1 00:00:05,240 --> 00:00:07,080 Speaker 1: Welcome to Fear and Greed the week ahead. I'm sure 2 00:00:07,080 --> 00:00:09,360 Speaker 1: in ail, Matt and as always I'm joined by economist 3 00:00:09,360 --> 00:00:11,719 Speaker 1: Stephen Cooculis. You'll find here m at the cook dot com, 4 00:00:11,720 --> 00:00:15,800 Speaker 1: tg kuk dot com, end x using the handle the 5 00:00:15,880 --> 00:00:16,480 Speaker 1: Kirk Stephen. 6 00:00:16,560 --> 00:00:19,200 Speaker 2: Good morning, very good morning, Sean cracking. 7 00:00:18,880 --> 00:00:22,080 Speaker 1: Wheed last week interest rate cut? Did they get better? 8 00:00:22,239 --> 00:00:22,720 Speaker 1: I don't think so. 9 00:00:23,400 --> 00:00:26,080 Speaker 2: It was fabulous the rate cut happened, and even though 10 00:00:26,079 --> 00:00:28,400 Speaker 2: everyone thought it was going to happen in one form 11 00:00:28,480 --> 00:00:31,240 Speaker 2: or another. A big shout out to Sally All from 12 00:00:31,480 --> 00:00:35,280 Speaker 2: NAB the chief economist who called fifty, and the fact 13 00:00:35,280 --> 00:00:38,800 Speaker 2: that the RBA considered fifty. The Governor Michelle Bullerch did 14 00:00:38,920 --> 00:00:41,360 Speaker 2: note that fifty was on the table, perhaps not for 15 00:00:41,360 --> 00:00:44,160 Speaker 2: a long time. Saw the bond market rally, the stock 16 00:00:44,200 --> 00:00:47,320 Speaker 2: market reacted positively to it. So a couple of things 17 00:00:47,320 --> 00:00:50,360 Speaker 2: to draw from that sort of decision and analysis from 18 00:00:50,400 --> 00:00:54,240 Speaker 2: the Reserve Bank is that another rate cuts on the table. 19 00:00:54,280 --> 00:00:57,640 Speaker 2: They were sort of close. We got vaguely close to 20 00:00:57,680 --> 00:00:59,720 Speaker 2: cutting fifty, so that means it won't take much in 21 00:00:59,760 --> 00:01:05,080 Speaker 2: the way of software economic data. Further news of slower inflation, 22 00:01:05,680 --> 00:01:08,679 Speaker 2: maybe a bit of fragility in the labor market data 23 00:01:08,680 --> 00:01:11,040 Speaker 2: for them to cut again next time. 24 00:01:11,200 --> 00:01:14,360 Speaker 1: Let's hope. So, let's hope. So we will actually find 25 00:01:14,400 --> 00:01:17,039 Speaker 1: out about some of that data this week because we 26 00:01:17,120 --> 00:01:20,240 Speaker 1: have the monthly CPI data out, Yeah. 27 00:01:19,800 --> 00:01:22,640 Speaker 2: And importantly indicator the Reserve Bank government. Again she noted 28 00:01:22,640 --> 00:01:25,440 Speaker 2: the monthly CPI and again tended to sort of downplay 29 00:01:25,480 --> 00:01:29,679 Speaker 2: it because it is not yet a comprehensive measurement of 30 00:01:29,680 --> 00:01:31,679 Speaker 2: the basket of goods and services that goes into the 31 00:01:31,800 --> 00:01:35,800 Speaker 2: quarterly CPI, however, and it's very important. However, it does 32 00:01:35,840 --> 00:01:38,080 Speaker 2: contain a lot of information on prices, a lot of 33 00:01:38,080 --> 00:01:41,080 Speaker 2: goods prices in particular, and we do know, just without 34 00:01:41,120 --> 00:01:43,120 Speaker 2: being too boring for a moment, a lot of prices 35 00:01:43,120 --> 00:01:45,640 Speaker 2: don't change every month. So things like school fees, you know, 36 00:01:46,000 --> 00:01:49,760 Speaker 2: they don't change every month, Things like other education fee, 37 00:01:49,800 --> 00:01:53,320 Speaker 2: things like electricity prices, they tend to be relatively stable 38 00:01:53,360 --> 00:01:55,680 Speaker 2: and don't change much, which is why the monthly numbers 39 00:01:55,720 --> 00:01:58,840 Speaker 2: tend to be a bit more either flat or volatile. 40 00:01:58,840 --> 00:02:01,480 Speaker 2: I know that sounds like a country victory thing, but anyway, 41 00:02:02,080 --> 00:02:03,840 Speaker 2: cutting through all that sort of stuff, we like to 42 00:02:03,840 --> 00:02:07,240 Speaker 2: see annual inflation headline terms continuing to sort of roll 43 00:02:07,280 --> 00:02:11,000 Speaker 2: along about three point four to three point five percent, 44 00:02:11,080 --> 00:02:14,959 Speaker 2: so right on the bullseye and the trim demain probably 45 00:02:15,000 --> 00:02:18,520 Speaker 2: holding it around about two point seven percent or thereabout. 46 00:02:18,560 --> 00:02:21,880 Speaker 2: So again another indicator that inflation's back into the two 47 00:02:21,919 --> 00:02:22,880 Speaker 2: to three percent band. 48 00:02:23,280 --> 00:02:25,560 Speaker 1: Now last week at the Reserve, back in the statement 49 00:02:25,800 --> 00:02:29,040 Speaker 1: afterwards and Michelle Bullock's press conference, there was more talk 50 00:02:29,080 --> 00:02:32,480 Speaker 1: about growth in the economy, so that whole focus on inflation, 51 00:02:33,160 --> 00:02:35,480 Speaker 1: it sort of shifted a bit. They're still talking about inflation, 52 00:02:35,560 --> 00:02:38,400 Speaker 1: but more talk about it growth. Now this week, we 53 00:02:38,480 --> 00:02:42,480 Speaker 1: have building approvals, we have CAPEX, which is business investment. 54 00:02:42,760 --> 00:02:44,760 Speaker 1: We have retail sales, so we have a bunch of 55 00:02:44,800 --> 00:02:46,960 Speaker 1: partial indicators about how the economy's going. 56 00:02:47,400 --> 00:02:49,919 Speaker 2: Yeah, really important indicators too. And you're quite right, the 57 00:02:49,960 --> 00:02:53,440 Speaker 2: government did well, didn't quite do the victory dance, and 58 00:02:53,520 --> 00:02:57,040 Speaker 2: inflation's under control and we can all sit back and relax. 59 00:02:57,680 --> 00:03:01,120 Speaker 2: She did note that one of the things that feeding 60 00:03:01,120 --> 00:03:04,079 Speaker 2: into their relative dubbishness in terms of the rate cut 61 00:03:04,160 --> 00:03:07,359 Speaker 2: and maybe more to come, was that their forecast for 62 00:03:07,440 --> 00:03:10,680 Speaker 2: household spending in particular has seen a lot of downside 63 00:03:10,720 --> 00:03:13,160 Speaker 2: to what they were suggesting three and six months before 64 00:03:13,200 --> 00:03:15,320 Speaker 2: that that they were sort of banking on, you know, 65 00:03:15,360 --> 00:03:18,520 Speaker 2: a rebound in household incomes, the fact that inflation was 66 00:03:18,560 --> 00:03:22,919 Speaker 2: falling as a booster real wages as a reason why 67 00:03:23,080 --> 00:03:25,799 Speaker 2: we consume as it start spending, and a lass that's 68 00:03:25,800 --> 00:03:28,400 Speaker 2: been pretty disappointing. So this week, as you said, we 69 00:03:28,440 --> 00:03:32,200 Speaker 2: get that retail sales numbers expected to show a small increase, 70 00:03:32,240 --> 00:03:35,600 Speaker 2: although we do note and other economists note, the timing 71 00:03:35,720 --> 00:03:39,119 Speaker 2: of the Easter and Anzac Day holidays were all sort 72 00:03:39,160 --> 00:03:41,800 Speaker 2: of in the middle of the latter part of April, 73 00:03:41,840 --> 00:03:43,880 Speaker 2: so that could lead to a bit of a quirky result, 74 00:03:43,960 --> 00:03:46,000 Speaker 2: so we'll watch out for that one, but a small 75 00:03:46,040 --> 00:03:48,960 Speaker 2: increase is likely. Building approvals they had a big eight 76 00:03:48,960 --> 00:03:52,240 Speaker 2: percent four last month, so again just statistical noise, we 77 00:03:52,240 --> 00:03:54,760 Speaker 2: think there should be something of a rebound occurring there. 78 00:03:55,200 --> 00:03:58,480 Speaker 2: And as you touched on everybody's favorite release, the private sector, 79 00:03:58,520 --> 00:04:02,640 Speaker 2: CAPEX numbers Investment the engine room of productivity enhancement. 80 00:04:03,080 --> 00:04:05,280 Speaker 1: You know the reason that I like that, it's because 81 00:04:05,320 --> 00:04:08,480 Speaker 1: I don't understand it, Like retail tries really easy to understand, 82 00:04:09,000 --> 00:04:12,600 Speaker 1: whereas CAPEX the four car I mean, I need someone 83 00:04:12,600 --> 00:04:13,960 Speaker 1: like you to explain it to me. That's why I 84 00:04:14,040 --> 00:04:15,000 Speaker 1: like that release so much. 85 00:04:15,160 --> 00:04:19,479 Speaker 2: CAPEX is investment in things like buildings and structures. So 86 00:04:19,560 --> 00:04:23,040 Speaker 2: it is hotels, it's office blocks, it's factories, it's warehouses, 87 00:04:23,520 --> 00:04:26,080 Speaker 2: it's university campuses. They're the sort of things that are 88 00:04:26,080 --> 00:04:31,280 Speaker 2: capital investment. And it's machinery and equipment, so a computer, 89 00:04:31,600 --> 00:04:37,520 Speaker 2: a lathe to people still use lads. It's trucks and 90 00:04:37,560 --> 00:04:39,400 Speaker 2: diggers and these sort of things. And if you've got 91 00:04:39,400 --> 00:04:42,240 Speaker 2: a spare thirty seconds, I'll explained why it's so so 92 00:04:42,480 --> 00:04:45,680 Speaker 2: important and so important about the productivity story is that 93 00:04:46,040 --> 00:04:48,839 Speaker 2: think of an example. If you're a mining company, you 94 00:04:48,920 --> 00:04:51,039 Speaker 2: employ ten people and you give them a pick of 95 00:04:51,040 --> 00:04:54,040 Speaker 2: shovel and a wheelbarrow. Okay, in your mining iron ore 96 00:04:54,040 --> 00:04:55,840 Speaker 2: in the pilbrick, you're not going to have a high 97 00:04:55,880 --> 00:04:58,960 Speaker 2: level of output. I don't think employ ten people. But 98 00:04:59,520 --> 00:05:02,400 Speaker 2: you in the in capital expenditure, you buy a couple 99 00:05:02,440 --> 00:05:05,200 Speaker 2: of really big diggers, a dump truck, and you build 100 00:05:05,200 --> 00:05:07,800 Speaker 2: the rail system to get the iron ore to the port. 101 00:05:08,080 --> 00:05:12,200 Speaker 2: Your productivity and your output will be massive. So that's 102 00:05:12,240 --> 00:05:14,960 Speaker 2: why CAPEX is the engine of the whole economy. Yeah, 103 00:05:15,040 --> 00:05:17,640 Speaker 2: consumer spending, housing, Yeah, we love all those indicators. But 104 00:05:17,880 --> 00:05:20,799 Speaker 2: it's really Capex and that's been the missing ingredient. Well, 105 00:05:21,080 --> 00:05:23,560 Speaker 2: I'll say for basically a decade. We've had a pretty 106 00:05:23,680 --> 00:05:27,080 Speaker 2: poor run on Capex for the best part of ten years, 107 00:05:27,120 --> 00:05:29,240 Speaker 2: and it'd be nice to see a plus sign on 108 00:05:29,240 --> 00:05:30,719 Speaker 2: that Capex number later this week. 109 00:05:30,960 --> 00:05:34,000 Speaker 1: It would Not only did we get a chat about 110 00:05:34,080 --> 00:05:37,320 Speaker 1: last week and a chat about economic growth, we also 111 00:05:37,360 --> 00:05:40,920 Speaker 1: got an economics lesson on business investment in Capex. This 112 00:05:41,000 --> 00:05:43,120 Speaker 1: has been one of the great weak ahead Stephen. 113 00:05:44,320 --> 00:05:47,279 Speaker 2: Thanks Sean, It's been lots of fun. And yeah, Capex Capex, 114 00:05:47,320 --> 00:05:49,080 Speaker 2: that's the name of the game. And in fact, you know, 115 00:05:49,080 --> 00:05:52,560 Speaker 2: if we believe Jim Chalmers post election sort of rhetoric 116 00:05:52,600 --> 00:05:55,280 Speaker 2: about where he sees his policy priorities, it's all about 117 00:05:55,279 --> 00:05:57,880 Speaker 2: productivity and as I mentioned, we want capex. So come on, 118 00:05:57,920 --> 00:06:01,280 Speaker 2: private sector, start investing, not only for your own sake, 119 00:06:01,320 --> 00:06:02,320 Speaker 2: but for the good of the country. 120 00:06:02,520 --> 00:06:03,360 Speaker 1: Enjoy the week Stephen. 121 00:06:03,480 --> 00:06:03,960 Speaker 2: Thanks John. 122 00:06:04,080 --> 00:06:06,279 Speaker 1: That was the economist Stephen Kokurla's better known as the kok. 123 00:06:06,360 --> 00:06:07,839 Speaker 1: You can find him at the cook dot com and 124 00:06:07,880 --> 00:06:10,440 Speaker 1: follow him on X using the handle the Kirk. I'm 125 00:06:10,440 --> 00:06:13,799 Speaker 1: Sean Elmer and this is here and greet the week ahead.