1 00:00:05,360 --> 00:00:08,160 Sean Aylmer: Welcome to the Fear and Greed Business Interview. I'm Sean Aylmer. 2 00:00:08,360 --> 00:00:12,000 Sean Aylmer: Last week's tariff announcement by US President Donald Trump sent 3 00:00:12,160 --> 00:00:16,560 Sean Aylmer: global markets reeling, nations scrambled to respond to the widespread tariffs, 4 00:00:16,640 --> 00:00:20,079 Sean Aylmer: The risk of US recession increased, and investors watched as 5 00:00:20,200 --> 00:00:22,840 Sean Aylmer: trillions of dollars of value was wiped from Wall Street. 6 00:00:23,280 --> 00:00:25,160 Sean Aylmer: So what are we supposed to make it all now? 7 00:00:25,200 --> 00:00:28,440 Sean Aylmer: And how to investors navigate what's become a very nervous, 8 00:00:28,720 --> 00:00:32,800 Sean Aylmer: very fragile environment. Doctor Shane Oliver, chief economist and head 9 00:00:32,840 --> 00:00:36,320 Sean Aylmer: of investment Strategy at AMP, joins me this morning. Shane, 10 00:00:36,360 --> 00:00:37,440 Sean Aylmer: Welcome back to Fear and Greed. 11 00:00:37,680 --> 00:00:39,080 Dr Shane Oliver: Thank you, Sean. Great to be here. 12 00:00:39,640 --> 00:00:42,120 Sean Aylmer: Are we going to see a recession in the US? 13 00:00:42,159 --> 00:00:43,800 Sean Aylmer: That seems to be the big question. 14 00:00:44,880 --> 00:00:46,960 Dr Shane Oliver: I certainly think it is the big question. I think 15 00:00:46,960 --> 00:00:49,280 Dr Shane Oliver: it's getting close to fifty to fifty, to be honest 16 00:00:49,280 --> 00:00:53,800 Dr Shane Oliver: with you. Obviously, my assessment regarding that has been changing 17 00:00:53,920 --> 00:00:58,160 Dr Shane Oliver: rapidly over the last few days. These tariffs are very, 18 00:00:58,280 --> 00:01:01,080 Dr Shane Oliver: very onerous. It is the US on the rest of 19 00:01:01,080 --> 00:01:03,600 Dr Shane Oliver: the world. So the US will experience the bulk of 20 00:01:03,720 --> 00:01:07,119 Dr Shane Oliver: this eruption. It affects all imports coming into the US, 21 00:01:07,160 --> 00:01:10,840 Dr Shane Oliver: whereas when you're thinking about Europe or China, it's not 22 00:01:10,920 --> 00:01:14,280 Dr Shane Oliver: affecting all of their exports, which is good for those countries. 23 00:01:14,319 --> 00:01:16,959 Dr Shane Oliver: So the hit to the US I think will at 24 00:01:17,040 --> 00:01:20,800 Dr Shane Oliver: least be one percent of their GDP, potentially more depending 25 00:01:20,800 --> 00:01:23,800 Dr Shane Oliver: on how retaliation goes and other things along the way, 26 00:01:24,120 --> 00:01:26,040 Dr Shane Oliver: whereas the hit to other parts of the world will 27 00:01:26,080 --> 00:01:29,440 Dr Shane Oliver: be substantially less than that. But it is a big 28 00:01:29,480 --> 00:01:32,520 Dr Shane Oliver: grag and obviously the US is the world's biggest economy. 29 00:01:32,520 --> 00:01:34,920 Dr Shane Oliver: If it goes into recession, that's bad news for the 30 00:01:34,959 --> 00:01:37,800 Dr Shane Oliver: global economy and really bad news for us as well. 31 00:01:38,400 --> 00:01:40,760 Sean Aylmer: So how does that transmit to Australia? What do you 32 00:01:40,760 --> 00:01:44,480 Sean Aylmer: think the impact will be on Australia as things stand now, 33 00:01:44,640 --> 00:01:47,000 Sean Aylmer: and that's important to make that point because it is 34 00:01:47,000 --> 00:01:47,639 Sean Aylmer: ever changing? 35 00:01:48,760 --> 00:01:51,320 Dr Shane Oliver: As things stand now, I think the main impact is 36 00:01:51,400 --> 00:01:55,360 Dr Shane Oliver: perhaps maybe zero point five percent hit to growth, far 37 00:01:55,440 --> 00:01:57,480 Dr Shane Oliver: less than in the US. Obviously there's a lot of 38 00:01:57,480 --> 00:02:00,520 Dr Shane Oliver: debate about Australian exports to the US, but I think 39 00:02:00,560 --> 00:02:02,400 Dr Shane Oliver: that's a bit of a sideshow and the great scheme 40 00:02:02,440 --> 00:02:05,720 Dr Shane Oliver: of things. It's horrible for the industries being affected, including 41 00:02:05,720 --> 00:02:09,120 Dr Shane Oliver: our farmers, but we have about twenty four billion dollars 42 00:02:09,160 --> 00:02:11,679 Dr Shane Oliver: of exports that go to the US annually. Still and 43 00:02:11,720 --> 00:02:14,320 Dr Shane Oliver: our Dominium that already faced twenty five percent tariff. Now 44 00:02:14,400 --> 00:02:17,000 Dr Shane Oliver: they're less than one billion dollars of that. So we're 45 00:02:17,000 --> 00:02:20,440 Dr Shane Oliver: looking at a much bigger set of industries and exports 46 00:02:20,440 --> 00:02:23,400 Dr Shane Oliver: that will now be affected. Pharmaceuticals haven't yet been included, 47 00:02:23,440 --> 00:02:25,760 Dr Shane Oliver: but that's only a matter of time. I think Trump 48 00:02:25,800 --> 00:02:27,800 Dr Shane Oliver: excluded them because I think he's planning to put a 49 00:02:27,800 --> 00:02:30,760 Dr Shane Oliver: bigger tariff on them, maybe twenty five percent. So it 50 00:02:30,760 --> 00:02:33,400 Dr Shane Oliver: looks like Australia was in spared on the calculation that 51 00:02:33,440 --> 00:02:36,720 Dr Shane Oliver: Trump put through justifying his ten percent, which applies to 52 00:02:36,760 --> 00:02:40,200 Dr Shane Oliver: everything except still and our Dominium. The fact that we 53 00:02:40,240 --> 00:02:42,919 Dr Shane Oliver: have a trade deficit with America, they have a surplus 54 00:02:42,960 --> 00:02:46,919 Dr Shane Oliver: with us. We buy more from them than they buy 55 00:02:46,919 --> 00:02:49,640 Dr Shane Oliver: from us. That seemed to be totally irrelevant. Just decided 56 00:02:49,639 --> 00:02:52,359 Dr Shane Oliver: they'll whack a ten percent tariff on so it's really 57 00:02:52,400 --> 00:02:54,720 Dr Shane Oliver: hard for us to get out of that. I can't see what 58 00:02:54,840 --> 00:02:56,880 Dr Shane Oliver: here is to bargain on because we already have a 59 00:02:57,360 --> 00:03:00,000 Dr Shane Oliver: trade deficit with them. But in any case, that's where 60 00:03:00,040 --> 00:03:02,880 Dr Shane Oliver: we just put all that in context. That twenty four 61 00:03:02,880 --> 00:03:05,560 Dr Shane Oliver: billion dollars is less than one percent of our GDP. 62 00:03:06,160 --> 00:03:08,320 Dr Shane Oliver: The exports are not barred from the US. They can 63 00:03:08,360 --> 00:03:10,600 Dr Shane Oliver: still go there, they'll be a little bit less competitive 64 00:03:10,600 --> 00:03:13,720 Dr Shane Oliver: at most. At most you may be looking. At one point two 65 00:03:13,760 --> 00:03:15,959 Dr Shane Oliver: percent hit the economy from that, but I think it's 66 00:03:16,080 --> 00:03:19,160 Dr Shane Oliver: probably less than that. The bigger threats. The bigger threat 67 00:03:19,240 --> 00:03:24,720 Dr Shane Oliver: comes from slower growth resulting in Korea, China, Japan, Europe, 68 00:03:25,280 --> 00:03:28,440 Dr Shane Oliver: and more broadly the US, just resulting in less global 69 00:03:28,520 --> 00:03:32,040 Dr Shane Oliver: trade and less demand for our rural material exports, particularly 70 00:03:32,040 --> 00:03:35,520 Dr Shane Oliver: going to places like China. So that's where the damage 71 00:03:35,560 --> 00:03:38,040 Dr Shane Oliver: will come from. A lot of people seem to think, well, 72 00:03:38,080 --> 00:03:40,720 Dr Shane Oliver: the tariffs will lead to inflation. I think that's goblet begooped. 73 00:03:40,720 --> 00:03:43,280 Dr Shane Oliver: They're ignoring that the tariffs are being imposed at the 74 00:03:43,320 --> 00:03:46,320 Dr Shane Oliver: border in the US. It's a tariff, a tax, basically 75 00:03:46,360 --> 00:03:49,160 Dr Shane Oliver: a tax. This will be a record tax collection tax 76 00:03:49,200 --> 00:03:51,600 Dr Shane Oliver: hike in the US. It's equivalent of about six hundred 77 00:03:51,680 --> 00:03:54,760 Dr Shane Oliver: billion US dollars the amount of tax there they're going 78 00:03:54,840 --> 00:03:57,320 Dr Shane Oliver: to be collecting in the US from those tariffs. So 79 00:03:57,880 --> 00:04:00,680 Dr Shane Oliver: but trouble is Trump is totally wrong. It's not charged 80 00:04:00,720 --> 00:04:04,600 Dr Shane Oliver: on foreigners. It's Americans who will pay it. But that 81 00:04:04,680 --> 00:04:06,560 Dr Shane Oliver: adds to the US inflation, but it doesn't add to 82 00:04:06,560 --> 00:04:10,560 Dr Shane Oliver: our inflation. If anything, we may benefit from more cheaper 83 00:04:10,600 --> 00:04:13,280 Dr Shane Oliver: goods coming to Australia that previously went to the US. 84 00:04:13,720 --> 00:04:15,720 Dr Shane Oliver: But the main risk is the hit to growth, and 85 00:04:15,800 --> 00:04:19,000 Dr Shane Oliver: of course that then in turn adds potentially to the 86 00:04:19,000 --> 00:04:21,240 Dr Shane Oliver: amount by which the RBA will cut interest rates. 87 00:04:21,600 --> 00:04:24,200 Sean Aylmer: So before we get to the Reserve Bank, is there 88 00:04:24,200 --> 00:04:28,240 Sean Aylmer: any economic rationale for what Donald Trump is doing? And 89 00:04:28,320 --> 00:04:32,279 Sean Aylmer: some of his advisors, Treasury Secretary Scott Bessant for example, 90 00:04:32,680 --> 00:04:33,560 Sean Aylmer: they're no fools. 91 00:04:33,800 --> 00:04:34,800 Dr Shane Oliver: Well, I don't know. 92 00:04:36,560 --> 00:04:40,720 Sean Aylmer: Fair comment! why is he doing it? Everyone's looking at 93 00:04:40,720 --> 00:04:43,080 Sean Aylmer: this and you read about saying this is crazy, right, 94 00:04:43,160 --> 00:04:46,039 Sean Aylmer: But surely there's some strategy behind it. 95 00:04:46,360 --> 00:04:49,400 Dr Shane Oliver: Yeah, I know, And I tick wondering that now we're 96 00:04:49,400 --> 00:04:52,719 Dr Shane Oliver: all saying he's nuts. Maybe there's some sense to it, 97 00:04:52,800 --> 00:04:55,120 Dr Shane Oliver: method to the madness, so to speak. There's all sorts 98 00:04:55,160 --> 00:04:58,680 Dr Shane Oliver: of different theories being espoused. I mean, the basic view 99 00:04:58,800 --> 00:05:02,719 Dr Shane Oliver: I think is that Trump is a form of mercantilist. He thinks that, 100 00:05:03,440 --> 00:05:05,840 Dr Shane Oliver: you know, you should have trade barriers up and try 101 00:05:05,880 --> 00:05:07,400 Dr Shane Oliver: and have all production in the US. 102 00:05:08,040 --> 00:05:08,140 Sean Aylmer: Very 1910. 103 00:05:08,140 --> 00:05:11,920 Dr Shane Oliver: We have came back to the nineteen fifties, you know, 104 00:05:12,120 --> 00:05:14,640 Dr Shane Oliver: like it was in happy days in American graffiti and 105 00:05:14,720 --> 00:05:16,960 Dr Shane Oliver: cars were made in America and everyone drove a Chevy 106 00:05:16,960 --> 00:05:20,120 Dr Shane Oliver: and a Caddy and played with Hula hoops. But I think that 107 00:05:20,160 --> 00:05:23,080 Dr Shane Oliver: world is long gone, and there's lots of things that 108 00:05:23,160 --> 00:05:26,599 Dr Shane Oliver: America doesn't produce as well as other countries can. For example, 109 00:05:26,600 --> 00:05:28,680 Dr Shane Oliver: we get this example all the time. You know, we 110 00:05:28,800 --> 00:05:31,800 Dr Shane Oliver: produced beef which is fairly lean because it's grass fed. 111 00:05:31,880 --> 00:05:34,360 Dr Shane Oliver: Their beef is grain fed, so it's a lot fattier, 112 00:05:34,400 --> 00:05:39,239 Dr Shane Oliver: so it gets blended in MacDonald's beef patties meat paddies. 113 00:05:39,279 --> 00:05:41,919 Dr Shane Oliver: So there's a bit of a complementarity to it there. 114 00:05:42,080 --> 00:05:45,039 Dr Shane Oliver: The aluminium that we export to the US, it grew, 115 00:05:45,120 --> 00:05:47,080 Dr Shane Oliver: but it mainly grew because they couldn't get it out 116 00:05:47,120 --> 00:05:49,560 Dr Shane Oliver: of Russia anymore as a result of war with Ukraine, 117 00:05:49,560 --> 00:05:51,760 Dr Shane Oliver: so there was a reason for that. They seem to have this 118 00:05:51,839 --> 00:05:54,560 Dr Shane Oliver: hatred of anything coming from offshore, and they want to 119 00:05:54,560 --> 00:05:56,120 Dr Shane Oliver: see it come back to the US. But I think 120 00:05:56,120 --> 00:05:58,400 Dr Shane Oliver: that will just in Polish American and I'll end up 121 00:05:58,440 --> 00:06:01,200 Dr Shane Oliver: the lower living standard. Paul Keating and others worked this 122 00:06:01,240 --> 00:06:03,280 Dr Shane Oliver: out many years ago. We could keep the trade barriers 123 00:06:03,360 --> 00:06:05,160 Dr Shane Oliver: up there forever do the same thing as the US, 124 00:06:05,200 --> 00:06:08,800 Dr Shane Oliver: perhaps make it such that I can trade in my 125 00:06:08,920 --> 00:06:11,440 Dr Shane Oliver: existing Holden for a new one, which I can't do 126 00:06:11,480 --> 00:06:13,240 Dr Shane Oliver: at present, and we might all be a little bit 127 00:06:13,240 --> 00:06:15,560 Dr Shane Oliver: happier with that, but ultimately I think our quality of 128 00:06:15,600 --> 00:06:17,960 Dr Shane Oliver: life will go down. And we saw right through that 129 00:06:18,000 --> 00:06:20,120 Dr Shane Oliver: period of people were voting with their feet. We had 130 00:06:20,400 --> 00:06:23,760 Dr Shane Oliver: Holdens and Fords and Chryslers and things, but people weren't 131 00:06:23,760 --> 00:06:27,000 Dr Shane Oliver: buying the imports. Likewise with clothes and all sorts of 132 00:06:27,000 --> 00:06:30,520 Dr Shane Oliver: other things. The ideal world is one where a particular 133 00:06:30,520 --> 00:06:33,560 Dr Shane Oliver: country focuses on things where they have a comparative advantage, 134 00:06:33,920 --> 00:06:36,720 Dr Shane Oliver: and they import things that other countries have an advantage. 135 00:06:36,760 --> 00:06:42,400 Dr Shane Oliver: And that's Ricardian economics. Basically economics 101. But Trump seems to have 136 00:06:42,600 --> 00:06:44,920 Dr Shane Oliver: upended that and thinks that he can just bring all 137 00:06:44,960 --> 00:06:48,159 Dr Shane Oliver: production back to the US. But I think he's grossly mistaken. 138 00:06:48,560 --> 00:06:51,560 Dr Shane Oliver: I don't see any logic in their so called reciprocal tariffs. 139 00:06:51,600 --> 00:06:56,040 Dr Shane Oliver: I saw the calculation there. It's pure nonsense. Why Norfolk Island is in there 140 00:06:56,120 --> 00:06:58,640 Dr Shane Oliver: just just highlights how stupid the whole thing is. 141 00:06:58,960 --> 00:07:02,720 Sean Aylmer: They've been been dropped. They've been dropped apparently, but they 142 00:07:02,720 --> 00:07:04,159 Sean Aylmer: were there for forty eight hours or so. 143 00:07:04,560 --> 00:07:06,520 Dr Shane Oliver: Yeah, and then they'd taken off. But how it even got 144 00:07:06,560 --> 00:07:09,279 Dr Shane Oliver: there in the first place was just pure stupidity. I 145 00:07:09,279 --> 00:07:11,120 Dr Shane Oliver: don't see any sense in this. A lot of people say, oh, 146 00:07:11,200 --> 00:07:13,440 Dr Shane Oliver: let's go back to the past. You know, America was 147 00:07:13,520 --> 00:07:16,240 Dr Shane Oliver: dreaming of the nineteen fifties. In the seventies, you know, 148 00:07:16,280 --> 00:07:18,840 Dr Shane Oliver: going through a tough time, so they started watching American Graffiti, 149 00:07:18,960 --> 00:07:22,440 Dr Shane Oliver: and Happy Days and Laverne and Shirley. But it's impossible that 150 00:07:22,520 --> 00:07:25,360 Dr Shane Oliver: world is gone. If you bring production back to the US, 151 00:07:25,360 --> 00:07:27,440 Dr Shane Oliver: and it will take years and decades to do that, 152 00:07:27,720 --> 00:07:29,160 Dr Shane Oliver: you're going to end up with a lot of jobs 153 00:07:29,160 --> 00:07:31,920 Dr Shane Oliver: for robots. And then when you ask Americans what do 154 00:07:31,960 --> 00:07:33,360 Dr Shane Oliver: you want to do? What sort of job do you 155 00:07:33,400 --> 00:07:35,160 Dr Shane Oliver: want to do? None of them say work on a 156 00:07:35,160 --> 00:07:37,520 Dr Shane Oliver: production line in a factory. That's not what people want 157 00:07:37,520 --> 00:07:40,240 Dr Shane Oliver: to do these days. Australians don't say that. I know, 158 00:07:40,280 --> 00:07:42,400 Dr Shane Oliver: you end up doing things you maybe didn't dream of doing, 159 00:07:42,400 --> 00:07:45,320 Dr Shane Oliver: but that's not what people dream of doing. We've moved on 160 00:07:45,400 --> 00:07:47,720 Dr Shane Oliver: from that. The other aspect is America has a four 161 00:07:47,760 --> 00:07:50,320 Dr Shane Oliver: percent unemployment rate. It's pretty hard to say that all 162 00:07:50,360 --> 00:07:54,120 Dr Shane Oliver: their jobs have been stolen and gone somewhere else when 163 00:07:54,120 --> 00:07:56,720 Dr Shane Oliver: they've got a four percent unemployment, right, you know, some 164 00:07:56,760 --> 00:07:58,480 Dr Shane Oliver: would say they've still got a bit of a shortage 165 00:07:58,480 --> 00:08:02,080 Dr Shane Oliver: of workers and now banning immigrants and yeah, kind of 166 00:08:02,080 --> 00:08:05,560 Dr Shane Oliver: bring factories back, we'll just make that situation worse. The other 167 00:08:05,600 --> 00:08:07,800 Dr Shane Oliver: aspect is I get it. Yeah, there's some parts of 168 00:08:07,800 --> 00:08:11,920 Dr Shane Oliver: America that have really struggled as a result of the industrialization, 169 00:08:12,600 --> 00:08:14,920 Dr Shane Oliver: and that's been really tough for American workers. You could 170 00:08:15,040 --> 00:08:18,960 Dr Shane Oliver: argue the Hillbilly Elergy that reflects it to that to 171 00:08:19,000 --> 00:08:22,120 Dr Shane Oliver: some degree. But then I sort of think about places 172 00:08:22,200 --> 00:08:28,240 Dr Shane Oliver: like Geelong Newcastle in Australia. These were big industrial cities. You 173 00:08:28,320 --> 00:08:31,240 Dr Shane Oliver: go to Newcastle thirty forty years ago, you'd look across 174 00:08:31,280 --> 00:08:33,280 Dr Shane Oliver: the river there and see the steel works and the 175 00:08:34,160 --> 00:08:37,000 Dr Shane Oliver: bit of an iffy placed here. Now go there and Geelong 176 00:08:37,040 --> 00:08:38,640 Dr Shane Oliver: they look really, really nice. 177 00:08:39,200 --> 00:08:39,341 Sean Aylmer: Reinvented. 178 00:08:39,341 --> 00:08:42,400 Dr Shane Oliver: They've moved on, and that's what has to happen in America, 179 00:08:42,400 --> 00:08:44,440 Dr Shane Oliver: and I don't know why they can't move on from 180 00:08:44,440 --> 00:08:49,200 Dr Shane Oliver: it and recognize that manufacturing has been commodified. It's something 181 00:08:49,240 --> 00:08:52,440 Dr Shane Oliver: that you do in countries with very low labour costs 182 00:08:52,520 --> 00:08:54,640 Dr Shane Oliver: and that you don't necessarily want to go back to 183 00:08:54,679 --> 00:08:55,400 Dr Shane Oliver: those days. 184 00:08:55,800 --> 00:08:57,679 Sean Aylmer: Stay with me, Shane will be back in a minute 185 00:08:57,720 --> 00:08:59,760 Sean Aylmer: to talk about what it means on interest rates and 186 00:08:59,760 --> 00:09:00,840 Sean Aylmer: what it needs for investors. 187 00:09:07,040 --> 00:09:11,120 Sean Aylmer: I'm speaking to doctor Shane Oliver from AMP. Interest Rates. Shane, 188 00:09:11,200 --> 00:09:13,360 Sean Aylmer: what's it mean for local interest rates? 189 00:09:14,080 --> 00:09:16,160 Dr Shane Oliver: Well, I think they were going to go down anyway, 190 00:09:16,200 --> 00:09:18,920 Dr Shane Oliver: but this just adds to the case. The threat to 191 00:09:19,480 --> 00:09:22,360 Dr Shane Oliver: growth is far bigger than any threat to the higher 192 00:09:22,400 --> 00:09:27,120 Dr Shane Oliver: inflation flowing from the tariffs. We're not going to retaliate. The Aussie 193 00:09:27,160 --> 00:09:29,840 Dr Shane Oliver: dollar is actually proving quite resilient so far, so it's 194 00:09:29,880 --> 00:09:33,200 Dr Shane Oliver: not collapsing. If anything's coming down, it's the US dollar. It 195 00:09:33,200 --> 00:09:36,360 Dr Shane Oliver: seems like there's a rush out of the US going on 196 00:09:36,440 --> 00:09:38,800 Dr Shane Oliver: here as investors think this isn't so good for America. 197 00:09:39,160 --> 00:09:40,840 Dr Shane Oliver: But I think this just adds the case for the 198 00:09:40,920 --> 00:09:42,960 Dr Shane Oliver: RBA to cut. We were looking at two more cuts 199 00:09:42,960 --> 00:09:46,440 Dr Shane Oliver: this year and one more next year in February. First 200 00:09:46,520 --> 00:09:49,439 Dr Shane Oliver: next cut coming in May. I think we'll certainly get 201 00:09:49,440 --> 00:09:51,360 Dr Shane Oliver: a cut in May. Now the money market has a 202 00:09:51,480 --> 00:09:54,480 Dr Shane Oliver: greater than one hundred percent probability of a cut in May, 203 00:09:54,880 --> 00:09:57,880 Dr Shane Oliver: and I think that will be justified anyway by lower inflation. 204 00:09:58,040 --> 00:10:01,480 Dr Shane Oliver: But there's now a good chance will get maybe more 205 00:10:01,840 --> 00:10:03,520 Dr Shane Oliver: a couple more by the end of the year rather 206 00:10:03,559 --> 00:10:06,320 Dr Shane Oliver: than just one more so that's the bottom line, lower 207 00:10:06,400 --> 00:10:09,400 Dr Shane Oliver: interest rates and so there is a silver lining to 208 00:10:09,400 --> 00:10:11,760 Dr Shane Oliver: the cloud here for many Australians who are seeing this 209 00:10:11,800 --> 00:10:14,040 Dr Shane Oliver: horrible news out of the US that those with a 210 00:10:14,080 --> 00:10:16,440 Dr Shane Oliver: mortgage might actually end up with lower interest rates than 211 00:10:16,440 --> 00:10:17,720 Dr Shane Oliver: would otherwise have been the case. 212 00:10:18,080 --> 00:10:20,479 Sean Aylmer: What about investors, what's the advice for investors. 213 00:10:20,920 --> 00:10:22,920 Dr Shane Oliver: Well, I'm a little bit fearful that in the short 214 00:10:22,960 --> 00:10:25,760 Dr Shane Oliver: term markets can still have another leg down. We've seen 215 00:10:25,800 --> 00:10:28,120 Dr Shane Oliver: one leg down which was on the back of fears 216 00:10:28,200 --> 00:10:32,240 Dr Shane Oliver: around the tariffs. Where yet to see hard economic data 217 00:10:32,600 --> 00:10:35,000 Dr Shane Oliver: showing the impact of those tariffs, but that's likely to 218 00:10:35,040 --> 00:10:37,720 Dr Shane Oliver: become apparent in the next few months and that could 219 00:10:37,800 --> 00:10:40,840 Dr Shane Oliver: lead to another leg down in markets. So far as 220 00:10:40,880 --> 00:10:44,120 Dr Shane Oliver: we talk, the US share markets down about twelve percent 221 00:10:44,160 --> 00:10:46,680 Dr Shane Oliver: from its high, Global shares it down about eleven percent, 222 00:10:46,760 --> 00:10:49,400 Dr Shane Oliver: and the Aussie share markets down around ten percent, and 223 00:10:49,480 --> 00:10:51,680 Dr Shane Oliver: the great scheme of things that's a bit of a 224 00:10:51,720 --> 00:10:56,120 Dr Shane Oliver: non events twenty I know you media types, I'm saying 225 00:10:56,400 --> 00:10:58,400 Dr Shane Oliver: talking tell us about the billions that were wiped off 226 00:10:58,440 --> 00:11:01,559 Dr Shane Oliver: the market with great excitement, But a ten percent fall 227 00:11:01,600 --> 00:11:03,640 Dr Shane Oliver: from the top, you can say it's just a normal correction, 228 00:11:04,200 --> 00:11:07,040 Dr Shane Oliver: and you think back to twenty twenty two, markets fell 229 00:11:07,280 --> 00:11:09,400 Dr Shane Oliver: sixteen percent in the US market had a twenty five 230 00:11:09,400 --> 00:11:13,040 Dr Shane Oliver: percent full twenty twenty. Both are about thirty five percent 231 00:11:13,400 --> 00:11:15,640 Dr Shane Oliver: back to the GFC fifty five percent. So these things do 232 00:11:15,840 --> 00:11:18,000 Dr Shane Oliver: happen. What we've seen so far is quite mild, but the 233 00:11:18,080 --> 00:11:21,560 Dr Shane Oliver: risk is still on the downside. We'll have more downside here. 234 00:11:21,920 --> 00:11:23,960 Dr Shane Oliver: Mon't be in a straight line, I don't think, but 235 00:11:24,080 --> 00:11:26,640 Dr Shane Oliver: I suspect you've got to see more pain in America 236 00:11:27,000 --> 00:11:29,120 Dr Shane Oliver: to get Donald Trump to back down a little bit. He's not 237 00:11:29,160 --> 00:11:31,880 Dr Shane Oliver: going to pay much attention to just a ten percent fall, 238 00:11:32,080 --> 00:11:34,800 Dr Shane Oliver: but if it's fifteen I've been saying a greater than 239 00:11:34,800 --> 00:11:38,199 Dr Shane Oliver: fifteen percent correction here, fifteen percent plus if it's fifteen 240 00:11:38,280 --> 00:11:41,600 Dr Shane Oliver: or twenty or headlines a about a bear market, then he's likely 241 00:11:41,640 --> 00:11:46,400 Dr Shane Oliver: to respond, particularly given increasing pressure from Republican politicians. So 242 00:11:47,320 --> 00:11:49,199 Dr Shane Oliver: I think in some ways, yeah, we might have to 243 00:11:49,200 --> 00:11:51,440 Dr Shane Oliver: see a further fall just to get Donald Trump to 244 00:11:51,480 --> 00:11:54,320 Dr Shane Oliver: back down a little bit, see some sense coming through 245 00:11:54,360 --> 00:11:56,080 Dr Shane Oliver: and more of a focus on his tax cuts and 246 00:11:56,120 --> 00:11:58,160 Dr Shane Oliver: deregulation rather than on the negatives. 247 00:11:58,480 --> 00:11:59,718 Sean Aylmer: Shane, thank you for talking to Fear adn Greed. 248 00:12:00,520 --> 00:12:01,280 Dr Shane Oliver: My pleasure, Sean. 249 00:12:01,480 --> 00:12:03,840 Sean Aylmer: That was Doctor Shane Oliver, Chief Economist and Head of 250 00:12:03,960 --> 00:12:06,880 Sean Aylmer: Investment Strategy at AMP. This is the Fear and Greed 251 00:12:06,920 --> 00:12:10,120 Sean Aylmer: Business Interview. Remember this is general information only, and should 252 00:12:10,120 --> 00:12:13,839 Sean Aylmer: always seek professional advice before making investment decisions. Join us 253 00:12:13,840 --> 00:12:16,040 Sean Aylmer: every morning for the full episode of Fear and Greed 254 00:12:16,120 --> 00:12:18,720 Sean Aylmer: and daily business news for people who make their own decisions. 255 00:12:18,880 --> 00:12:20,920 Sean Aylmer: I'm Sean Aylmer. Enjoy your day.