1 00:00:05,280 --> 00:00:07,200 Speaker 1: Welcome to Fear and Greed the week Ahead. I'm Sean 2 00:00:07,280 --> 00:00:10,680 Speaker 1: Alma and as always i'm joined by economist Stephen Coucoulis. 3 00:00:10,760 --> 00:00:12,719 Speaker 1: You'll find him at the Cook dot com, t h 4 00:00:12,800 --> 00:00:16,360 Speaker 1: E k O UK, thecook dot com and on X 5 00:00:16,680 --> 00:00:18,960 Speaker 1: using to handle the Kirk Stephen, good morning. 6 00:00:19,040 --> 00:00:21,600 Speaker 2: Good morning. I'm still recovering from the AFL Grand File. 7 00:00:21,680 --> 00:00:22,280 Speaker 2: What a game. 8 00:00:22,880 --> 00:00:23,759 Speaker 1: It was a great game. 9 00:00:23,840 --> 00:00:25,919 Speaker 2: Yeah, no Melbourne things, but it was still still a 10 00:00:25,920 --> 00:00:26,360 Speaker 2: good event. 11 00:00:26,760 --> 00:00:30,040 Speaker 1: Yes you're a Melbourne man nowadays. Now tell me. Last 12 00:00:30,080 --> 00:00:34,320 Speaker 1: week cracking week for the economy. We saw the Reserve 13 00:00:34,400 --> 00:00:36,479 Speaker 1: Bank come out and tell us what they thought, and 14 00:00:36,520 --> 00:00:39,000 Speaker 1: then we had those inflation numbers which were kind of 15 00:00:39,600 --> 00:00:42,040 Speaker 1: I mean, okay, it's easy to just sort of say, look, 16 00:00:42,040 --> 00:00:44,720 Speaker 1: don't worry about it the headline inflation rate. But the 17 00:00:44,800 --> 00:00:45,720 Speaker 1: numbers weren't too bad. 18 00:00:45,760 --> 00:00:48,080 Speaker 2: Really, they were quite good. So starting with the RBA, 19 00:00:48,200 --> 00:00:50,839 Speaker 2: now clearly they don't want a cut rates. Now they 20 00:00:50,920 --> 00:00:54,120 Speaker 2: happened to sort of avoid the discussion of rate hikes. 21 00:00:54,160 --> 00:00:56,840 Speaker 2: I think the Governor was asked explicitly whether the board 22 00:00:56,880 --> 00:01:00,000 Speaker 2: meeting earlier that day on Tuesday last week, considered rate hikes, 23 00:01:00,000 --> 00:01:02,120 Speaker 2: and she's effectively said no, we were just sort of 24 00:01:02,160 --> 00:01:04,759 Speaker 2: looking at the economy trying to update our risk profile. 25 00:01:05,480 --> 00:01:08,120 Speaker 2: They didn't embrace ray cuts either. That was a genuine 26 00:01:08,360 --> 00:01:12,000 Speaker 2: neutral assessment of where they are on monetary policy. Now, 27 00:01:12,720 --> 00:01:14,920 Speaker 2: that was all fine and andy. It went pretty much 28 00:01:14,959 --> 00:01:17,080 Speaker 2: through to the key, but there's no real surprises there 29 00:01:17,120 --> 00:01:20,640 Speaker 2: for US economists. But over the next day we saw 30 00:01:20,680 --> 00:01:23,520 Speaker 2: the inflation numbers. Now they work for the month of August, 31 00:01:23,560 --> 00:01:26,919 Speaker 2: and we know the monthly figures are not comprehensive, they're volatile, 32 00:01:27,000 --> 00:01:29,280 Speaker 2: and all these other caveats that are there, and there's 33 00:01:29,280 --> 00:01:32,080 Speaker 2: an even bigger caveat with these ones in that they 34 00:01:32,080 --> 00:01:36,920 Speaker 2: included the effects of that electricity subsidy, and that trimmed 35 00:01:37,360 --> 00:01:40,360 Speaker 2: about zero point five percentage points off the monthly CBI 36 00:01:40,760 --> 00:01:44,120 Speaker 2: about seventeen percent the electricity prices well because about seventy 37 00:01:44,120 --> 00:01:46,560 Speaker 2: five dollars subsidy from the Commons and a few other 38 00:01:46,600 --> 00:01:50,120 Speaker 2: substies from state governments. But nonetheless we still saw headline 39 00:01:50,120 --> 00:01:52,960 Speaker 2: inflation back to the targets two point seven percent. Daniel 40 00:01:53,000 --> 00:01:56,200 Speaker 2: turns the trimmed mean, which of course the ABA loves 41 00:01:56,240 --> 00:01:59,680 Speaker 2: to go on about, did decelerate to three point four 42 00:01:59,680 --> 00:02:02,160 Speaker 2: percent from three point eight, and the momentum seems to be, 43 00:02:02,640 --> 00:02:04,280 Speaker 2: you know, we're on track to get to get that 44 00:02:04,280 --> 00:02:06,640 Speaker 2: below three not too distant future. 45 00:02:07,040 --> 00:02:09,959 Speaker 1: Yeah, I mean the momentum is certainly with those hoping 46 00:02:10,000 --> 00:02:12,960 Speaker 1: for a rate cut, if not late this year, certainly 47 00:02:13,000 --> 00:02:13,680 Speaker 1: early next. 48 00:02:13,520 --> 00:02:15,920 Speaker 2: Year indeed, and that's when the markets settled. You know, 49 00:02:15,919 --> 00:02:18,640 Speaker 2: there was a bit of volatility with the governor's talk, 50 00:02:18,720 --> 00:02:21,760 Speaker 2: with global events, and of course with the inflation data itself. 51 00:02:21,800 --> 00:02:24,079 Speaker 2: But you know, as we sort of kick off this week, 52 00:02:24,120 --> 00:02:27,040 Speaker 2: there's still a high probability. We're at about seventy five 53 00:02:27,080 --> 00:02:29,720 Speaker 2: percent chance you will take of a rate cut before 54 00:02:29,760 --> 00:02:34,320 Speaker 2: Christmas in Australia. So that's a pretty decent probability for 55 00:02:34,400 --> 00:02:36,919 Speaker 2: the December meeting rather than the November meeting of the 56 00:02:37,040 --> 00:02:39,880 Speaker 2: RB eight war. Then when we get into twenty twenty five, 57 00:02:40,360 --> 00:02:43,200 Speaker 2: there's about roughly one hundred and twenty five points of 58 00:02:43,240 --> 00:02:45,640 Speaker 2: rate cuts from today priced into the end of twenty 59 00:02:45,720 --> 00:02:48,359 Speaker 2: twenty five, so taking the cash rate to the low 60 00:02:48,440 --> 00:02:52,200 Speaker 2: threes on the back of weak growth and as we mentioned, 61 00:02:52,240 --> 00:02:56,000 Speaker 2: that inflation rate finally getting back to the target range. 62 00:02:55,800 --> 00:02:57,720 Speaker 1: Let's hope. So now, I like this week, there's a 63 00:02:57,760 --> 00:03:00,959 Speaker 1: week every month in the world of bureau statistics and 64 00:03:01,000 --> 00:03:04,840 Speaker 1: economies where you get all these partial indicators building approvals, 65 00:03:04,960 --> 00:03:08,520 Speaker 1: retail trade, trade, and this is the week, Steven. 66 00:03:08,639 --> 00:03:11,480 Speaker 2: It is the week. And yes they're not the sort 67 00:03:11,480 --> 00:03:14,880 Speaker 2: of slammed dark economic indicators are going to change anyone's view, 68 00:03:14,880 --> 00:03:16,959 Speaker 2: including of the reserve back. But they are, as you said, 69 00:03:16,960 --> 00:03:19,680 Speaker 2: the building blocks into where the economy is going in 70 00:03:19,720 --> 00:03:22,720 Speaker 2: different segments of the economy. So to retail trade, first, 71 00:03:22,760 --> 00:03:25,640 Speaker 2: we had a pretty disappointing result in July that figures 72 00:03:25,680 --> 00:03:29,000 Speaker 2: were dead flat, and that's when the income tax payments 73 00:03:29,160 --> 00:03:31,799 Speaker 2: came through. So back at the time, people were looking 74 00:03:31,840 --> 00:03:34,079 Speaker 2: for a bit of an increase. This time around, maybe 75 00:03:34,080 --> 00:03:36,000 Speaker 2: because people didn't get paid on the first of July, 76 00:03:36,080 --> 00:03:38,520 Speaker 2: they got paid later in the month according to their paydays, 77 00:03:38,920 --> 00:03:41,280 Speaker 2: and then they receive their tax cuts. Then we're looking 78 00:03:41,320 --> 00:03:44,000 Speaker 2: for a modest increase a round about half of percent 79 00:03:44,480 --> 00:03:48,120 Speaker 2: in retail spending, which is okay in the scheme of things. 80 00:03:48,480 --> 00:03:50,840 Speaker 2: Building approvals, ah, that one that makes me sort of 81 00:03:50,920 --> 00:03:53,680 Speaker 2: grown every month that you know, we need a lot 82 00:03:53,680 --> 00:03:56,800 Speaker 2: of new building to sort of house their population growth, 83 00:03:56,880 --> 00:03:59,720 Speaker 2: to meet the demand for house prices rental market. We're like, 84 00:04:00,920 --> 00:04:03,400 Speaker 2: we had a decent jump last month. If we can 85 00:04:03,400 --> 00:04:05,920 Speaker 2: get two or that would be you know, a baby 86 00:04:05,920 --> 00:04:09,440 Speaker 2: step towards improving the property market and the supply side 87 00:04:09,480 --> 00:04:11,400 Speaker 2: of the economy. Remember these are approvals, they are at 88 00:04:11,480 --> 00:04:15,000 Speaker 2: completed dwellings. We know that it takes well a good year, 89 00:04:15,120 --> 00:04:17,480 Speaker 2: maybe two, to turn a piece of dirt into a 90 00:04:17,560 --> 00:04:18,840 Speaker 2: dwelling that someone can live in. 91 00:04:19,160 --> 00:04:21,080 Speaker 1: Let's just quickly talk about trade. What do we expect 92 00:04:21,160 --> 00:04:22,679 Speaker 1: on that side. 93 00:04:21,920 --> 00:04:25,599 Speaker 2: The actual trade, but probably just another tiny setback in 94 00:04:25,600 --> 00:04:27,840 Speaker 2: the trade surplus. You know, about a year ago we 95 00:04:27,839 --> 00:04:32,159 Speaker 2: were running monthly goods trade surpluses around about fifteen billion 96 00:04:32,200 --> 00:04:34,919 Speaker 2: dollars or they'reabouts were exporting our pants off, and the 97 00:04:34,960 --> 00:04:39,080 Speaker 2: commodity price cycles very high, volumes were high, and we're 98 00:04:39,080 --> 00:04:41,640 Speaker 2: getting year fifteen billion dollars a month of a surplus. Now, 99 00:04:41,760 --> 00:04:44,400 Speaker 2: the last week month's struckp to about five or six billion. 100 00:04:44,760 --> 00:04:47,080 Speaker 2: Commodity prices are down, the i ore price down. We 101 00:04:47,120 --> 00:04:49,599 Speaker 2: know again from last week's data on China that the 102 00:04:49,640 --> 00:04:52,600 Speaker 2: economy there is weak, and so there's probably a pullback 103 00:04:52,640 --> 00:04:56,040 Speaker 2: in export volumes, certainly a pullback in export prices. So 104 00:04:56,080 --> 00:04:58,320 Speaker 2: the trade surplus is probably going to just shrink another 105 00:04:58,360 --> 00:05:00,440 Speaker 2: a little bit more when we get those international numbers. 106 00:05:00,760 --> 00:05:02,279 Speaker 1: Hey, we've got the end of the month. Of course 107 00:05:02,400 --> 00:05:05,279 Speaker 1: house prices. What's going to happen, Well. 108 00:05:05,080 --> 00:05:07,680 Speaker 2: We know from the high frequency core logic numbers they 109 00:05:07,720 --> 00:05:10,600 Speaker 2: published data of every day, we're probably going to get 110 00:05:10,600 --> 00:05:13,839 Speaker 2: a zero point five percent increase in nationwide prices. But 111 00:05:14,000 --> 00:05:17,760 Speaker 2: be warned there's a method divergence from city to city. 112 00:05:18,560 --> 00:05:22,120 Speaker 2: Perth is still absolutely on fire, plus twenty five percent 113 00:05:22,520 --> 00:05:26,200 Speaker 2: in annual terms, so Perth is really rocketing, along Brisbane 114 00:05:26,279 --> 00:05:30,719 Speaker 2: Adelaide probably around that fifteen percent increase in annual terms. Sydney, 115 00:05:30,920 --> 00:05:34,200 Speaker 2: obviously the biggest market, is slowing, probably annual growths down 116 00:05:34,240 --> 00:05:37,400 Speaker 2: about four or five percent from double digit rates six 117 00:05:37,440 --> 00:05:40,640 Speaker 2: months ago, and the other cities including big old Melbourne 118 00:05:40,680 --> 00:05:45,279 Speaker 2: but also Darwin, Canberra, Hobart all flat to slightly lower. 119 00:05:45,360 --> 00:05:47,240 Speaker 2: The prices there are starting to weaken. So you've got 120 00:05:47,279 --> 00:05:50,960 Speaker 2: a huge divergence from Perth to say Melbourne, a twenty 121 00:05:50,960 --> 00:05:53,800 Speaker 2: five percentage point difference in the growth rate. But look 122 00:05:54,000 --> 00:05:56,120 Speaker 2: at this state, there's seems to be just the early 123 00:05:56,160 --> 00:05:59,479 Speaker 2: signs of housing even in those boom cities is just 124 00:05:59,560 --> 00:06:00,920 Speaker 2: starting to taper up a little bit. 125 00:06:01,320 --> 00:06:04,040 Speaker 1: Stephen enjoy your week well do, Thank you, John. That 126 00:06:04,160 --> 00:06:06,560 Speaker 1: was economist Stephen Kokurlas, better known as the Cook. You 127 00:06:06,560 --> 00:06:08,520 Speaker 1: can find him at the cook dot com and follow 128 00:06:08,600 --> 00:06:10,960 Speaker 1: him on ex using the handle the Kirk. I'm Sean 129 00:06:11,040 --> 00:06:13,120 Speaker 1: Elmer and this is fear and greet the week ahead.