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Speaker 1: Welcome to Fear and Greed business news you can use. Today,

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Speaker 1: the federal government unveils the biggest overhaul of the Defense

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Speaker 1: Department in fifty years. The Medicines Regulator warns of potential

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Speaker 1: dire side effects of weight loss drugs, and mett. Cash

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Speaker 1: says it has lost three hundred and forty million dollars

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Speaker 1: in cigarette sales because of the illegal tobacco market. Plus

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Speaker 1: the ASX suffers another embarrassing outage, and consultancy group Accentia

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Speaker 1: takes corporate jargon to a whole new level. It is Tuesday,

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Speaker 1: the second of December twenty twenty five. I'm Michael Thompson

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Speaker 1: and good morning. Sean Aylmer.

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Speaker 2: Good morning, Michael.

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Speaker 1: Shown the main story this morning, the federal government will

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Speaker 1: create an independent agency to manage defense projects in what

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Speaker 1: it described as the biggest overhaul of the department in

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Speaker 1: fifty years.

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Speaker 2: In effect, the Department of Defense will be downsized considerably,

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Speaker 2: losing about forty percent of its budget, one quarter of

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Speaker 2: its employees, and responsibility for delivering major defense projects. Three

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Speaker 2: existing divisions of Defense, once called the Capability, Acquisition and

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Speaker 2: Sustainment Group. Doesn't that roll off the tongue capability acquis,

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Speaker 2: the Statement Group, the Guided Weapons and Explosives Ordnance Group,

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Speaker 2: which is kind of a cool group to be part of,

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Speaker 2: and the Naval Shipbuilding a sustainment group. They'll all shift

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Speaker 2: into a newly created Defense Delivery Agency, which will be

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Speaker 2: operational from July next year, independent from July twenty twenty seven.

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Speaker 2: There's been a bunch of reviews into defense that have

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Speaker 2: recommended the creation of an independent project management agency. Yesterday,

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Speaker 2: Acting Prime Minister Richard Miles, who of course is also

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Speaker 2: Defense Minister. He's acting because Anthony Abernezi and Jerdy Haydnen

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Speaker 2: are on their honeymoon. So Richard Miles said the changes

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Speaker 2: will greatly improve the quality of the defense spend. He

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Speaker 2: said it's one of the biggest changes to defense ever.

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Speaker 2: It also will theoretically provide better oversight on the fense budget. Now,

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Speaker 2: the fence budget is huge, fifty six billion dollars two

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Speaker 2: percent of GDP that scheduled to rise to about one

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Speaker 2: hundred billion dollars by twenty thirty four. So a little

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Speaker 2: bit of an oversight it's probably a very good thing.

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Speaker 1: Yeah, you're probably right. It sounds like a lot of money, right,

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Speaker 1: But Australia's defense budget, when you look at it as

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Speaker 1: a percentage of GDP, it is relatively small compared to

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Speaker 1: other countries.

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Speaker 2: Yes, even after the boost in spending over the next decade,

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Speaker 2: it will still be well short of what Donald Trump

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Speaker 2: reckons regional allies like Australia should spend. He thinks we

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Speaker 2: should be spending three and a half percent of GDP.

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Speaker 2: That would mean would have to probably add another two

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Speaker 2: hundred billion dollars or one hundred billion dollars on top

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Speaker 2: of a hundred billions we've already got. Trump demanded that

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Speaker 2: European allies increased spending to five percent of GDP. Now

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Speaker 2: they haven't done that yet, though Poland is pretty close

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Speaker 2: to it. But undoubtedly there's a surge in defense related spending.

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Speaker 2: Now a lot of that in Europe, and potentially here

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Speaker 2: includes infrastructure. So you might build bridges between islands in Spain,

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Speaker 2: for example, and that's considered defense spending because it actually

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Speaker 2: is creating a defensible peninsula, as the case may be.

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Speaker 2: But certainly a lot of pressure on defense spending and

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Speaker 2: as a result, you really need much much greater oversight.

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Speaker 2: And I don't think anyone's going to stand up there

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Speaker 2: and say hate the department. Department of Defense is the

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Speaker 2: role model for transparency. It's just not and the government's

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Speaker 2: trying to improve it.

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Speaker 1: So that bridge example, I think was Italy, wasn't it

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Speaker 1: with the bridge to Sicily and they were going to

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Speaker 1: call it as.

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Speaker 2: A it was literally I said Spain, yes, yeah.

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Speaker 1: And that particular one was, hey, this is going to

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Speaker 1: count towards increasing our GDP, which just sounds an awful

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Speaker 1: lot like creative accounting.

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Speaker 2: Well, it's interesting. I was speaking to an expert about

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Speaker 2: that and they said, no, no, no, it's actually okay

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Speaker 2: because if you have a bridge which Sicily becomes much

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Speaker 2: more defendable, so it actually is defense spending.

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Speaker 1: Also feels like it gives you something easy to target.

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Speaker 1: Target the tridge right anyway, just on the defense topic, though,

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Speaker 1: Richard Miles yesterday said that Australia is monitoring a naval

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Speaker 1: flotilla that is traveling through the Philippine Sea with an

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Speaker 1: unknown destination.

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Speaker 2: That's right, the Philippine seas well north of Australia. It's

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Speaker 2: north of Papua New Guinea in Indonesia. But the government

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Speaker 2: is keeping a very close watch on the flotilla. In

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Speaker 2: February this year. Of course, the Chinese fleet circumnavigated Australia

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Speaker 2: in act not considered friendly by the ALP government, and

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Speaker 2: it's going to be very close watch on this one.

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Speaker 1: Yeah, Okay, turning from defense to the markets, how do

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Speaker 1: the ASX go? Yesterday?

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Speaker 2: There's some PAX two hundred fell a little over half

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Speaker 2: a percent to eight five hundred and sixty five points.

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Speaker 2: Health Care stocks led the market lower. C as Hell

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Speaker 2: and Sigma both off one point four percent. Consumer staples

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Speaker 2: were also lower. The Big Bank dropped. Bit of rotation

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Speaker 2: going on at the moment, Michael out of financials into

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Speaker 2: materials that happened to gain yesterday. That's as a result

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Speaker 2: the HP Fortescu, Metals Group, Rio Tinto were all higher.

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Speaker 1: And plenty more to talk about later with the absolute

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Speaker 1: debarcle that went on yesterday for the ASX, but we'll

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Speaker 1: do that in a moment. Bitcoin has fallen back below

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Speaker 1: eighty six thousand US dollars a unit markets, fearing uncertainty,

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Speaker 1: particularly in the US economy.

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Speaker 2: That's right. Other cryptos fell as well. Ether was down

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Speaker 2: seven percent, Solano dropped eight percent. Otherwise, in global markets,

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Speaker 2: US President Donald Trump said he's decided on his pick

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Speaker 2: for the next Federal Reserve chair, and he expects that

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Speaker 2: nominee to deliver inter straight cuts. Don't know who that

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Speaker 2: might be, but we'll wait and see. In currency markets,

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Speaker 2: the Aussie dollar is trading about that sixty five and

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Speaker 2: a half US sense.

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Speaker 1: And that's the subject of today's Q and A Sean

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Speaker 1: coming up after the show. You're speaking with Ray Attrell

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Speaker 1: from NAB.

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Speaker 2: That's exactly right, Foreign currencies, the Asie dollar. I did

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Speaker 2: a thesis on the Aussie dollar when I did my

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Speaker 2: honors year at university.

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Speaker 1: Only finding this out now, well.

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Speaker 2: I don't think it was a very good thesis, but

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Speaker 2: it's kind of interesting. The Adsie doll. It matters so

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Speaker 2: much because it's the pricing mechanism for everything that goes

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Speaker 2: in and out of the country. Yet what drives it

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Speaker 2: is changing, and so you talk to Ray like, we're

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Speaker 2: always a commodities currency that seems to be changing, and

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Speaker 2: we talked to Ray about that. It's really really interesting,

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Speaker 2: particularly when you spend so much for your time doing

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Speaker 2: a thesis on foreign exchange.

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Speaker 1: Yeah, it's probably not. It's probably not the kind of

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Speaker 1: thing you open conversations with.

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Speaker 2: Is it like I did a thesis you like you'd

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Speaker 2: like to meet you know, at that age in your

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Speaker 2: early twenties and you're trying to meet people, and so

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Speaker 2: what's your thesis on the Aussie dollar? Never got me

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Speaker 2: very far, Never got me very far.

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Speaker 1: That's a one way ticket to single town anyway. Quick

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Speaker 1: freak back in a moment if the rest of the

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Speaker 1: day's business news sean. Australia's medicines regulator has issued a

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Speaker 1: safety warning over the risk of suicidal thoughts and behavior

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Speaker 1: linked to drugs known as GLP one receptor agonists, including

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Speaker 1: a zebic, most commonly yes.

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Speaker 2: The Therapeutic Goods Administration also said a link between some

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Speaker 2: GLP one drugs and reduced effectiveness of oral contraception could

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Speaker 2: not be ruled out. In a safety alert issued yesterday,

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Speaker 2: the TGA said it had updated warnings for the high

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Speaker 2: profile drugs used to treat type two diabetes and obesity.

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Speaker 2: So zepix one, wi gobi sexend Tulucity Monjaro is another

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Speaker 2: The alert read I quote. Patients taking these medicines should

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Speaker 2: tell their health professional if they experienced new or worsening depressions,

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Speaker 2: suicvital thoughts, or any unusual changes in mood or behavior.

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Speaker 2: The GLP one drugs have a very short track record,

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Speaker 2: some medical professionals have been very wary about the unknown

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Speaker 2: longer term side effects. Now the fact that the TJA

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Speaker 2: has come out and provided this warning means that they're

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Speaker 2: certainly taking it seriously.

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Speaker 1: Now. I mentioned before the break the ASX and the

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Speaker 1: situation it had yesterday, an outage yesterday morning that meant

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Speaker 1: around eighty companies couldn't put out announcements, which frustrated the

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Speaker 1: heck out of companies and investors alike.

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Speaker 2: The incident occurred just before nine am, stopped the release

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Speaker 2: of the announcements, some of which were time sensitive. It

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Speaker 2: lasted about three hours. Now shares started trading without any hiccups.

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Speaker 2: Perhaps the company hit most met cash the grocery wholesaler.

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Speaker 2: It was forced to place its shares into were trading

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Speaker 2: halt after being unable to release a presentation detailing its

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Speaker 2: first half results. It has been a tumultuous few years

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Speaker 2: at the ASEX Limited, from a filed upgrade of its

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Speaker 2: settlement systems to are damaging trading settlements outage, the release

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Speaker 2: of information saying TPG was buying a software development business

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Speaker 2: business was actually TPG Capital Asia. We have ASSEIC and

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Speaker 2: the Reserve Bank looking into it yesterday does not help

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Speaker 2: ax No, but it's.

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Speaker 1: Just a little bit more pressure. The you mentioned, Matt Cash. There,

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Speaker 1: management at met cash might have been unhappy about the outage,

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Speaker 1: and I suspect they were, but I reckon they'd be

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Speaker 1: even more unhappy about the reaction to their half year results.

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Speaker 1: Once shared trading began again, met Cash closed down more

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Speaker 1: than nine percent yesterday.

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Speaker 2: That's right. The grocery wholesale are best known for supplying

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Speaker 2: Ida stores, posted a small increase in half year revenue.

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Speaker 2: But but, but, but the big news, Michael, they lost

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Speaker 2: more than three one hundred and forty million dollars in

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Speaker 2: tobacco sales. Or tobacco sales were down that much. That's

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Speaker 2: because the illegal trade in cigarettes is so strong. The

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Speaker 2: black markets out con troll. It's hit Coals and Woolies,

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Speaker 2: Viva Energy, which owns Shell branded service stations, and poll Now.

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Speaker 2: The government's increased to baco excise by more than two

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Speaker 2: hundred and eighty per cent since twenty thirteen, pushing the

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Speaker 2: cost of a twenty five pack of cigarettes to about

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Speaker 2: fifty dollars thirty four of that fifty dollars goes to

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Speaker 2: the government. So people, I mean, beautiful example of supply

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Speaker 2: and demand. Right, the supply is there, but demand's not

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Speaker 2: because they're just too expensive. So the black market is thriving.

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Speaker 1: Sean on that. I was speaking to somebody recently, very

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Speaker 1: respected business person, and they were talking about the fact

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Speaker 1: that they are still a smoker, and they said that

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Speaker 1: they have started buying cigarettes black market cigarettes because the

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Speaker 1: cost difference is so extreme that it's less than half

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Speaker 1: the price of buying it from an official retailer and

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Speaker 1: paying all of the official excises and taxes and things.

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Speaker 1: And I thought, Okay, if this person is someone who

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Speaker 1: I would never expect to do that kind of thing

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Speaker 1: is doing it because the margin the difference is so great,

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Speaker 1: then there is seriously a problem there.

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Speaker 2: Yeah. Yeah, yeah, I don't know much about the economics

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Speaker 2: of it. I don't know where you buy cigarettes from

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Speaker 2: online and whether they're taxed or you know, whether it's

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Speaker 2: stolen property or whether it's actually not solen property but

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Speaker 2: just avoiding tax rates. I know nothing about it, but

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Speaker 2: clearly when you have you know, kind of reputable people

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Speaker 2: doing it, there's some issue.

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Speaker 1: Yeah, it might be one for fear and greed Q

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Speaker 1: and A. We could delve into that one in a

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Speaker 1: little bit more detail. Treasury Wine estates, shorn away from cigarettes,

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Speaker 1: has bowed to the inevitable, saying it will book a

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Speaker 1: significant non cash impairment against its US operations, with all

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Speaker 1: six hundred and eighty seven million dollars of America's good

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Speaker 1: will likely to be written off.

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Speaker 2: Really away from SIKI, is you know, like a red

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Speaker 2: Winer cigarette together?

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Speaker 1: Quite well, Yeah, it'll just picture you in that bar

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Speaker 1: to chat people up about your thesis.

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Speaker 2: That's right.

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Speaker 1: On the other hand, here you go, that's right.

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Speaker 2: Anyway, back to Treasury Whine, I say, six hundred and

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Speaker 2: eighty seven million dollars a lot of money that the

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Speaker 2: rite off includes the high profile nineteen crimes label could

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Speaker 2: be even bigger. The total once half here accounts of

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Speaker 2: finalized Treasury under former chief executive Tim Ford, spent billions

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Speaker 2: of dollars pushing into the US, including buying high end

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Speaker 2: California producer Dow Vineyards for one point six billion dollars.

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Speaker 2: He was hoping to turn that brand into another flagship

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Speaker 2: brand alongside Penfoles. Hasn't worked, Treasury said, The problem isn't

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Speaker 2: so much the underperformance of its assets in the US,

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Speaker 2: but more than Americans just aren't spending as much on wine,

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Speaker 2: and that's what's hurting them. Treasury share price is down

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Speaker 2: fifty percent this year, including one percent yesterday.

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Speaker 1: The biggest M and A deal on the local market

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Speaker 1: has been dumped, with private equity groups EQT and CBC

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Speaker 1: Capital Partners walking away from a billion dollar deal to

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Speaker 1: purchase insurance broker and underwriter AUB Group.

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Speaker 2: The two had spent a month doing due diligence, had

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Speaker 2: offered forty five dollars a share for the stock it

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Speaker 2: had been trading around thirty two bucks ahead of the bid.

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Speaker 2: The company, AUB's share price tumbled seventeen percent yesterday to

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Speaker 2: just under thirty one dollars now. AUB boss Mike Emmett

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Speaker 2: put on a brave face. He said the due diligence

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Speaker 2: had strengthened his conviction in his strategy. But your share

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Speaker 2: helds out there thought they're going to get forty five

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Speaker 2: bucks hens down to thirty one bucks. I hope they

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Speaker 2: have as much confidence in his strategy as Mike Emmett does.

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Speaker 1: That's a good way to put it. Turning to international

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Speaker 1: news now Sean severe weather across parts of Asia has

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Speaker 1: claimed nearly one thousand lives, with Indonesia and Sri Lanka

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Speaker 1: among the worst affected by heavy rainfall, flooding, and landslides.

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Speaker 2: Three top tropical cyclones, coinciding with the northeast monsoon that

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Speaker 2: typically brings heavy down Paul was too southeast days at

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Speaker 2: this time of year, have caused widespread destruction in the region.

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Speaker 2: Peninsula Malaysia and southern Thailand have also received significant above

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Speaker 2: normal rains in the past week, according to data from

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Speaker 2: the US Climate Prediction Center. In Indonesia's Sumatra Island, a

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Speaker 2: week of trenchial rains intensified by a rare cyclone has

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Speaker 2: left at least four hundred and forty two people dead,

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Speaker 2: another four hundred and two missing, and officials warned casualty

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Speaker 2: numbers will likely climb. That's according to Bloomberg, Storm Sena,

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Speaker 2: which circled the Strait of Mica last week, has now

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Speaker 2: dissipated over the South China Sea.

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Speaker 1: Finally, Sean mentioned this one at the top of the show.

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Speaker 1: Global consultancy Accenture eight hundred thousand staff have gone from

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Speaker 1: employees they've had a bit of a facelift. They're not

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Speaker 1: employees anymore. They're reinventors now sean, and they're part of

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Speaker 1: what the company calls its reinvention Services business.

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Speaker 2: So Accentsia now wants to be clients reinventure part reinvention

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Speaker 2: partner of choice by helping them to adopt to AI

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Speaker 2: tools that is the future. According to chief executive Julie Sweet,

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Speaker 2: she was an inventor of reinventor as it applies to

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Speaker 2: Accentua back in June, after the group united, it's I've

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Speaker 2: got to say this strategy consulting creative, technology and operations

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Speaker 2: units into a single business unit called Reinvention Services OUCH.

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Speaker 2: The consultancy wants to adopt to the explosion of AI

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Speaker 2: and wants to advise companies on adopting the technology. According

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Speaker 2: to a report in the Ft, you may smirk at this, Michael,

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Speaker 2: I do a little bit. Yeah. You might smirk at

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Speaker 2: the reinventors at Centure, but others have done similar things.

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Speaker 2: At Disney, remember employees became imaginee imagineers. Yes, yes, At

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Speaker 2: Amazon there's a bunch of people that became Ninja coders. Okay,

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Speaker 2: I'm all for it. I mean, we need to go

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Speaker 2: wider and deep dive to find some low hanging fruit.

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Speaker 2: When it comes to core comminencies, we need to move

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Speaker 2: the needle and during out deliverables and game changes and

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Speaker 2: we should circle back and make sure our ducks are

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Speaker 2: in a row.

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Speaker 1: Michael, did you see me scrambling for your microphone button

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Speaker 1: just trying to turn you off? Halfway through that I

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Speaker 1: could not find it?

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Speaker 2: I have. I've worked with people who, honestly, I don't

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Speaker 2: think they actually knew what they were talking about, but

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Speaker 2: they figured jug and get there there, and they are

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Speaker 2: very frustrating.

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Speaker 1: It's of smoke screen. Sometimes you can just if you're

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Speaker 1: throw enough of that stuff out there, you can generally

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Speaker 1: kind of bluff your way through most conversations. I've done

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Speaker 1: that with you before, Sean. Up next is Fear and

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Speaker 1: Greed Q and a Rayatreal from NAB is your guest

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Speaker 1: today is coming up in the Fear and grad playlist

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Speaker 1: on your podcast platform or at Fearangreed dot com dot au,

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Speaker 1: which also where you sign up for that free daily newsletter.

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Speaker 1: I'll put a link in the show notes as well.

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Speaker 1: Thank you, Sean, Thank you Michael. It's Tuesday. The two

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Speaker 1: of December twenty twenty five. Make sure you're following the

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Speaker 1: podcast and please join us online on LinkedIn, Instagram, x

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Speaker 1: TikTok and Facebook.

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Speaker 2: I'm Mike Thompson.

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Speaker 1: That was fair and great. Have a great day.