1 00:00:05,800 --> 00:00:09,000 Sean Aylmer: Welcome to the Fear and Greed Business Interview. I'm Sean Aylmer. April 2 00:00:09,119 --> 00:00:12,280 Sean Aylmer: was an extraordinary month for markets, with huge swings off 3 00:00:12,280 --> 00:00:16,040 Sean Aylmer: the back of Donald Trump's tariff announcements. So where are 4 00:00:16,079 --> 00:00:19,119 Sean Aylmer: we at now. It's confession season on the ASX and 5 00:00:19,160 --> 00:00:21,200 Sean Aylmer: there are a growing number of companies telling investors that 6 00:00:21,239 --> 00:00:24,840 Sean Aylmer: earnings and or revenue might not be quite what they 7 00:00:24,960 --> 00:00:27,840 Sean Aylmer: had hoped, often on the back of the US trade war. 8 00:00:27,920 --> 00:00:30,880 Sean Aylmer: Remember this is general information only, and you should seek 9 00:00:30,920 --> 00:00:34,559 Sean Aylmer: professional advice before making investment decisions. Matthew Kidman is the 10 00:00:34,560 --> 00:00:37,800 Sean Aylmer: principal of Centennial Asset Management. Matthew, welcome back to Fear 11 00:00:37,840 --> 00:00:38,200 Sean Aylmer: and Greed. 12 00:00:38,560 --> 00:00:39,160 Matthew Kidman: Thanks Sean. 13 00:00:39,560 --> 00:00:43,040 Sean Aylmer: Before we go further, Matthew, you have donated very generously 14 00:00:43,080 --> 00:00:46,040 Sean Aylmer: to the Fear and Greed Royal Far West Ride for 15 00:00:46,120 --> 00:00:49,959 Sean Aylmer: Country Kids fundraiser. Jesus, A lot of that isn't there. 16 00:00:50,240 --> 00:00:51,280 Sean Aylmer: Thank you very much for that. 17 00:00:52,159 --> 00:00:53,120 Matthew Kidman: How far are you riding? 18 00:00:56,240 --> 00:00:58,760 Sean Aylmer: Three hundred and eighty kilometers and I'm in all sorts 19 00:00:58,800 --> 00:01:00,000 Sean Aylmer: of trouble. Two weeks to go. 20 00:01:01,360 --> 00:01:04,120 Matthew Kidman: Because I was just I was just thinking maybe what 21 00:01:04,200 --> 00:01:07,000 Matthew Kidman: I what I actually donated, was not enough, because it's 22 00:01:07,000 --> 00:01:09,280 Matthew Kidman: going to be pretty tough. It could be hard out there. 23 00:01:09,319 --> 00:01:15,240 Matthew Kidman: It could be wet up north. There's going to be 24 00:01:15,280 --> 00:01:18,240 Matthew Kidman: a lot of swearing. Yeah, it's been dry down south. It 25 00:01:18,280 --> 00:01:19,240 Matthew Kidman: should have gone down south. 26 00:01:19,280 --> 00:01:22,360 Sean Aylmer: We should have, we should have. I don't know anyway, Matthew 27 00:01:22,560 --> 00:01:24,760 Sean Aylmer: has donated very generously, So thank you very much for 28 00:01:24,800 --> 00:01:25,400 Sean Aylmer: that pleasure. 29 00:01:25,600 --> 00:01:28,320 Matthew Kidman: Good luck with it. I hope it goes well. 30 00:01:28,600 --> 00:01:30,600 Sean Aylmer: Yeah, I hope I make I'm well done. Thank you. 31 00:01:31,440 --> 00:01:33,880 Sean Aylmer: Last month in markets, what do you make of it? And 32 00:01:33,880 --> 00:01:35,600 Sean Aylmer: I really want to get to confession season and what 33 00:01:35,640 --> 00:01:38,680 Sean Aylmer: are we seeing coming up at this time, which you know, 34 00:01:38,720 --> 00:01:40,200 Sean Aylmer: a couple of months before the end of the financial 35 00:01:40,240 --> 00:01:43,000 Sean Aylmer: year and corporates kind of know where they're going to land. 36 00:01:43,640 --> 00:01:46,040 Matthew Kidman: Yeah, it was a while ride, wasn't it. I can't 37 00:01:46,040 --> 00:01:48,440 Matthew Kidman: remember when we last spoke, but we picked about in 38 00:01:48,440 --> 00:01:51,360 Matthew Kidman: the middle of our last reporting season, which was February, 39 00:01:51,920 --> 00:01:55,080 Matthew Kidman: and it all came around the original tariff discussion Mexico 40 00:01:55,200 --> 00:01:59,200 Matthew Kidman: Canada and fell, fell, fell, and then kind of had 41 00:01:59,200 --> 00:02:03,960 Matthew Kidman: the last shuddering kind of fall after the Trump I'm 42 00:02:03,960 --> 00:02:05,800 Matthew Kidman: not going to mention what he named the day because 43 00:02:06,040 --> 00:02:09,880 Matthew Kidman: that sounds like he was celebrating. But when the tariffs 44 00:02:09,919 --> 00:02:13,440 Matthew Kidman: went on all the country's reciprocal tariffs and it had 45 00:02:13,440 --> 00:02:16,600 Matthew Kidman: that last lurch down, and then since then we've seen 46 00:02:17,280 --> 00:02:21,160 Matthew Kidman: the Americans come slowly back away, step by step from 47 00:02:21,440 --> 00:02:24,000 Matthew Kidman: what they said, because I think they spook themselves about 48 00:02:24,000 --> 00:02:29,239 Matthew Kidman: how negative markets were, and the markets have responded incredibly 49 00:02:29,280 --> 00:02:33,639 Matthew Kidman: well since then. That the Australian market's comfortably above where 50 00:02:33,639 --> 00:02:36,120 Matthew Kidman: it was on that April three or April four, whatever 51 00:02:36,160 --> 00:02:38,600 Matthew Kidman: it was in Australia when those tariffs were announced. So 52 00:02:39,000 --> 00:02:42,080 Matthew Kidman: it's quite amazing. But as you say, we're starting to 53 00:02:42,200 --> 00:02:45,359 Matthew Kidman: enter the new phase of the market, which we've had 54 00:02:45,400 --> 00:02:48,320 Matthew Kidman: the US the quarter or first quarter sorry for them, 55 00:02:48,760 --> 00:02:51,119 Matthew Kidman: reporting season, and they're a fair way into that now 56 00:02:51,480 --> 00:02:54,600 Matthew Kidman: and been going most of April since those tariffs were announced. 57 00:02:55,040 --> 00:02:58,200 Matthew Kidman: And now Australia hasn't got an official the quarter as 58 00:02:58,240 --> 00:03:01,040 Matthew Kidman: it is for US becau's got different balance statue, but 59 00:03:01,240 --> 00:03:03,360 Matthew Kidman: we do have what we call a bit of a 60 00:03:03,400 --> 00:03:07,560 Matthew Kidman: confession season, and of course we've got the famous mcquari 61 00:03:07,680 --> 00:03:10,080 Matthew Kidman: conference next week, which is probably the biggest conference in 62 00:03:10,080 --> 00:03:13,280 Matthew Kidman: Australia for companies, and we'll get a raft of updates then, 63 00:03:13,360 --> 00:03:16,560 Matthew Kidman: we would think, and so that'll set the tone going forward. 64 00:03:17,160 --> 00:03:21,040 Sean Aylmer: Not if anyone've got Macquarie coming up. What's the general 65 00:03:21,480 --> 00:03:25,560 Sean Aylmer: gist coming out of corporates around tariff's bossie corporates. 66 00:03:25,880 --> 00:03:28,360 Matthew Kidman: Yeah, so Australia's not in a bad position as we know, 67 00:03:28,440 --> 00:03:30,640 Matthew Kidman: we've got this ten percent tariff, but we don't do 68 00:03:31,160 --> 00:03:36,360 Matthew Kidman: too much trade with the US directly, so domestically we're okay. 69 00:03:36,400 --> 00:03:38,360 Matthew Kidman: But of course, over the years a lot of Australian 70 00:03:38,400 --> 00:03:41,800 Matthew Kidman: companies have got exposure to the US and because that's 71 00:03:41,800 --> 00:03:45,560 Matthew Kidman: been the growth avenue for many companies and been successful. 72 00:03:45,600 --> 00:03:49,320 Matthew Kidman: But so we're seeing real signs from our companies that 73 00:03:49,800 --> 00:03:53,839 Matthew Kidman: things are slowing down, especially for the consumer. So it's 74 00:03:53,880 --> 00:03:59,000 Matthew Kidman: fled from say US Airlines into other companies in Australia. 75 00:03:59,040 --> 00:04:02,480 Matthew Kidman: Of course, we've had two downgrades from two of Strowspeak's 76 00:04:02,520 --> 00:04:06,240 Matthew Kidman: travel groups, corporate travel just you know, this Friday just 77 00:04:06,320 --> 00:04:10,640 Matthew Kidman: passed and we had before that flight Center. Everyone kind 78 00:04:10,640 --> 00:04:13,240 Matthew Kidman: of expected it, but it was it was really sharp, 79 00:04:13,400 --> 00:04:17,400 Matthew Kidman: quite quite meaningful downgrades around travel in the US, which 80 00:04:17,400 --> 00:04:18,920 Matthew Kidman: is one of the first things to fall off with 81 00:04:19,000 --> 00:04:22,480 Matthew Kidman: consumer confidence and probably a bit of a harbinger for 82 00:04:22,680 --> 00:04:24,880 Matthew Kidman: what's going to happen over the next three or four months. 83 00:04:25,560 --> 00:04:28,400 Matthew Kidman: Even more so, even more damaging was a little company 84 00:04:28,400 --> 00:04:35,600 Matthew Kidman: called Tourism Holdings THHL, which depends heavily on European customers 85 00:04:35,640 --> 00:04:39,239 Matthew Kidman: that go around the world and the higher recreational vehicles 86 00:04:39,240 --> 00:04:42,120 Matthew Kidman: to travel around for four to six weeks. The numbers 87 00:04:42,120 --> 00:04:43,920 Matthew Kidman: out of the US were down forty five to fifty 88 00:04:43,960 --> 00:04:47,120 Matthew Kidman: percent when the summer coming, and so that's hit them 89 00:04:47,120 --> 00:04:49,800 Matthew Kidman: for six because they take forward bookings because it's not 90 00:04:50,040 --> 00:04:54,080 Matthew Kidman: you know, we're flying the equivalent to you know, New 91 00:04:54,120 --> 00:04:56,719 Matthew Kidman: York to Washington. This is let's plan a four or 92 00:04:56,720 --> 00:04:58,720 Matthew Kidman: six week holiday, which they do earlier, and they've been 93 00:04:58,760 --> 00:05:05,200 Matthew Kidman: hit already. The US exposure, especially for certain services has 94 00:05:05,360 --> 00:05:08,359 Matthew Kidman: really dropped off, and it's been nasty. Some of the 95 00:05:08,400 --> 00:05:11,359 Matthew Kidman: updates here have been a bit mixed. We're going through 96 00:05:11,800 --> 00:05:15,279 Matthew Kidman: in the domestic economy. We had an unusual holiday period 97 00:05:15,360 --> 00:05:18,800 Matthew Kidman: during April and then we've had a federal election, so 98 00:05:19,120 --> 00:05:21,800 Matthew Kidman: that's going to take the shine off most things, just 99 00:05:21,839 --> 00:05:26,400 Matthew Kidman: because the nature of those periods we're spending, not because 100 00:05:27,040 --> 00:05:29,480 Matthew Kidman: we're in a funk or anything, but spending just tapers off. 101 00:05:30,400 --> 00:05:35,200 Matthew Kidman: I'm actually quite bullish shorn on domestic Australia. We've just 102 00:05:35,240 --> 00:05:37,960 Matthew Kidman: got through the election and that's a good thing that 103 00:05:38,560 --> 00:05:42,240 Matthew Kidman: we're always apprehensive, just the unknown. And then we've got 104 00:05:42,279 --> 00:05:46,559 Matthew Kidman: a Reserve Bank Board meeting later this month in May, 105 00:05:47,160 --> 00:05:50,919 Matthew Kidman: which everyone's tipping an interest rate cut inflations back in 106 00:05:51,000 --> 00:05:55,039 Matthew Kidman: a reasonable zone. We've got the prospects of goods and 107 00:05:55,040 --> 00:05:57,480 Matthew Kidman: this is where the tariffs might work for US. Goods 108 00:05:57,520 --> 00:05:59,840 Matthew Kidman: coming out of China being redirected around the world that 109 00:06:00,240 --> 00:06:03,360 Matthew Kidman: not going to America now, so that cop could be 110 00:06:03,440 --> 00:06:06,440 Matthew Kidman: quite good for pricing for goods, especially cars as we 111 00:06:06,520 --> 00:06:11,520 Matthew Kidman: know coming into Australia. And I suspect that maybe the 112 00:06:12,080 --> 00:06:15,640 Matthew Kidman: given the tariffs and the world growth picture which has 113 00:06:15,680 --> 00:06:20,159 Matthew Kidman: come off of it, everyone's down forecasting slower growth around 114 00:06:20,200 --> 00:06:23,120 Matthew Kidman: the world, especially out of the US, might lead us 115 00:06:23,200 --> 00:06:26,000 Matthew Kidman: to more interest rate cuts as we travel through the year, 116 00:06:26,279 --> 00:06:29,800 Matthew Kidman: and that would help the domestic situation because where we're 117 00:06:29,839 --> 00:06:32,000 Matthew Kidman: not getting hit so hard by the tariffs. 118 00:06:32,279 --> 00:06:34,440 Sean Aylmer: Okay, I want to talk international in a moment, but 119 00:06:34,520 --> 00:06:37,000 Sean Aylmer: we're going to take a quick break. Stay with me, Matthew. 120 00:06:44,200 --> 00:06:47,880 Sean Aylmer: I'm talking to Matthew Kidman from Centennial Asset Management. When 121 00:06:47,920 --> 00:06:51,680 Sean Aylmer: you look overseas, and let's start with the US and 122 00:06:51,800 --> 00:06:54,679 Sean Aylmer: Wall Street, particularly the tech stocks, we've had some really 123 00:06:54,720 --> 00:06:59,360 Sean Aylmer: interesting results over the past week or so, Microsoft meta 124 00:07:00,120 --> 00:07:05,080 Sean Aylmer: is on kind of mixed results. I suppose, yeah, that's right. 125 00:07:05,240 --> 00:07:10,040 Matthew Kidman: Obviously Microsoft surprised the market with a good result. Amazon 126 00:07:10,320 --> 00:07:14,320 Matthew Kidman: not a bit mixed, and some of that. We were 127 00:07:14,320 --> 00:07:16,480 Matthew Kidman: talking about it during the last few days as the 128 00:07:16,480 --> 00:07:20,040 Matthew Kidman: results come out. The chip makers mixed and we'll get 129 00:07:20,080 --> 00:07:22,240 Matthew Kidman: in videos always a bit later. That's the big one. 130 00:07:22,680 --> 00:07:26,640 Matthew Kidman: So it's it's going to kind of choose your poison there. 131 00:07:27,280 --> 00:07:30,840 Matthew Kidman: But the tech companies are probably holding up reasonably well 132 00:07:31,440 --> 00:07:34,320 Matthew Kidman: compared to I think that the risk in the US 133 00:07:34,560 --> 00:07:38,600 Matthew Kidman: at the moment is around the consumer and that will 134 00:07:38,640 --> 00:07:43,000 Matthew Kidman: bleed into business confidence and CAPEX related so that more 135 00:07:43,080 --> 00:07:47,360 Matthew Kidman: industrial business to business kind of model that will flow in. 136 00:07:47,720 --> 00:07:52,960 Matthew Kidman: As you know very well that recessions or slow downs 137 00:07:53,040 --> 00:07:55,679 Matthew Kidman: take a while to hit the actual numbers in terms 138 00:07:55,680 --> 00:07:59,560 Matthew Kidman: of employment. But what we have with this one is 139 00:07:59,640 --> 00:08:03,800 Matthew Kidman: we know that port volumes are really coming off in 140 00:08:03,840 --> 00:08:06,560 Matthew Kidman: the next week, which is interesting. So goods coming from 141 00:08:06,640 --> 00:08:10,320 Matthew Kidman: China into the US are coming off dramatically over the 142 00:08:10,320 --> 00:08:14,200 Matthew Kidman: next week or so. We've already seen some lay people 143 00:08:14,280 --> 00:08:18,520 Matthew Kidman: laid off around transport, and that will hit the shelves 144 00:08:18,560 --> 00:08:20,880 Matthew Kidman: and that's a big problem the tech companies on the 145 00:08:20,880 --> 00:08:23,680 Matthew Kidman: other hand, are probably okay for the moment, but like 146 00:08:23,760 --> 00:08:26,600 Matthew Kidman: everyone else, eventually they will feel a slow down. 147 00:08:27,760 --> 00:08:31,400 Sean Aylmer: It is remarkable that port data how quickly the tariffs 148 00:08:31,480 --> 00:08:35,559 Sean Aylmer: have affected movements of goods. It just seems almost instantaneous. 149 00:08:36,280 --> 00:08:38,240 Matthew Kidman: Yeah, so I think what's happened to a lot of 150 00:08:38,280 --> 00:08:42,880 Matthew Kidman: goods is that the consumers in America, because of the 151 00:08:42,920 --> 00:08:47,680 Matthew Kidman: price hikes, have just canceled orders full stop. Just can't 152 00:08:47,679 --> 00:08:49,520 Matthew Kidman: afford it. There's no margin that they're going to lose 153 00:08:49,600 --> 00:08:52,480 Matthew Kidman: money on it. Rather have nothing on the shelf or 154 00:08:52,520 --> 00:08:55,240 Matthew Kidman: nothing to offer than just lose money. Because the consumer, 155 00:08:55,600 --> 00:08:58,000 Matthew Kidman: when you think about it, something that might have cost 156 00:08:58,040 --> 00:09:02,320 Matthew Kidman: eighty dollars last time is now two hundred overnight. People 157 00:09:02,320 --> 00:09:05,520 Matthew Kidman: are going to that's big sticker shock. They're not going 158 00:09:05,600 --> 00:09:08,880 Matthew Kidman: to either that. You know, the Chinese are going to 159 00:09:08,960 --> 00:09:11,520 Matthew Kidman: have to take some of that margin the retailer, but 160 00:09:11,720 --> 00:09:14,400 Matthew Kidman: whichever way you cut it, everyone's going to lose. So 161 00:09:14,440 --> 00:09:16,640 Matthew Kidman: it's just not going to work. So orders have been canceled. 162 00:09:16,640 --> 00:09:20,400 Matthew Kidman: That's why shipments are down. It's really tangible. You can 163 00:09:20,400 --> 00:09:23,560 Matthew Kidman: almost see it working its way through the system. And 164 00:09:24,040 --> 00:09:28,080 Matthew Kidman: Los Angeles Port forecasting next week. It just happens to 165 00:09:28,160 --> 00:09:31,520 Matthew Kidman: hit next week because the way the delay on when 166 00:09:31,520 --> 00:09:35,400 Matthew Kidman: ships leave China coming to the US are down over 167 00:09:35,480 --> 00:09:38,200 Matthew Kidman: thirty five percent next week, from one week to the next. 168 00:09:38,240 --> 00:09:41,839 Matthew Kidman: It's just bang. So it's going to affect everyone unless 169 00:09:41,880 --> 00:09:44,720 Matthew Kidman: they can reverse it really quick. There's there's already an 170 00:09:44,720 --> 00:09:47,559 Matthew Kidman: air pocket, no matter how could they move now, it's 171 00:09:47,600 --> 00:09:50,200 Matthew Kidman: already in train. It's going to take a while to reverse, 172 00:09:50,880 --> 00:09:54,360 Matthew Kidman: and I think everything's going to slow down. There's consumer sentiment, 173 00:09:54,400 --> 00:09:57,239 Matthew Kidman: as we call it, the soft data or the leading indicators, 174 00:09:58,920 --> 00:10:02,280 Matthew Kidman: going to start to the real data in say the 175 00:10:02,320 --> 00:10:04,959 Matthew Kidman: next week, and that will be the case, and eventually 176 00:10:05,000 --> 00:10:07,679 Matthew Kidman: you will see unemployment start to rise, maybe over the 177 00:10:07,720 --> 00:10:11,720 Matthew Kidman: next six seven weeks. And so you know, it's a 178 00:10:11,760 --> 00:10:14,520 Matthew Kidman: slowdown is on now in the US, and I think 179 00:10:14,559 --> 00:10:16,960 Matthew Kidman: it's a dangerous place to be operating, even if you 180 00:10:17,000 --> 00:10:18,720 Matthew Kidman: are a robust big tech company. 181 00:10:19,040 --> 00:10:20,800 Sean Aylmer: Matthew, thank you for talking to Fear and Greed. 182 00:10:21,120 --> 00:10:21,600 Matthew Kidman: Thanks Sean. 183 00:10:21,920 --> 00:10:24,440 Speaker 2: Now that was Matthew Kidman from Centennial Asset Management. This 184 00:10:24,559 --> 00:10:26,800 Speaker 2: is the Fear and Greed a business interview. Remember this 185 00:10:26,840 --> 00:10:29,520 Speaker 2: is general information only, and you should seek professional advice 186 00:10:29,720 --> 00:10:32,840 Speaker 2: before investing. Join us every morning for the full episode of 187 00:10:32,920 --> 00:10:34,920 Speaker 2: Fear and greed, daily business to use the people who 188 00:10:35,000 --> 00:10:39,160 Speaker 2: make their own decisions. I'm Sean Aylmer. Enjoy your day