1 00:00:05,160 --> 00:00:08,080 Speaker 1: Welcome to Fear and Greed the week Ahead. I'm Sean Almer, 2 00:00:08,160 --> 00:00:11,319 Speaker 1: and as always I'm joined by economist Stephen Kokulis. You'll 3 00:00:11,360 --> 00:00:13,400 Speaker 1: find him at the Cook dot com, t h E 4 00:00:13,680 --> 00:00:17,240 Speaker 1: k O UK, thecook dot com and on X using 5 00:00:17,280 --> 00:00:19,320 Speaker 1: the handle the Kirk. Stephen. 6 00:00:19,360 --> 00:00:21,480 Speaker 2: Good morning, Very good morning, Sean. 7 00:00:22,320 --> 00:00:25,480 Speaker 1: So well let us have it. Are we going to 8 00:00:25,560 --> 00:00:26,639 Speaker 1: have a rate cut or not? 9 00:00:27,720 --> 00:00:30,680 Speaker 2: I'd be shocked if we don't. The inflation numbers that 10 00:00:30,760 --> 00:00:35,520 Speaker 2: came out last week confirmed that will headline inflation's low, 11 00:00:35,800 --> 00:00:39,440 Speaker 2: partly driven by the government subsidies, but it's also just 12 00:00:39,520 --> 00:00:43,600 Speaker 2: decelerating across a whole range of items within the consumer 13 00:00:43,680 --> 00:00:47,000 Speaker 2: price index basket. So inflation's under control. And so if 14 00:00:47,000 --> 00:00:51,520 Speaker 2: we you know, trim the extreme high as extreme extreme lows, 15 00:00:51,560 --> 00:00:54,160 Speaker 2: that the Bureau statistics still on our behalf and there 16 00:00:54,240 --> 00:00:58,600 Speaker 2: is a bank love it's showing a deceleration in inflation. 17 00:00:58,800 --> 00:01:01,560 Speaker 2: So in a funny way, I'm usually reluctant to look 18 00:01:01,600 --> 00:01:04,120 Speaker 2: at one quarter of data and annualize because that's a 19 00:01:04,160 --> 00:01:06,160 Speaker 2: bit cheeky and you can get any number you want 20 00:01:06,160 --> 00:01:08,480 Speaker 2: if to do that. However, I would note that the 21 00:01:08,560 --> 00:01:11,600 Speaker 2: quarterly figure was zero point five, which is very low, 22 00:01:12,040 --> 00:01:14,480 Speaker 2: and the three point two annual figure actually includes some 23 00:01:14,560 --> 00:01:18,840 Speaker 2: inflation numbers from January and February and March twenty twenty four. 24 00:01:19,120 --> 00:01:21,200 Speaker 2: By definition, that's how you getting here on you change, 25 00:01:21,240 --> 00:01:23,319 Speaker 2: and that sort of ancient history in a way. So 26 00:01:23,400 --> 00:01:25,920 Speaker 2: there is a there is a case to be sort 27 00:01:25,920 --> 00:01:27,880 Speaker 2: of looking at the very short term trends to get 28 00:01:27,880 --> 00:01:31,440 Speaker 2: these meaningful turning points. And I'd see a point five 29 00:01:31,480 --> 00:01:34,200 Speaker 2: trimmed mean I see the economy being week, I see 30 00:01:34,240 --> 00:01:37,600 Speaker 2: wages growth decelerating. I look around the world and see 31 00:01:38,080 --> 00:01:40,800 Speaker 2: most places cutting rates, although the Fed didn't last week, 32 00:01:40,840 --> 00:01:44,320 Speaker 2: but that's for obviously slightly different reasons, but other central 33 00:01:44,360 --> 00:01:47,119 Speaker 2: banks did cut. So we've got this scenario where, yeah, 34 00:01:47,160 --> 00:01:50,280 Speaker 2: I think our RBA on the eighteenth of February, Michelle 35 00:01:50,280 --> 00:01:55,160 Speaker 2: Bullocker's governor will go bomba. There's a twenty five basis 36 00:01:55,160 --> 00:01:58,280 Speaker 2: point rate cut, and the reason is low inflation, sonny growth, 37 00:01:58,400 --> 00:02:02,880 Speaker 2: and we want to preserve of a solid labor market. 38 00:02:03,520 --> 00:02:06,920 Speaker 1: There's no midda's that data last week. If you split 39 00:02:07,000 --> 00:02:09,840 Speaker 1: between goods and services inflation, services inflation is still a 40 00:02:09,880 --> 00:02:12,680 Speaker 1: bit too high, and that labor market is still very strong. 41 00:02:13,720 --> 00:02:17,160 Speaker 2: Indeed, that well, services inflation and the non tradables, which 42 00:02:17,160 --> 00:02:20,200 Speaker 2: is sort of the domestically inspired inflation. Yet by definition 43 00:02:20,240 --> 00:02:22,600 Speaker 2: tradeables things like all prices which are down a lot, 44 00:02:22,639 --> 00:02:27,240 Speaker 2: and those sorts of things we're importing lower goods prices 45 00:02:27,280 --> 00:02:30,320 Speaker 2: from around the world. With Chinese economy being weak, they've 46 00:02:30,360 --> 00:02:33,720 Speaker 2: got disinflation actually there. So yes, you can cut and 47 00:02:33,760 --> 00:02:36,840 Speaker 2: die these numbers in many different ways, and it is 48 00:02:37,080 --> 00:02:40,680 Speaker 2: useful to do that. I would tend to disagree that 49 00:02:40,680 --> 00:02:44,480 Speaker 2: the labor market's tight. I know you and I have 50 00:02:44,560 --> 00:02:46,560 Speaker 2: got used to an unemployment rate of four percent being 51 00:02:46,639 --> 00:02:49,160 Speaker 2: really too low in a sense. But the way that 52 00:02:49,240 --> 00:02:52,240 Speaker 2: I'm rethinking you can't teach an old blog nutricks the 53 00:02:52,280 --> 00:02:55,000 Speaker 2: way that I'm rethinking about this labor market, how do 54 00:02:55,040 --> 00:02:58,400 Speaker 2: you tell it for labor market's hot, cold, or neutral? 55 00:02:59,080 --> 00:03:05,280 Speaker 2: The labor market is cool if wages growth is decelerating, 56 00:03:06,000 --> 00:03:09,160 Speaker 2: and over the last three quarters nine months we've had 57 00:03:09,200 --> 00:03:11,959 Speaker 2: wages growth decelerating, So maybe the NEHRU without getting to 58 00:03:12,000 --> 00:03:15,200 Speaker 2: that needed gritty argument, heaven for a bid is sort 59 00:03:15,200 --> 00:03:17,080 Speaker 2: of like four percent, and we're sort of at that 60 00:03:17,160 --> 00:03:20,120 Speaker 2: level now, so is the labor market type sort of 61 00:03:20,520 --> 00:03:22,760 Speaker 2: you know, job ads have been trending down, So it's 62 00:03:22,800 --> 00:03:27,560 Speaker 2: a good number, but maybe, just maybe, like other places 63 00:03:27,560 --> 00:03:29,920 Speaker 2: around the world, a very low unemployment rate is of 64 00:03:29,919 --> 00:03:32,840 Speaker 2: something we've got used to because of demographic changes, you know, 65 00:03:33,000 --> 00:03:36,520 Speaker 2: technology change, artificial intelligence, all those things feeding into the 66 00:03:36,600 --> 00:03:37,120 Speaker 2: labor market. 67 00:03:37,200 --> 00:03:40,920 Speaker 1: Numbers, okay, plenty going on this week, ahead of anything 68 00:03:40,920 --> 00:03:42,720 Speaker 1: that the Reserve Bank does in a couple of weeks time. 69 00:03:42,960 --> 00:03:46,800 Speaker 1: House prices for the January the month of January down down. 70 00:03:46,880 --> 00:03:51,720 Speaker 2: Prices are down as status co might it looks like 71 00:03:52,960 --> 00:03:56,120 Speaker 2: Sydney has joined the ranks of Melbourne with prices dropping 72 00:03:56,600 --> 00:03:59,400 Speaker 2: not much, but the aggregate national figure will be about 73 00:03:59,440 --> 00:04:02,840 Speaker 2: minus point to ish minus point three. And even the 74 00:04:02,880 --> 00:04:07,320 Speaker 2: places that were hot Perth, Adelaide, Brisbane, the rated increase 75 00:04:07,400 --> 00:04:10,360 Speaker 2: is slowing down, so house prices will get a little 76 00:04:10,360 --> 00:04:13,720 Speaker 2: bit of a you know, a story confirming that house 77 00:04:13,760 --> 00:04:16,040 Speaker 2: prices are edging lower. 78 00:04:16,600 --> 00:04:20,640 Speaker 1: H Okay. What I reckon is really interesting, well this week, 79 00:04:20,680 --> 00:04:21,880 Speaker 1: but then for the rest of the year, and this 80 00:04:21,960 --> 00:04:25,000 Speaker 1: is one of your favorites is retail sales. But the 81 00:04:25,040 --> 00:04:29,360 Speaker 1: new Households Spending Survey the Bureau Statistics is talking about. 82 00:04:29,600 --> 00:04:32,320 Speaker 2: Yeah, well retail sales. We know about the thing that's 83 00:04:32,360 --> 00:04:35,400 Speaker 2: been published for many many decades now, but they've experimented 84 00:04:35,440 --> 00:04:39,279 Speaker 2: the new statistician David Grewin fabulous Statistician, Love his work. 85 00:04:39,320 --> 00:04:42,279 Speaker 2: He's sort of revamped the way the abs calculate data. 86 00:04:42,279 --> 00:04:44,159 Speaker 2: It sounds a bit of a pointy headed thing, but 87 00:04:44,200 --> 00:04:47,200 Speaker 2: it's really important for us to sort of look at. 88 00:04:47,240 --> 00:04:51,800 Speaker 2: But the household spending survey is retail sales as it's 89 00:04:51,800 --> 00:04:56,080 Speaker 2: space plus includes a whole bunch of services in the figure, 90 00:04:56,120 --> 00:05:00,440 Speaker 2: so it's a much closer move towards total household consumption. 91 00:05:00,520 --> 00:05:03,640 Speaker 2: There's a lot of extra spending items they include in there, 92 00:05:03,680 --> 00:05:06,800 Speaker 2: so it's roughly double the size of retail sales. So 93 00:05:06,800 --> 00:05:07,920 Speaker 2: one of the things that we used to get the 94 00:05:07,960 --> 00:05:10,279 Speaker 2: retail sales numbers, Yeah they're up, but we don't know 95 00:05:10,279 --> 00:05:13,120 Speaker 2: what happened to the household spending on services. Well now 96 00:05:13,160 --> 00:05:15,720 Speaker 2: we have a fair bit more information on that, so 97 00:05:16,480 --> 00:05:18,840 Speaker 2: that's coming out later this week. And it's a we 98 00:05:18,920 --> 00:05:22,160 Speaker 2: get the retail sales numbers too, they'll be obsolete in 99 00:05:22,200 --> 00:05:26,120 Speaker 2: twelve months time, but the household spending it's a comprehensive 100 00:05:27,000 --> 00:05:29,680 Speaker 2: overview of where we consumers are spending our money. 101 00:05:29,839 --> 00:05:31,040 Speaker 1: Wow, that's very exciting. 102 00:05:31,080 --> 00:05:32,159 Speaker 2: And by the way, it's going to be a little 103 00:05:32,160 --> 00:05:34,440 Speaker 2: bit weaker. Now, what are we looking for? Yeah, we 104 00:05:34,480 --> 00:05:36,800 Speaker 2: had the Black Friday sales, and of course that was 105 00:05:36,839 --> 00:05:39,480 Speaker 2: not so much service as it was goods. It was irons, clothing, 106 00:05:39,520 --> 00:05:42,560 Speaker 2: white goods and makeup and cosmetics and all that sort 107 00:05:42,600 --> 00:05:45,279 Speaker 2: of stuff. They're going to pull back down. So we're 108 00:05:45,279 --> 00:05:47,960 Speaker 2: looking for a softish number coming on household spending, sort 109 00:05:48,000 --> 00:05:50,280 Speaker 2: of like a minus point two point three after an 110 00:05:50,279 --> 00:05:52,880 Speaker 2: increase of about point five the previous month and. 111 00:05:52,839 --> 00:05:55,320 Speaker 1: Just quickly the other day of this week. Building approvals, 112 00:05:55,400 --> 00:05:56,800 Speaker 1: job ads, what do you expect from them? 113 00:05:57,200 --> 00:06:00,000 Speaker 2: Building approvals? Well, the long and winding roads sort of 114 00:05:59,839 --> 00:06:02,360 Speaker 2: one point two million new dwellings is sort of started, 115 00:06:02,400 --> 00:06:05,600 Speaker 2: and it's a slow start. Well, I don't think we're 116 00:06:05,600 --> 00:06:07,080 Speaker 2: going to get to the one point two minute. It'd 117 00:06:07,080 --> 00:06:09,080 Speaker 2: be sort of quite miraculous, even though we're only sort 118 00:06:09,120 --> 00:06:12,000 Speaker 2: of six months down the track of the of the target. 119 00:06:12,040 --> 00:06:14,239 Speaker 2: But you know, it'd be nice to see building approvals increase. 120 00:06:14,320 --> 00:06:15,680 Speaker 2: We all know that we need to build more to 121 00:06:15,720 --> 00:06:19,120 Speaker 2: address housing shortages and rental market and house prices, lots 122 00:06:19,200 --> 00:06:21,240 Speaker 2: of stuff. So I think the marks for a bit 123 00:06:21,279 --> 00:06:22,720 Speaker 2: of a flat figure, but it'd be nice to get 124 00:06:22,720 --> 00:06:26,320 Speaker 2: an upside surprise things like job ads. They've been weakening 125 00:06:27,040 --> 00:06:30,600 Speaker 2: the last year or so, but the rated deceleration is stalled. 126 00:06:31,080 --> 00:06:34,840 Speaker 2: So any resumption of the fall, or quite nicely a 127 00:06:34,920 --> 00:06:37,040 Speaker 2: pick up in job ads would be interesting to see. 128 00:06:37,360 --> 00:06:39,119 Speaker 2: Just at the margin. It's not going to change RBA 129 00:06:39,279 --> 00:06:40,920 Speaker 2: or market thinking, but it's sort of one of these 130 00:06:41,000 --> 00:06:44,160 Speaker 2: bits of information on the labor market as we're discussing 131 00:06:44,200 --> 00:06:48,080 Speaker 2: unemployment a minute ago, that's really important for the overalls, 132 00:06:48,160 --> 00:06:52,040 Speaker 2: a sort of is labor market type loose or about neutral? 133 00:06:52,360 --> 00:06:54,039 Speaker 1: Fair enough? Stephen, enjoy your week. 134 00:06:54,240 --> 00:06:54,760 Speaker 2: Thank you, Sean. 135 00:06:55,080 --> 00:06:57,480 Speaker 1: That's economist Stephen Kokulis, better known as the Kookie. Can 136 00:06:57,480 --> 00:06:59,280 Speaker 1: find him at the cook dot com and follow him 137 00:06:59,320 --> 00:07:02,000 Speaker 1: on exit using the handle of the Coop. I'm Sean 138 00:07:02,080 --> 00:07:05,920 Speaker 1: Elmer and this is Bear and Greed the Weak Ahead.