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Speaker 1: Welcome to Ask Fear and Greed, where we take your

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Speaker 1: questions and do our best to answer them. I'm Michael Thompson,

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Speaker 1: and good afternoon, Sean Aylmer.

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Speaker 2: Hello Michael, Sean.

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Speaker 1: I love this show. I know it's only a bonus episode,

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Speaker 1: but it is so interesting to see the questions that

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Speaker 1: listeners have been asking, and today's is a great question

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Speaker 1: that comes from Greg. He has sent it in via

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Speaker 1: the website. He went to Fearangreed dot com dot are

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Speaker 1: you and sent it in there. You can also do

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Speaker 1: it via LinkedIn or Facebook or Instagram or any of

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Speaker 1: the social media platforms. But Greg's gone to the website

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Speaker 1: and he says a timely question for Ask Fear and Greed.

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Speaker 1: He goes On Monday. Last week, the ASX tumbled, but

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Speaker 1: there was a lot of talk about interest rate sensitive

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Speaker 1: stocks falling disproportionately relative to the index. Given that interest

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Speaker 1: rates have started to fall across the globe and that

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Speaker 1: the RBA's launch on that rate cutting cycle appears somewhat imminent,

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Speaker 1: the reaction of the market seems totally counter intuitive that

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Speaker 1: stock's sensitive to rising interest rates would plummet when rates

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Speaker 1: are next going to fall.

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Speaker 2: Why is it so, ah, Greg, Greg, you're assuming rational behavior,

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Speaker 2: come on common, That's not how it works.

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Speaker 1: So basically, what you're saying, really is that markets are irrational?

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Speaker 1: Is that what you're trying to tell?

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Speaker 3: Well, they're probably rational. It is a cracking question because

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Speaker 3: so many times you say, interstrate sensitive stocks fall because

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Speaker 3: of bad news, which means interest rates might fall. But

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Speaker 3: then the next thing you know, they're doing really well

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Speaker 3: because interestrates are going to fall. So what's the different

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Speaker 3: sort of thing? Why? Why is that the case? Economists

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Speaker 3: and investment analysts are absolutely known for cherry picking the data.

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Speaker 3: In fact, they take what they want to tell their

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Speaker 3: stories story. This actually reminds me I'm going I'm digressing

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Speaker 3: a little bit here. The Reserve Bank Deputy governor yesterday, Hauser,

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Speaker 3: he was out and he had a real crack. He

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Speaker 3: was speaking to a room full of economists and had

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Speaker 3: a real crack at them. He said economic commentators had

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Speaker 3: created a world of winners and losers, gurus and charlatans,

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Speaker 3: geniuses and buffoons. Those seeing things differently are casticated as

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Speaker 3: in competent, biast or on the make, and changes in

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Speaker 3: views are presented as disastrous or humiliating.

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Speaker 2: Failures.

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Speaker 3: Yes, of course, these people are getting paid to make

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Speaker 3: a prediction, and so they need to make a prediction.

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Speaker 3: And so that's kind of what happens. Back to Greg's question,

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Speaker 3: when you get some piece of data like weak employment,

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Speaker 3: for example, does that mean the labor market's slowing? Okay,

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Speaker 3: so maybe the Reserve Bank will cut interest rates because

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Speaker 3: they don't want the unemployment to go too high, and

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Speaker 3: that's good for shares. Or does it mean, oh no,

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Speaker 3: the economy is slowing, we could have a recession. Oh dear,

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Speaker 3: that's bad for shares. And that's kind of the number

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Speaker 3: of the answer of the question. If you get unequivocally

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Speaker 3: good news or bad news, then you do get big shifts.

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Speaker 3: And that's actually what happened last Monday, which is when

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Speaker 3: Greek is referring to in the US, on the previous

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Speaker 3: Friday or Thursday Friday night in the US previously, there

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Speaker 3: was data on manufacturing, on the services, and on the

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Speaker 3: labor market. All of it was bad news data saying

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Speaker 3: things are slowing sharply. So people thought, oh no, the

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Speaker 3: Fed needs to cut rates. But rather than thinking that's

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Speaker 3: good for interest right sensitive stocks, it was all about

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Speaker 3: they haven't done enough, therefore we're heading into recession. If

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Speaker 3: we go into recession, the stocks get hit hardest often

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Speaker 3: are those consumer discretionary stocks, the interest rate sensitive consumer

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Speaker 3: discretionary stocks. So it's a fine line, and that's what

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Speaker 3: the sell off last Monday was about. Unequivocal bad news

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Speaker 3: all around. I suppose bottom line economists and investors are

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Speaker 3: telling a story to fit their hypothesis. That's what they're

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Speaker 3: paid to do. The best ones don't always get it right,

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Speaker 3: but their analysis is good enough to pay for. So

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Speaker 3: I don't think I can be too critical of anyone

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Speaker 3: not getting it right or you know, getting it wrong

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Speaker 3: too often, especially if their analysis is good. So I

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Speaker 3: think I've answered.

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Speaker 1: The question, and purely sean from a media perspective, the

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Speaker 1: last thing you want is someone who's going to sit

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Speaker 1: on the fence on everything. Yeah, you want someone to

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Speaker 1: kind of give their view and if they're able to

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Speaker 1: back it up and provide the reasoning as to why

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Speaker 1: they believe that it's going to happen one way or

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Speaker 1: the other, at least it gives you something to work with.

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Speaker 1: And if they show their working they're okay. All right,

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Speaker 1: I understand where you're coming from. The last thing you

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Speaker 1: want to hear if you're listening to the radio, or

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Speaker 1: is just someone going, oh, it could go one way

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Speaker 1: or the other, like no, no, no, just tell me

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Speaker 1: one way the other.

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Speaker 2: Tell me why.

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Speaker 1: I think it will all be happy.

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Speaker 3: It's a fair point because the media has a lot

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Speaker 3: to blame for this because immediate just wants the headline.

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Speaker 1: I wasn't saying that. I'm not trying to take any

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Speaker 1: responsibility here, Sean.

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Speaker 3: I suppose what you want is to have that. I mean,

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Speaker 3: it's okay to say this is bad news, but you

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Speaker 3: want the media to give the other side, you know, however,

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Speaker 3: because then you can make up your own decision. That's

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Speaker 3: what i'd say. But certainly the meat is to blame too.

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Speaker 3: Thanks for pointing out out, Michael, I had glossed over

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Speaker 3: that bite.

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Speaker 1: Nice sole contribution to today's ask Fear and Greed. I

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Speaker 1: reckon Greg would be satisfied with that answer. I don't

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Speaker 1: want to speak for him, and maybe Greg, if you

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Speaker 1: are satisfied, let us know. We've actually had a couple

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Speaker 1: of people come back to us after you've answered their

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Speaker 1: questions and confirmed that yes, that's exactly what they were

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Speaker 1: looking for. I've never actually told you that, Sean, So

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Speaker 1: I've never never delivered that.

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Speaker 3: I didn't know that now affirmation. Now we only even

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Speaker 3: use people's first name. But I know this Greek because

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Speaker 3: I'm well, I don't know, but I suspect it's a

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Speaker 3: Greg that I used to work with many years ago,

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Speaker 3: and he is a great fan of the show and

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Speaker 3: has been listening for years and years.

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Speaker 2: Do you know what he deserves? Michael, Oh, you're going

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Speaker 2: to do it again.

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Speaker 1: We only got the MEA mugs, the fear and greed

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Speaker 1: most enthusiastic advocate MEA mugs, the rare collectible items. We've

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Speaker 1: got them yesterday, and you've already given out five.

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Speaker 3: Yeah, well, I mean two to my mother woner me.

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Speaker 3: So let's face it, I'm not going to give those

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Speaker 3: out take those back? No, but Greg, and I'm going

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Speaker 3: to call him what ow if that is the right

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Speaker 3: Greg that I'm talking about and effected. If it is you, Greg,

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Speaker 3: make sure you're get in touch.

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Speaker 2: We will send you our new merch.

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Speaker 3: I only received it yesterday. We've been promising it for

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Speaker 3: four years. So you know, it's kind of a bit

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Speaker 3: like economists, isn't it really promising one thing giving another.

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Speaker 1: And finally finally delivering it a lot to deliver at

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Speaker 1: some point in the future. Then at least you can say, yeah,

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Speaker 1: see I got it right, just wrong on the timeline.

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Speaker 3: Yeah, that's right. But if that is you, Greg, please

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Speaker 3: get in touch and you will be one of the

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Speaker 3: first recipients of the most enthusiastic advocate a dreadful acronym.

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Speaker 1: But the spirit of it that was fantastic. So it's

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Speaker 1: all about kind of the Then Greg will go and

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Speaker 1: take that into the office and you'll drink out of

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Speaker 1: the Fear and greet me a mug in front of

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Speaker 1: other people and they'll all see it and they'll ask

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Speaker 1: him what Fear and Greed is and then he'll explain

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Speaker 1: and lo and behold, We've got an extra four listeners

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Speaker 1: out of it.

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Speaker 3: That's what it's about.

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Speaker 2: That's all right, Gregory went five, not four far. I'm high.

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Speaker 1: All right, Greg, thank you very much for the question

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Speaker 1: for sending that in via Fear and Greed, and thank

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Speaker 1: you Sean.

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Speaker 3: Thank you. Michael.

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Speaker 1: Remember, if you've got something you'd like to know, then

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Speaker 1: send it through LinkedIn, Instagram, Facebook, Fearangreed dot com dot au.

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Speaker 1: I'm Michael Thompson. And this is ask fear and greed,