker 1: alphared heads towards Southeast Queensland and all the New South

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Speaker 1: Wales plus city groups trillion dollar mistake and Donald Trump

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Speaker 1: cuts military aid to Ukraine. Welcome to Fear and Greed.

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Speaker 1: Daily business news for people who make their own decisions.

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Speaker 1: It is Wednesday, the fifth of March twenty twenty five.

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

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Speaker 2: Good morning, Michael, Sean.

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Speaker 1: The main story this morning the value of agricultural production

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Speaker 1: in Australia this financial year is set to hit almost

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Speaker 1: one hundred billion dollars, driven by record livestock and crop production,

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Speaker 1: but the shadow of global tariffs is certainly looming large

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Speaker 1: over the sector, with fears of major disruptions to global

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Speaker 1: supply chains true.

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Speaker 2: But what we've seen in the last twenty four hours

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Speaker 2: are potentially the benefits to Australian agricultural producers of US tariffs.

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Speaker 2: First to the figures ninety eight billion dollars in livestock, crop,

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Speaker 2: fisheries and forestry production, this financial year's second highest on record.

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Speaker 2: Livestock comes in at about forty billion dollars. Strong demand

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Speaker 2: for Australian red meat at the moment and livestock products

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Speaker 2: according to the AH the name of this company, the

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Speaker 2: name of this bureau always gets me, the Australian Bureau

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Speaker 2: of Agricultural and Resource Economics and Sciences, as.

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Speaker 1: Though they don't want anybody to read their reports.

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Speaker 2: Yes, livestock forty billion dollars. ABEARS says cop production will

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Speaker 2: come in around fifty two billion dollars. There has been

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Speaker 2: great growing conditions over the last twelve months or the

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Speaker 2: last seven or eight months really, although would have been

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Speaker 2: better except for dry weather in South Australia and Victoria.

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Speaker 2: To get a bit of context on this, we talk

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Speaker 2: a lot about iron ore exports in Australia that's worth

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Speaker 2: about a hundhundred and forty billion dollars. The value of

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Speaker 2: manufacturing in this country is about one hundred and five

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Speaker 2: billion dollars, so we're talking one hundred billion dollars here.

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Speaker 2: So it's a major, major industry, very big part of

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Speaker 2: the economy, obviously a lot of history. Employs about two

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Speaker 2: hundred and forty thousand people, mostly in cheap and beef

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Speaker 2: farming and grain production. It uses about fifty five percent

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Speaker 2: of land and a massive seventy percent of water usage.

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Speaker 2: The bottom line is that as a sector, agriculture is

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Speaker 2: doing pretty well.

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Speaker 1: And it's clearly very very important. As you established, what

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Speaker 1: happens then if the world just becomes filled with tariffs.

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Speaker 2: Michael, The problem with tariffs isn't necessarily first order impacts.

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Speaker 2: Some goods may get hit with a tariff from Australia,

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Speaker 2: but that's not really a big concern. Thus, Father and

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Speaker 2: no US tariff on Australian agricultural products for example. In fact,

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Speaker 2: tariffs on other countries will change the competitive landscape and

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Speaker 2: that could help or hinder a Australia. So what we've

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Speaker 2: got over the last twenty four hours, for example, is

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Speaker 2: that Beijing hit back against tariffs on its exports to

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Speaker 2: the US by targeting agricultural shipments. So the Finance Ministry

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Speaker 2: yesterday said it will put a fifteen percent leveg on

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Speaker 2: a range of farm produce from the US into China. Chicken, wheat, corn, cotton,

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Speaker 2: ten percent on sorghum, fruits, vegetables, and dairy products. Those

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Speaker 2: products from the US to China are being hit with tariffs.

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Speaker 2: So maybe the sellers of those products in the US

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Speaker 2: will look for other markets, which could be Australia for example.

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Speaker 2: The thing there is are they competing with Australian producers?

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Speaker 2: That's bad? Are they not competing with Australian producers cheaper

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Speaker 2: goods into Australia The big risk though for Australian producers.

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Speaker 2: Tariffs can disrupt global supply chains, They can raise input costs.

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Speaker 2: They certainly put inflationary pressures into the global economy and

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Speaker 2: that can reduce economic activity. It's that second order effect

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Speaker 2: that really matters all.

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Speaker 1: Right now, Sean, this is interesting. The Australian Open, the

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Speaker 1: tennis and also the cricket tests against India helped trigger

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Speaker 1: a jump in retail spending in January, continuing it a

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Speaker 1: run of pretty decent turnover.

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Speaker 2: Yes, so it was up zero point three percent in January.

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Speaker 2: Doesn't sound like much, but we're talking hundreds of millions

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Speaker 2: of dollars here. Grocery stores cafes restaurants did well, which

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Speaker 2: very much reflects those sporting events. The retail slump looks

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Speaker 2: to be over officially, with the caveat that people are

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Speaker 2: looking to buy lower cost items. So what we saw

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Speaker 2: in the recent earning season from Woos and Carl's is

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Speaker 2: sales of home brands were rising, but at least they're

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Speaker 2: spending money. Over the last year, retail revenue is now

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Speaker 2: up nearly four percent. If you compare that to GDP

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Speaker 2: over all economy, that's pretty good. Now we're getting figures

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Speaker 2: on how the economy performed in the December quarter and

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Speaker 2: for the full twenty twenty four Today economists think it'll

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Speaker 2: be about one and a half percent. But if you're

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Speaker 2: getting retail sales at four percent economy growing at one

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Speaker 2: and a half percent, you'd have to say the retail

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Speaker 2: sales are doing okay and.

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Speaker 1: Just staying in economics. The release of the Reserve Bank

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Speaker 1: Board minutes, it's made it pretty clear there is no

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Speaker 1: certainty about another interest rate cut.

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Speaker 2: In fact, the Board said in the minutes that on balance,

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Speaker 2: the case to lower interest rates was stronger than keeping

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Speaker 2: rates on hole two weeks ago. Hence we got that

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Speaker 2: cut underlying infation is continuing to fall. In fact, it's

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Speaker 2: falling faster than forecast. Therefore, the bank said they didn't

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Speaker 2: need the insurance taken out when they raised the cash

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Speaker 2: rate back in November twenty twenty three. The inference in

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Speaker 2: that is that they raised it once back in late

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Speaker 2: twenty twenty three, so they've dropped that now, But that

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Speaker 2: doesn't mean they're about to do any other cuts. In fact,

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Speaker 2: the minutes say that members agreed that their decision at

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Speaker 2: this meeting did not commit them to further reductions in

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Speaker 2: the cash rate target at subsequent meetings. So not a

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Speaker 2: lot of good news for those hoping for a rate cut.

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Speaker 1: No, no, it doesn't sound like it. Speaking of rate

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Speaker 1: cuts and the impact on property, Sean got a great

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Speaker 1: interview coming up today after the show with Alice Staltz

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Speaker 1: from Domain.

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Speaker 2: Yeah. So we talk about the fact that house prices

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Speaker 2: in January bounced somewhat, so we had three months of

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Speaker 2: house prices going backwards. They bounced, particularly in Melbourne, which

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Speaker 2: has actually had a shocking twelve months or so. So

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Speaker 2: we ask ALUs about that. Sydney, Brisbane, Adelaide Perth. She

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Speaker 2: shows her bias towards her hometown. You'll have to listen

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Speaker 2: to find out which one that is. Yeah, and she

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Speaker 2: also tells us where good places to invest basically.

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Speaker 1: And the thing I love about Alice is that she

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Speaker 1: just tells you.

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Speaker 2: Exactly what she thinks, very plain spoken.

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Speaker 1: Yeah, it's great. It is a really good conversation. That's

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Speaker 1: coming up a bit later on. Lots more to come,

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Speaker 1: but Sean my favorite story that we'll be getting to later, like,

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Speaker 1: picture the biggest clerical era you've ever made in your job.

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Speaker 1: Multiply that by a trillion, and that's kind of where

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Speaker 1: we're at with this mistake that was made at City Group.

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Speaker 1: So we'll get to that one in a little bit.

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

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Speaker 1: day's business news. Sawn. The unofficial election campaign continues with

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Speaker 1: Prime Minister Anthony Albanezi announcing a four point eight billion

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Speaker 1: dollar federal funding injection into the New South Wales public

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Speaker 1: school system, claiming the investment will ensure quote no child

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Speaker 1: falls behind.

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Speaker 2: Have we heard that before? Surely no child left Like

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Speaker 2: that's falls behind as opposed to no child left behind,

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Speaker 2: because that's the US, isn't that? Yeah? Yeah, yeah, that

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Speaker 2: was Reagan eighties. Yeah, no child left behind. Well we've

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Speaker 2: become no child falls behind. Don't mean anything othern easy.

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Speaker 2: He's using Royal Reagan slogans.

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Speaker 1: Oh there we go anyway.

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Speaker 2: The patent was in Sydney alongside New South Wales Premier

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Speaker 2: Chris Means. He said the spend would lift the Comwell's

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Speaker 2: contribution to school funding in the state by an additional

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Speaker 2: five percent. Meanwhile, coalition says it will order the return

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Speaker 2: of public servants to the office five days a week

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Speaker 2: if elected. The opposition Public Service spokesperson Jane Hume said

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Speaker 2: research shows working from home has reduced productivity and the

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Speaker 2: status quo is unsustainable Otherwise, both leaders rasked if that

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Speaker 2: allow Australian troops to join a coalition of the willing

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Speaker 2: in Ukraine now. Both sounded lukewarm on the idea, although

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Speaker 2: Prime Minister Anthony Albernezy, who obviously holds power, said if

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Speaker 2: a request is made he'll give consideration to it, so

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Speaker 2: it is definitely a softening of his stance on that.

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Speaker 1: Yeah. Now, the local insurance stocks got hit yesterday as

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Speaker 1: Cyclone Alfred heads towards the South Queensland Northern New South

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Speaker 1: Wales coast.

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Speaker 2: Suncourt, which is based in Brisbane, fell two and a

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Speaker 2: half cent. QB and IAG were down two point two

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Speaker 2: percent one point seven percent respectively. In a statement, sun

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Speaker 2: Court said the Federal Government Cyclone Reinsurance Pool provides cover

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Speaker 2: for damage when a storm is classified as a cyclone

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Speaker 2: and for an additional forty eight hours after it downgraded.

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Speaker 2: Hence the company's protected. That's kind of the financial side.

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Speaker 2: The human cost here they could be dramatic. Brisbane, Southeast

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Speaker 2: Queensland and Northern New South Wales are preparing for the cyclone.

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Speaker 2: Up to a meter of rain, forecast winds and excess

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Speaker 2: of one hundred kilometers an hour in some areas. A

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Speaker 2: bunch of beaches from the Sunshine Coast in Queensland to

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Speaker 2: barron By Northern New South Wales have been closed. The

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Speaker 2: region is home to four million people. The storm has

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Speaker 2: intensified to a category two cyclone. It's expected to make

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Speaker 2: landfall on Thursday now. Residents of Southeast Queensland have been

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Speaker 2: told to prepare for three days of power outage.

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Speaker 1: Wow local markets, how do they perform? Yesterday?

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Speaker 2: S ANDPASX two hundred close down a little over half

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Speaker 2: percent to just under eighty two hundred points. It dropped

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Speaker 2: more than a percent following a poor lead in for

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Speaker 2: more street than it recovered somewhat. The healthcare sub index

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Speaker 2: was the only one of eleven in the black thanks

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Speaker 2: to CSL, which was up one percent. Energy stocks didn't

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Speaker 2: do so well. Woodside, Santos, Origin Energy all sold off

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Speaker 2: more than three percent, same with Full Skew Metals Group.

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Speaker 2: Ten year bond yields fell to their lowest level this year. Michael, Michael,

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Speaker 2: this is exciting for you. I can say to wake up,

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Speaker 2: Wake up, Michael.

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Speaker 1: I was swaying on my feet just a little bit,

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Speaker 1: and you took that as a sign that I was

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Speaker 1: not excited. I'm interested.

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Speaker 2: You love bond yiels. Bonds are really safe, right, Yes,

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Speaker 2: I love how.

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Speaker 1: You're simplifying it for me. Go on, I understand this.

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Speaker 2: Okay, demand for ultra safe assets is rising. When demand rises,

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Speaker 2: prices go up, your returns go down. Hence one neils

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Speaker 2: or form.

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Speaker 1: Do you now just include that by default whenever we

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Speaker 1: start talking.

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Speaker 2: About well, I actually find bonds hard, like the credit markets,

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Speaker 2: which includes bonds are hard.

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Speaker 1: Well, I was going to say, it's not the worst

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Speaker 1: thing in the world to explain that each time we

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Speaker 1: do it because every time, if there's someone you're listening

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Speaker 1: that doesn't really get it's just that like twenty second

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Speaker 1: little explainer.

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Speaker 2: That's right.

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Speaker 1: I've now stretched out to about a minute and a half.

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Speaker 1: So well done me. International markets, what's going on?

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Speaker 2: It's a bad dave for Wall Street yesterday with US

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Speaker 2: President Donald Trump's imposition of twenty five percent tariffs on

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Speaker 2: Canada and Mexico. That triggered to sell off. The problem well,

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Speaker 2: what people fear is that they'll tariffle damage to the

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Speaker 2: US economy, trigger a trade war. We have seen Canada

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Speaker 2: already come and impose tariff one hundred and sixty one

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Speaker 2: billion dollars worth of US goods going to that country.

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Speaker 2: As a result, the S and P five hundred closed

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Speaker 2: down nearly two percent, the Nasdaq Commissant dropped two point

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Speaker 2: six percent, and Vidia fill about nine percent. Conicco Philip's

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Speaker 2: Energy group was down six or seven percent. Brent krude

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Speaker 2: fell to its lowest price this year, seventy two US

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Speaker 2: dollars a barrel. That's after opp plus said it would

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Speaker 2: increase production. Gold, a safe haven in times of turmoil,

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Speaker 2: it's rising. Not surprisingly, the Aussie dollars trading around sixty

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Speaker 2: two US cents, and iron are dropped back below one

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Speaker 2: hundred US dollars a ton. You'd think that might be

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Speaker 2: tariff related, it's not. We have a major policy meeting

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Speaker 2: going on in China starting today and steel mills have

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Speaker 2: been instructed to curb production sure Blue skies during the

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Speaker 2: government's upcoming policy meeting. This is on Bloomberg.

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Speaker 1: You're kidding, no, I mean it happens every year.

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Speaker 2: So when they get together, the idea is to make

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Speaker 2: it all look good so they reduce pollution. Wow, it's

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Speaker 2: pretty cool.

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Speaker 1: That is amazing. Now, health Scope, Australia's second largest private

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Speaker 1: hospital operator, has failed to pay all the rent due

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Speaker 1: for March on eleven of its facilities owned by listed

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Speaker 1: property group Healthco Healthcare.

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Speaker 2: And Wellness so healthc Healthcare says it's issued breach notices

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Speaker 2: to health Scope for failing to pay the rent. Now

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Speaker 2: part payment's been received. The real estate Investment Trust that

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Speaker 2: this is health Co Healthcare said it will seek to

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Speaker 2: replace health Scope tendancies with other hospital operators if the

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Speaker 2: breaches aren't remedied. Health Scope is owned by pe group Brookfield.

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Speaker 2: It's got a stack of debt about one point six

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Speaker 2: billion dollars. It's been trying to renegotiate terms on that.

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Speaker 2: In short, it just doesn't make enough money from the hospitals.

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Speaker 2: It's got some big ones Gold close private hospital Sydney's

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Speaker 2: Northern Beaches Hospital Brookfelle has been forced to put more

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Speaker 2: money into health Scope. But it's really hard, you know,

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Speaker 2: it's sort of business. You can't just close down hospital. No,

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Speaker 2: It's part of the infrastructure in health infrastructure obviously, so

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Speaker 2: selling assets, closing facility is really tricky.

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Speaker 1: Okay. Turning to international news now, and US President Donald

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Speaker 1: Trump is pressing ahead with imposing tariffs twenty five percent

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Speaker 1: on all imports from Canada and Mexico from today, saying

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Speaker 1: there is no room for last minute negotiations.

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Speaker 2: Last month, the President issued an executive order applying additional

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Speaker 2: tariffs of twenty five percent to all imports from Canada

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Speaker 2: to Mexico, with the exception of Canadian oil and energy products,

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Speaker 2: which will face a ten percent levy. The tariffs will

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Speaker 2: delayed for one month. Now. Trump wants it to happen.

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Speaker 2: He reckons that people should be building or doing their

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Speaker 2: work within the US. In fact, his quote was, so

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Speaker 2: what they have to do is build their car plants,

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Speaker 2: frankly and other things in the United States, in which

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Speaker 2: case they have no tariffs. Canada responded immediately, putting tariffs

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Speaker 2: one hundred and sixty one billion dollars worth of US products.

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Speaker 2: China has also come out and placed tariffs on agricultural products.

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Speaker 1: The US is suspending military aid to Ukraine as Donald

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Speaker 1: Trump seeks to increase pressure on Volodimir Zelenski to make concessions,

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Speaker 1: just four days after the two leaders very publicly sparred

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Speaker 1: in the White House over peace talks with Russia.

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Speaker 2: Trump's decision halts what has been a consistent supply of

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Speaker 2: US military assistance, including weapons, to Kiev since Moscow launched

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Speaker 2: its full scale invasion of Ukraine three years ago. A

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Speaker 2: White House official yesterday said the President has been clear

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Speaker 2: that he's focused on peace. We need our partners to

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Speaker 2: be committed to that goal as well. Trump's move came

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Speaker 2: after he renewed his attacks on Ukraine's president on social

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Speaker 2: media and in remarks to reporters at the White House.

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Speaker 2: He also suggested Ukraine's leader might be out of office

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Speaker 2: if he fails to reach the cord with Moscow. According

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Speaker 2: to the ft.

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Speaker 1: All right, let's talk about City Group. Sean, I just

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Speaker 1: find this story absolutely staggering. City Group almost moved about

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Speaker 1: six billion US dollars to a customer's account by accident,

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Speaker 1: after a staffer handling the transfer copied and pasted the

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Speaker 1: account number into a field for the dollar figure. And

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Speaker 1: it gets better. It follows the bank almost crediting an

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Speaker 1: internal account eighty one trillion US dollars.

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Speaker 2: Yeah, so the first mistake from City Group's wealth management

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Speaker 2: business magnified the intended amount by more than a thousand times.

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Speaker 2: It was detected on the next business day. According to Bloomberg,

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Speaker 2: it happened in the same month, and another part of

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Speaker 2: the bank accidentally credited that eighty one trillion US dollars

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Speaker 2: to a different part of the bank, internal part of

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Speaker 2: the bank. The vision's error was reported to regulators. Executives

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Speaker 2: when the midst of discussions with senior management and regulators

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Speaker 2: over that six billion US dollar problem, When they actually

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Speaker 2: got word of the eighty one trillion dollar problem, could

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Speaker 2: you imagine them sitting in a room and saying, oh,

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Speaker 2: fellas just interrupting. I know you're talking, this is important, but.

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Speaker 1: Got a small problem here. Can you imagine being the

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Speaker 1: person who did it. Oh, no, that was me.

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Speaker 2: They literally copy and pasted into the wrong spot in

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Speaker 2: the eighty one trillion US dollar case. The mistake was

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Speaker 2: caught about ninety minutes later, according to the Financial Times,

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Speaker 2: and was so big that the funds couldn't actually have

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Speaker 2: left because it's bigger than the company itself. Eighty one

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Speaker 2: trillion dollars. Yeah, apparently the process at the center of

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Speaker 2: that incident has now been fully automated.

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Speaker 1: I wonder why that's an incredible story that one. It

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Speaker 1: is up next Sean is the Fear and Great Daily

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Speaker 1: interview with Salts from Domain Great Chatted is coming up

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Speaker 1: in the Fear and Greed playlist on your podcast platform

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Speaker 1: or at Fearangreed dot com dot au. End Sean, there's

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Speaker 1: a newsletter coming in a newsletter, Yes, in just a

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Speaker 1: couple of hours, So if you haven't already subscribed to

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Speaker 1: the Fear and Greed newsletter, head on to our website

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Speaker 1: Fearangreed dot com dot au. There's a link in our

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Speaker 1: show notes as well, and you will receive Sean's unfiltered,

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00:17:23,840 --> 00:17:28,800
Speaker 1: unadulterated thoughts on a whole lot of business news stories

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Speaker 1: and it's coming out in a couple of hours. Thank

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Speaker 1: you very much, Sean.

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Speaker 2: Thanks Michael.

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Speaker 1: It is Wednesday, the fifth of March twenty twenty five.

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Speaker 1: Make sure you're following the podcast and join us online

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Speaker 1: on LinkedIn, Instagram, x TikTok and Facebook. I'm Michael Thompson.

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