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

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Speaker 1: and as always at this time on a Monday morning,

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Speaker 1: I'm joined by the great economist Stephen Cooculis. You'll find

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Speaker 1: him at the Cook dot com, t h e k

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Speaker 1: or uk dot com and on X using the handle

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Speaker 1: the Kirk Stephen. What I seven days we've had.

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Speaker 2: Last week was exciting as anticipated, Lots of news, lots

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Speaker 2: of information, lots of policy changes, and here we are

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Speaker 2: still digesting what might be ahead.

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Speaker 1: Okay, let's start with the rate cut last week. Not

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Speaker 1: unexpected though the commentary afterwards, both at the press conference

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Speaker 1: and in the statement, you wouldn't exactly say you're putting

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Speaker 1: your house on another rate cut anytime soon.

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Speaker 2: No, the governor was went to sort of extreme measures.

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Speaker 2: She mentioned it many times during her Q and A

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Speaker 2: that the bank is well, they're confident that inflation's falling,

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Speaker 2: and on their current forecast, and even the lag for

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Speaker 2: a couple of rake which they put into their assumptions.

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Speaker 2: They're not forecasters, assumptions core inflation trimmed mean inflation is

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Speaker 2: going to be just a couple of ticks above two

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Speaker 2: and a half percent, and so that's basically a rounding era.

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Speaker 2: So that's why they delivered the rate cut. We had

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Speaker 2: the Deputy governor speaking and so that if they didn't

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Speaker 2: cut rates, then their forecast for inflation would be below

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Speaker 2: the midpoint of the target. So that's why they did it.

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Speaker 2: But then on the next breath, and this is the

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Speaker 2: sort of thing that's got markets still on edge about

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Speaker 2: where are we going and what's happening to this interest

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Speaker 2: rate profile out there? Is that she said quite clearly,

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Speaker 2: and this is again a legitimate comment. I'm not being critical.

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Speaker 2: In fact, on the contrary, we're data dependent. We will

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Speaker 2: react to the new economic news as it comes out.

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Speaker 2: So as I sit there and listen to that latter point,

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Speaker 2: if the data turns out to be weak, let's just

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Speaker 2: assume it's week. We get the inflation numbers ticking lower,

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Speaker 2: we get signs and economic growth is sort of soggy still,

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Speaker 2: and even though we had labour market numbers last week,

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Speaker 2: we get another one before the next meeting. That's a

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Speaker 2: bit where you know, it doesn't rule out a rate cut.

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Speaker 2: Put it that way.

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Speaker 1: Okay, what about the data we got after that decision,

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Speaker 1: So we had stuff from the labor market we had

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Speaker 1: basically contradictory pieces of data. Wages aren't growing too fast,

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Speaker 1: but wow, the employment market's strong.

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Speaker 2: Exactly, and it's continuing the theme that we've had for

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Speaker 2: what the past six or twelve months, even that you know,

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Speaker 2: the wages moderation was the thing that came out on Wednesday,

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Speaker 2: so the day after the rate cut decision, and it

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Speaker 2: confirmed that we only had one point seven percent increase

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Speaker 2: in wages in the quarter, which was the lowest since

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Speaker 2: twenty twenty two. So you don't get wages growth moderating

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Speaker 2: and a tight labor market is sort of my economics

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Speaker 2: one on one teacher, So maybe I'll put my economics

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Speaker 2: textbooks to the back of the bottom drawer for what

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Speaker 2: Because the next day we had another forty four thousand

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Speaker 2: jobs created in the month, which is a which is

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Speaker 2: a stonking increase, you know, and it's continuing that trend

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Speaker 2: where we're on average we're getting thirty forty fifty thousand

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Speaker 2: jobs per month. It's a little bit of volatility there.

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Speaker 2: And the unployment rate, while it did tick up to

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Speaker 2: four point one percent, it's been basically four percent plus

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Speaker 2: or minus that point one for the last I think

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Speaker 2: it's fourteen or fifteen months now. So even though the

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Speaker 2: economy is slowing, even though wages growth is decelerating, we've

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Speaker 2: got from a historical perspective, a very very low unemployment rate.

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Speaker 1: It's Andrew Houser last week you mentioned him. Michelle Bilok

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Speaker 1: spoke on Friday. The economy is not in that bad

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Speaker 1: a spot. You'd like growth to be a little stronger,

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Speaker 1: but you know, four percent unemployment, inflation coming down ain't

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Speaker 1: too bad.

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Speaker 2: And this is a funny thing. You're quite right that,

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Speaker 2: you know, if you said to most economists or even

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Speaker 2: policy makers at a loan governments, if you could preside

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Speaker 2: over a period where inflation is two and a half

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Speaker 2: ish or expected to be two and a half percent

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Speaker 2: plus minus forecasting error, unemployment in the low fours, economic

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Speaker 2: growth sort of chugging along, not too hot, maybe a

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Speaker 2: little too cold, but you know, but still still growing,

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Speaker 2: with wages growth above the inflation rate. Now, so this

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Speaker 2: is not the punters, the consumers the work are sort

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Speaker 2: of feeling okay, that's not a bad outcome, but yeah,

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Speaker 2: a last week, consumers, we're still feeling miserable. You know,

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Speaker 2: consumer center and is still pretty soggy. And pretty weak,

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Speaker 2: and that cost of leaving crisis is still something that's

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Speaker 2: sort of dominating this economic discussion as oh did I

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Speaker 2: say it as we get closer to the election day.

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Speaker 1: Now this week it's I mean, it's a good week.

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Speaker 1: Next week's a great week, but this week's not bad

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Speaker 1: because we have the monthly inflation figures out end capex.

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Speaker 2: Yeah, two important numbers. The monthly inflation numbers. Again, they

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Speaker 2: look they somewhat they are less important than the quarterly figures,

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Speaker 2: but they still provide a really important update on that

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Speaker 2: momentum on a number of core prices if you like,

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Speaker 2: through the course of the quarter. So these are for

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Speaker 2: the month of January. Markets looking for a figure for

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Speaker 2: the headline, and indeed for the trim mean to be

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Speaker 2: just to round about that two point five two point

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Speaker 2: six percent. Again, there's a lot of volatility with petrol prices.

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Speaker 2: And this will include school fees. January is the month

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Speaker 2: that they tend to be recorded by the Bureau of Stats,

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Speaker 2: and I think if we read the nine papers which

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Speaker 2: loves focus and practicing the school fees, they've gone up

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Speaker 2: a lot. So this one's going to be probably just

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Speaker 2: confirming two and a half and then the capex. I

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Speaker 2: know that that's your favorite indicator. Business investment is the

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Speaker 2: driver of productivity and growth. We need businesses to be

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Speaker 2: spending on machinery, equipment, AI and all these other important

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Speaker 2: things to grow our economy and boost productivity. It's like

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Speaker 2: we'd be flat. I'm sorry, but the forecasts are that

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Speaker 2: we've just got the business sector, you know, just doing okay,

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Speaker 2: but not really ramping up that extra capex that we

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Speaker 2: need to grow the economy more rapidly over the more

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Speaker 2: medium term.

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Speaker 1: And then we'll talk about it next week. Then we

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Speaker 1: have GDP, which of course is a big one.

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Speaker 2: GDP next week and this is the week, and again

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Speaker 2: early the following week next week on Monday, we get

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Speaker 2: a few more bits and bobs that feed into that

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Speaker 2: GDP forecast.

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Speaker 1: For sure, Stavin, enjoy your week.

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Speaker 2: Thank you, Sean will do.

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Speaker 1: There was economist Stephen Kokulis better known as the Kirk.

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Speaker 1: You can find him at the cook dot com, and

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Speaker 1: followed him on excusing the handle of the Kirk. I'm

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Speaker 1: Shane Elmer, and this is hearing greed the weak ahead