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Michael Thompson: Today on Fear and Greed, Reserve Bank boss Michelle Bullock

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Michael Thompson: hints that the next cut in interest rates could be

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Michael Thompson: some way off. Both political parties promised to spend billions

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Michael Thompson: of dollars on Medicare as, the unofficial election campaign ramps up,

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Michael Thompson: and last year's wonder float on the ASX Guzman Y Gomez

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Michael Thompson: gets hammered over week sales in the US, plus auction

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Michael Thompson: clearance rates bounce back, and two point four billion dollars

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Michael Thompson: worth of cryptocurrency has been stolen from a major exchange.

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Michael Thompson: Welcome to Fear and Greed, Daily business news for people

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Michael Thompson: who make their own decisions. It is Monday, the twenty

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Michael Thompson: fourth of February twenty twenty five. I'm Michael Thompson and

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Michael Thompson: good morning Sean Aylmer.

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Sean Aylmer: Good morning, Michael.

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Michael Thompson: Sean Big show today the main story this morning. Reserve

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Michael Thompson: Bank Governor Michelle Bullock appeared before Parliament on Friday, and

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Michael Thompson: she warned that if there were too many rate cuts,

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Michael Thompson: inflation pressures could re emerge, undermining three years of hard work.

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Sean Aylmer: She said, the Board's cautious about the prospect of future

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Sean Aylmer: rate cuts. Of course we had one last week. The

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Sean Aylmer: first time we got a rate cut in more than

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Sean Aylmer: four years. The Bank isn't committed to any particular course

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Sean Aylmer: of action. The Central Bank is targeting an inflation rate

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Sean Aylmer: of two and a half percent, she said, that's the

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Sean Aylmer: midpoint of the two to three percent. When asked about that,

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Sean Aylmer: she was pretty specific, saying that two and a half.

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Sean Aylmer: We're not targeting two point seven, We're targeting two and

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Sean Aylmer: a half. She also added that services inflation, that until

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Sean Aylmer: the end of last year have been pretty persistent, is

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Sean Aylmer: finally coming back under control. Miss Bullock said Donald Trump's

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Sean Aylmer: tariffs will be a negative for economic growth in Australia,

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Sean Aylmer: but the effect on inflation is less clear. There's pros

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Sean Aylmer: and cons on that one. All the uncertainty surrounding the

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Sean Aylmer: Trump administration's policies could well damage the global economy and

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Sean Aylmer: that won't help Australia. She said.

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Michael Thompson: As far as interest rate cuts go, she really has

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Michael Thompson: just doubled down on the messaging from the press conference

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Michael Thompson: after the cut last week, because she really came out

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Michael Thompson: and tried to hose down any excitement after that cut,

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Michael Thompson: and she's really doubled down on that in Parliament.

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Sean Aylmer: Yeah, she sure has. She clearly cut rates last week

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Sean Aylmer: with sort of one hand, thinking the good idea, the

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Sean Aylmer: other hand thinking I'm not so sure whether we should

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Sean Aylmer: be doing that.. And so she is at pains to

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Sean Aylmer: say all this did was reverse a rate hike of

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Sean Aylmer: kind of November twelve months ago, and that's all. It is,

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Sean Aylmer: no more than that, as they don't read any more

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Sean Aylmer: into it.

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Michael Thompson: The other thing that I thought was interesting coming out

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Michael Thompson: of that appearance on Friday was that she pointed to

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Michael Thompson: low income renters being the cohort hardest hit by the

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Michael Thompson: effect of cost of living pressures during the past couple

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Michael Thompson: of years.

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Sean Aylmer: Yes, so she talked about the big increase in rents,

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Sean Aylmer: then you add inflation on top of that. She said

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Sean Aylmer: that low income renters are a group that's often forgotten,

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Sean Aylmer: but they've been hit really hard by what's gone on.

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Sean Aylmer: Miss Bullock said the unemployment figures out last week, which

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Sean Aylmer: shows a big jump in full time employment, underscores the

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Sean Aylmer: need to be cautious on rates. She's also committed to

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Sean Aylmer: keeping cash in the economy. Fewer and fewer people, of

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Sean Aylmer: course, are using cash, meaning the movement of money. The movement

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Sean Aylmer: of cash is becoming uneconomical. The banks use it, so

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Sean Aylmer: too Aussie Post, some of the big retailers like Wesfarmer's Bunnings,

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Sean Aylmer: those sorts of people. But the company that moves the

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Sean Aylmer: cash around basically said it's uneconomical. They've had a bailout

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Sean Aylmer: package from government, and Miss Bullock said we will make

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Sean Aylmer: sure cash still runs through the economy. She also conceded

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Sean Aylmer: that the Central Bank under her predecessor, Philip Lowe was

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Sean Aylmer: late to the party when it came to interest rate increases.

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Sean Aylmer: Of course, the Reserve Bank acted well later than most

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Sean Aylmer: other central banks. She added, the Reserve Bank doesn't want

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Sean Aylmer: to be late again when cutting interest rates.

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Michael Thompson: Sean, we are entering the final week of the December

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Michael Thompson: half (phew!) earnings season. It's been a big few weeks,

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Michael Thompson: hasn't it? It has, and the ASX hasn't done so

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Michael Thompson: well during the first couple of weeks of reporting.

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Sean Aylmer: No so it was down three percent last week, mostly

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Sean Aylmer: on the back of an eight percent drop by the

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Sean Aylmer: banks or the Banking index at least. That's the worst

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Sean Aylmer: week for the banks since the coronavirus outbreak almost five

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Sean Aylmer: years ago. Of course, the banks were priced for perfection,

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Sean Aylmer: but disappointing results from National Australia Bank, less so from Westpac Bank,

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Sean Aylmer: Bendingo and Adelaide were disappointing as well. That triggered a

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Sean Aylmer: selloff across the sector. The big three miners REO, BHP

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Sean Aylmer: and Fotescue Metals also disappointed. So in Australia, when you

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Sean Aylmer: get the banks disappointing and the miners disappointing and the selloff,

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Sean Aylmer: the whole market goes backwards. Doesn't look a lot better. Today.

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Sean Aylmer: Wall Street fell one point seven percent over the weekend.

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Sean Aylmer: The NASDAQ was actually off two point two percent, but

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Sean Aylmer: the S and P five hundred was off that one

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Sean Aylmer: point seven percent. It was the worst session all this

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Sean Aylmer: year thus far, So it doesn't augur well for our

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Sean Aylmer: local market. When trading begins at ten am.

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Michael Thompson: That's a big drop on Wall Street. What happened there?

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Sean Aylmer: Well, the Trump glow is wearing off just a bit.

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Sean Aylmer: There are reports over the weekend showing consumer and business

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Sean Aylmer: sentiment in the US fell this month. That's on the

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Sean Aylmer: back of the tariff threats. Now, tariff's mean manufacturers in

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Sean Aylmer: the US will have to pay more for imports, pay

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Sean Aylmer: more for their inputs into the products they make. That'll

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Sean Aylmer: hurt earnings among consumers. They're worried that the tariffs will

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Sean Aylmer: push up prices and they'll start to climb at a

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Sean Aylmer: faster rate. So both consumer and business sentiment has come

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Sean Aylmer: off there and that hurt Wall Street. Adding to those

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Sean Aylmer: concerns were the world's biggest retailer, Walmart, late last week

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Sean Aylmer: forecast lower than expected profit all on the back of

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Sean Aylmer: uncertainly around consumer behaviour and costs, exactly the same as

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Sean Aylmer: that consumer sentiment business sentiment surveys. Running through the numbers,

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Sean Aylmer: the Aussie dollars buying about sixty three and a half

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Sean Aylmer: US cents at the moment, Bitcoin is around ninety five thousand

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Sean Aylmer: US dollars a unit, gold is at twenty nine forty an ounce,

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Sean Aylmer: and oil's off nearly three percent about seventy two US

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Sean Aylmer: dollars a barrel.

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Michael Thompson: We mentioned reporting season, Sean, and immediately after the show,

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Michael Thompson: we have a great interview coming up with Wesfarmers Managing

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Michael Thompson: director Rob Scott. It's part of our partnership with Osby's,

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Michael Thompson: which is Australia's leading provider of live and on demand

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Michael Thompson: video of the latest news in Australian business markets, economy,

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Michael Thompson: start ups, pretty much everything you can sign up for

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Michael Thompson: free at Ausbiz dot com dot Au. But this is

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Michael Thompson: a great chat, this one.

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Sean Aylmer: Yes, it's a very frank conversation I think from the

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Sean Aylmer: boss of Wessfarmers, Rob Scott. He talks about the growth

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Sean Aylmer: of Kmart's Anko brand. He talks about Bunning's pushing the

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Sean Aylmer: pet care right through to what went wrong with online

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Sean Aylmer: retailer Catch, which of course they closed down, and what

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Sean Aylmer: the rival of Chemist Warehouse on the ASX means for

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Sean Aylmer: Priceline Pharmacies which Wesfarmers owns. It's a great chat.

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Michael Thompson: Yeah, it certainly is. It is coming up after the show,

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Michael Thompson: so stick around for that one. Lots more still to come.

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Michael Thompson: A talking about the election campaign heating up with this

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Michael Thompson: focus on bulk billing, which is very interesting. Some great

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Michael Thompson: results from weekend auctions at two point four billion dollar

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Michael Thompson: crypto theft, So much still to come. We'll be back

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Michael Thompson: in a moment with the rest of the day's business news.

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Michael Thompson: Sean, Medicare will be a centerpiece of the upcoming election campaign,

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Michael Thompson: with Prime Minister Anthony Albernese promising to spend about eight

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Michael Thompson: and a half billion dollars over four years to boost

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Michael Thompson: payments to doctors who don't charge out of pocket expenses

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Michael Thompson: for patients.

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Sean Aylmer: Bulk billing is back Michael, or at least that's what

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Sean Aylmer: the ALP wants, assuming it is re elected. The goal

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Sean Aylmer: is to lift the rate of bulk bill doctor visits

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Sean Aylmer: from seventy eight percent today to ninety percent by twenty thirty,

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Sean Aylmer: which brings me to the point seventy eight percent today.

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Sean Aylmer: Why is it that I can only find the twenty

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Sean Aylmer: two percent that don't bulk bill?

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Michael Thompson: It does feel very, very hard to find a bulk

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Michael Thompson: billing doctor these days, even with kids. Yeah, I'm surprised

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Michael Thompson: at the number of people that are still charging kind

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Michael Thompson: of full rates for kids. Now I'm like, oh, this hurts.

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Sean Aylmer: It hurts, it really really does. Healthcare is one of

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Sean Aylmer: those issues that Labor thinks it's got its nose in

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Sean Aylmer: front on. Tony Abbott, the former coalition leader, the former Prime Minister,

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Sean Aylmer: tried to wine back Medicare and the Coalition is definitely

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Sean Aylmer: seen as less friendly towards Medicare. However, Opposition leader Peter

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Sean Aylmer: Dutton was pretty quick yesterday to come and match Labor's

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Sean Aylmer: bulk billing pledge, so all that money to improve bulk

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Sean Aylmer: billing or the availability of bulk billing seems to be

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Sean Aylmer: pledged no matter who wins the next election. The coalition,

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Sean Aylmer: I would say, is working really hard to look like

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Sean Aylmer: it supports universal healthcare. So apart from matching the Medicare pledge,

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Sean Aylmer: they're also matching the ALPs five hundred and seventy three

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Sean Aylmer: million dollars for a women's health package supporting the government's

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Sean Aylmer: one point seven billion dollars for public hospitals. Then, on

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Sean Aylmer: top of that, the coalition's promised half a billion dollars

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Sean Aylmer: to boost the number of psychology appointments that can be

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Sean Aylmer: claimed under Medicare.

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Michael Thompson: Just a quick one. Federal Treasurer Jim Chalmers is on

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Michael Thompson: his way to Washington to discuss the potential of tariff's

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Michael Thompson: on Australian exports to the US.

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Sean Aylmer: He'll be talking to his opposite number, Scott Bessant, who

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Sean Aylmer: is the Treasury Secretary. Tariff will be front and center,

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Sean Aylmer: though mister Chalmers yesterday said he doesn't really expect the

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Sean Aylmer: resolution during his trip. No doubt.

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Michael Thompson: It was the first proper weekend of auctions this year.

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Michael Thompson: Sean very exciting and you got to say it is

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Michael Thompson: incredible what an interest rate cut can do. Right? The

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Michael Thompson: national preliminary clearance rate came in at seventy two point

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Michael Thompson: one percent. That is the best since July last year.

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Sean Aylmer: Incredible, isn't it? Almost three thousand auctions. The clearance rate in

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Sean Aylmer: Sydney was seventy four percent, seventy two percent in Melbourne,

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Sean Aylmer: Adelaide and Canberra are pretty good too. Brisbane was a touch weak.

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Sean Aylmer: That means we've had two seventy percent clearance rates in

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Sean Aylmer: a row. Now when you adjust that, that'll come down

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Sean Aylmer: to low sixties. It is quite phenomenal when buyers get

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Sean Aylmer: confident that interest rates are going to fall. So obviously

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Sean Aylmer: we had the fall during last week, but even ahead

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Sean Aylmer: of that everyone expected it to happen. Just how more

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Sean Aylmer: buoyant the property market becomes.

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Michael Thompson: Yeah. It really is quite extraordinary, especially when the interest

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Michael Thompson: rate cut itself was only very very small, isn't it. It

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Michael Thompson: just goes to show that that enthusiasm is suddenly back right.

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Sean Aylmer: Yeah, sure is.

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Michael Thompson: Now, American real estate giant Costar has made a four

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Michael Thompson: dollars twenty a share bid for Domain, a thirty five

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Michael Thompson: percent premium to its most recent close that values the

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Michael Thompson: bid at two point seven billion dollars.

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Sean Aylmer: And Domains Board said it is considering the offer. The

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Sean Aylmer: US group has already built a significant stake in the

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Sean Aylmer: local company, which has struggled over the past years. Market

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Sean Aylmer: value has dropped by four percent over the last twelve months. REA,

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Sean Aylmer: the big competitor, up forty percent. That was before news

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Sean Aylmer: of the bid. When the bid hit, Domain's share price

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Sean Aylmer: jumped forty percent. REA fell eleven percent. Key to the outcome

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Sean Aylmer: will be controlling shareholder Nine Entertainment which owns about sixty

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Sean Aylmer: percent of Domain. It said it's considering the proposal. Its

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Sean Aylmer: share price jumped twenty percent on Friday. Co Star is

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Sean Aylmer: listed on Nasdaq, says it is the world's largest real

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Sean Aylmer: estate information company. Been on a bit of a buying

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Sean Aylmer: spree recently, purchasing a British group called on the Market

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Sean Aylmer: for about two hundred million dollars last year.

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Michael Thompson: I mentioned this one earlier. Sean Guzman Y Gomez, the

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Michael Thompson: biggest float of twenty twenty four, the one that everyone

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Michael Thompson: got really excited about, has reported earnings higher than expectations

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Michael Thompson: for the six months to the end of December, but

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Michael Thompson: that didn't prevent a sell off.

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Sean Aylmer: No. Same store sales were up nine percent, in part

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Sean Aylmer: due to the popularity of the twelve dollar chicken meal, Michael,

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Sean Aylmer: high breakfast turnover and more delivery orders. Also helping, it's

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Sean Aylmer: eleven twenty four x seven outlets. However, the group didn't provide

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Sean Aylmer: forward guidance and said that sales fell or losses widen

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Sean Aylmer: at its five US stores. Now by the close, Guzman's

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Sean Aylmer: share price was down fourteen percent. Guzman had an incredible

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Sean Aylmer: run last year, but it's an expensive stock relative to

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Sean Aylmer: some of its competitors Domino's, for example. Much of its

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Sean Aylmer: valuation is about the promise of future growth, especially in

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Sean Aylmer: the US. Investors are now worried that the promise of

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Sean Aylmer: that growth won't come to fruition, particularly in the US,

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Sean Aylmer: hence the big sell off on Friday.

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Michael Thompson: Why wouldn't it provide forward guidance?

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Sean Aylmer: Because it's the uncertainty. So if you're particularly in the

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Sean Aylmer: US at the moment, if you're going to have tariffs

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Sean Aylmer: in the US, I don't quite know how that affects.

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Sean Aylmer: Most of the inputs into Guzman Y Gomez would be locally sourced,

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Sean Aylmer: you would think, but you don't know. And there's just

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Sean Aylmer: so much uncertainty about operating in that environment at the moment.

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Michael Thompson: Okay, all right, and so and suddenly by not providing

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Michael Thompson: forward guidance, it creates even more uncertainty as well.

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Sean Aylmer: So, investors like CEOs that come out and say we reckon

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Sean Aylmer: in the next six months this is going to happen.

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Michael Thompson: Okay, one more Sean, before we get to international news.

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Michael Thompson: QBE has posted a higher net profit and lifted its

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Michael Thompson: dividend after paying out fewer claims for natural catastrophes over

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Michael Thompson: the past year.

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Sean Aylmer: Not a lot of great results last week QBE. I

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Sean Aylmer: don't know whether it was great, but it was a

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Sean Aylmer: very good result. For the full year ending December twenty

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Sean Aylmer: twenty four, the group made two point eight billion dollars.

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Sean Aylmer: It expects premium growth in the mid single digits in

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Sean Aylmer: the upcoming year. For last year, QBE, which operates extensively

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Sean Aylmer: in the US, said it expects exposure from the Los

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Sean Aylmer: Angeles wildfires last month. The total around two hundred million dollars.

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Sean Aylmer: Its year price closed up three percent on Friday.

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Michael Thompson: Turning to international news, Now, this story, Sean, is really

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Michael Thompson: quite extraordinary. Over the weekend, the Trump administration sent emails

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Michael Thompson: to US federal government employees, which is essentially the equivalent

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Michael Thompson: of the Australian Public Service, telling them to detail their

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Michael Thompson: work accomplishments from the previous week or risk losing their jobs.

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Sean Aylmer: The emails came shortly after Elon Musk, the billionaire head

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Sean Aylmer: of the Trump administration's Department of Government Efficiency, posted on

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Sean Aylmer: the social media site x that not responding to the

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Sean Aylmer: email would be viewed as a resignation. According to report

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Sean Aylmer: on Reuter's, Mask issued his post just hours after President

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Sean Aylmer: Donald Trump posted on his own social media network, The

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Sean Aylmer: Truth Social that Doge the Department of Government Efficiency should

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Sean Aylmer: get more aggressive in its attempts to downsize and reshape

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Sean Aylmer: the two point three million strong federal workforce. It's unclear

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Sean Aylmer: what legal basis MASK has to terminate federal workers if

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Sean Aylmer: they don't respond to his request. What would happen to

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Sean Aylmer: employees that can't detail confidential work? In some cases, it

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Sean Aylmer: means it's impossible for them to do so. Workers at

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Sean Aylmer: the Consumer Financial Protection Bureau, for example, they receive the email.

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Sean Aylmer: Most of those staff have been ordered not to perform

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Sean Aylmer: any tasks since early this month. Kind of creates a

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Sean Aylmer: conundrum when three weeks ago they said do not do anything,

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Sean Aylmer: and now they said if you haven't done anything, you're

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Sean Aylmer: going to get fired. You kind of have to wonder

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Sean Aylmer: what point this sort of behaviour, it certainly will crack

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Sean Aylmer: people and you really feel sorry for the individuals, but

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Sean Aylmer: also for the general population to see this, they must

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Sean Aylmer: realise at some point that this is just irrational.

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Michael Thompson: This has got to be unprecedented. Really, what we're seeing

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Michael Thompson: here that is that is staggering. So we'll see how

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Michael Thompson: that one plays out throughout the rest of the week.

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Michael Thompson: One last one to finish off on Sean and this

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Michael Thompson: is this is huge. Actually, Crypto Exchange Bybit said it

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Michael Thompson: was hacked, resulting in what analysts estimate was the loss

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Michael Thompson: of almost two point four billion dollars worth of tokens

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Michael Thompson: in the biggest theft ever experienced in the industry.

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Sean Aylmer: A hacker took control of one of Bybit's offline ethereum wallets,

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Sean Aylmer: and estimated one point four to six billion US, two

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Sean Aylmer: point four billion Aussie in assets flowed out of the wallet

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Sean Aylmer: in a series of suspicious transactions, according to Bloomberg. Research

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Sean Aylmer: firm Arkham Intelligence confirmed about one point four but in

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Sean Aylmer: US in outflows from the exchange, saying the funds have

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Sean Aylmer: begun to move to new addresses where they are being sold.

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Sean Aylmer: The hack is the largest ever crypto theft, according to Elliptic,

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Sean Aylmer: which is a blockchain analytics firm. It passes the six

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Sean Aylmer: hundred and eleven US stole from Poly Network in twenty

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Sean Aylmer: twenty one. It could well be the biggest financial theft ever.

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Michael Thompson: That is huge. That is just yeah, the largest incident ever,

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Michael Thompson: not just crypto. It was one report I was reading.

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Michael Thompson: It's just just makes you realise that the scale of

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Michael Thompson: this Sean has been a big show. We've had a

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Michael Thompson: lot to get through. It's going to be a big The Wek Ahead.

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Michael Thompson: Pp next is Fear and Greed The Weak Ahead featuring

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Michael Thompson: resident economist Stephen Koukoulas, because there is a lot happening.

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Sean Aylmer: Yes, his pulse is racing from last week. Then we

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Sean Aylmer: start talking to him about this week and things like inflation,

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Sean Aylmer: monthly inflation figures come out. He's very excited about that too.

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Sean Aylmer: And Steven plus an election. I mean, plenty going on

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Sean Aylmer: for The Kouk at the moment.

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Michael Thompson: Oh yeah, there certainly is. And it is basically must

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Michael Thompson: listen material because it helps you to prepare for what's

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Michael Thompson: coming up in the week ahead. And after that Fear

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Michael Thompson: and Greed Daily Interview with Wesfarmers Rob Scott. Plenty of

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Michael Thompson: good listening coming up in the Fear and Greed playlist

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Michael Thompson: on your podcast platform or at Fearangreed dot com dot au,

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Michael Thompson: which is also where we can sign up for our

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Michael Thompson: free weekly newsletter. It's coming out on Wednesday. Thank you

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Michael Thompson: very much, Sean.

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Sean Aylmer: Thank you, Michael.

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Michael Thompson: It's Monday, the twenty fourth of February twenty twenty five.

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Michael Thompson: Make sure you're following the podcast and please join us

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

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Michael Thompson: Thompson and that was Fear and Greed. Have a great day.