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Michael Thompson: It's  Friday,  the 1st  of  October  2021.  Welcome  to  Fear  and 

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Michael Thompson: Greed,  the  business  podcast  that  sets  you  up  for  a 

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Michael Thompson: successful  day.  I'm  Michael  Thompson,  and  good  morning,  Sean  Aylmer.

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Sean Aylmer: Morning,  Michael.  Do  you  know,  I  really  love  the  first 

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Sean Aylmer: day  of  the  month.

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Michael Thompson: Why?

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Sean Aylmer: I don't really know. I like watching the month tick over.

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Sean Aylmer: And for some reason, the first day of the month, it

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Sean Aylmer: feels like a real achievement having made it through the

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Sean Aylmer: previous month. And particularly when you're in a month when

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Sean Aylmer: lockdown's going to end.

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Michael Thompson: And,  it's  also  the  first  day  of  the  new  quarter.

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Sean Aylmer: So  true,  and  we  love  that  here  at  Fear  and  Greed.

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Michael Thompson: We certainly do. And Sean, do you know who else

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Michael Thompson: is excited? Treasurer Josh Frydenberg is excited. He's upbeat about

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Michael Thompson: the economy and the government gets an $80 billion boost.

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Michael Thompson: That is our main story this morning. Also, the local

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Michael Thompson: share market has its best day all year, Victoria reports

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Michael Thompson: a surge in COVID cases, and Foxtel outlines a brave

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Michael Thompson: new future. Then stay listening for Sean's chat to Kristiaan

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Michael Thompson: Rehder from Kardinia Capital about the stocks to watch as

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Michael Thompson: the economy reopens. But first Sean, as I mentioned, Federal

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Michael Thompson: Treasurer Josh Frydenberg yesterday said Australia ended last financial year

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Michael Thompson: about  $80 billion better off than forecast, primarily because of

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Michael Thompson: the big surge in jobs in the first six months

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Michael Thompson: of 2021. That's good news.

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Sean Aylmer: Yes, it definitely is. The budget deficit came in at

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Sean Aylmer: $134 billion last financial year, and that's after the federal

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Sean Aylmer: government spent about  $311 billion in economic and health support.

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Sean Aylmer: In short, the economy in 2021 was stronger than the

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Sean Aylmer: government expected, it paid out less in welfare, and received

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Sean Aylmer: much more in tax receipts. It really matters because it

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Sean Aylmer: means the starting point for this financial year is much stronger.

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Michael Thompson: So what about this financial year? I know we're only

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Michael Thompson: just a few months into it.

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Sean Aylmer: Well yes, the first quarter finished yesterday and that was a quarter

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Sean Aylmer: in which Victoria and New South Wales were in lockdown,

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Sean Aylmer: but things are looking okay. Everyone, the Reserve Bank included,

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Sean Aylmer: expects the economy contracted in the three months to the

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Sean Aylmer: end of September, and yesterday Mr. Frydenberg said the bill for

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Sean Aylmer: the Delta variant outbreak will top $20 billion, and he

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Sean Aylmer: expects the budget deficit this year to be around $107 billion. But,

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Sean Aylmer: some of the partial indicators are starting to look okay.

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Sean Aylmer: And certainly, investors and market economists are looking forward to

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Sean Aylmer: a pickup in the economy this quarter, ending at the

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Sean Aylmer: end of December, and then into 2022. Yesterday, the ASX 200 jumped almost 2%,

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Sean Aylmer: the best session of the year, after big falls of

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Sean Aylmer: the previous two days. What recent trading suggests, amid all the

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Sean Aylmer: noise and fears about inflation that we've been talking about,

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Sean Aylmer: investors fundamentally think the economy is on the improve.

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Michael Thompson: Now,  Sean,  it  has  been  a  big  week  for  economists. 

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Michael Thompson: I  am  definitely  not  one  of  those,  so  I'm  relying 

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Michael Thompson: on  you  to  take  me  through  some  of  these  figures 

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Michael Thompson: that  have  come  out  through  the  week.

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Sean Aylmer: It has been a big week. Retail trade figures earlier

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Sean Aylmer: in the week were affected by the lockdowns, but they

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Sean Aylmer: weren't a disaster like they could have been. Jarden Economics

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Sean Aylmer: put a note out to today. They're saying that they

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Sean Aylmer: think there's about $200 billion available to consumers when they

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Sean Aylmer: can start spending again. Now that's either paid down debt

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Sean Aylmer: or built up savings. And remember, the end of the lockdowns, at least

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Sean Aylmer: in New South Wales have been bought forward. That's good news. ABS (Australian Bureau of Statistics)

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Sean Aylmer: job vacancy figures yesterday came out. Now they're down 10%

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Sean Aylmer: in the three months to August, that's all during lockdown,

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Sean Aylmer: but they're still 50%, or almost 50%, above the start of

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Sean Aylmer: the pandemic. Also, the ABS yesterday said the number of

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Sean Aylmer: dwellings approved rose by nearly 7% last month. That came after

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Sean Aylmer: four consecutive months of decline. Low interest rates, increased household

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Sean Aylmer: savings and confidence in the housing market, are convincing people

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Sean Aylmer: to build and renovate in most states. Yep, things are uncertain.

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Sean Aylmer: But the consensus view among economists is that the Australian

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Sean Aylmer: economy will bounce back hard in coming weeks as the

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Sean Aylmer: reopening begins.

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Michael Thompson: You  mentioned  markets  before.  What  a  week  we've  had.  Yesterday 

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Michael Thompson: was  another  incredibly  volatile  day.

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Sean Aylmer: That's true, but at least yesterday the market went up.

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Sean Aylmer: After falling 1.5% on Tuesday, and then another 1.1% on Wednesday,

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Sean Aylmer: the S&P/ASX 200 finished up 1.9% yesterday to 7332 points. It

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Sean Aylmer: was the best day since November last year. The surge

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Sean Aylmer: means that the index ended the quarter, the September quarter,

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Sean Aylmer: up slightly. Now, why is that the case? Well, iron

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Sean Aylmer: ore prices bounced with Singapore Futures trading up 10%. That

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Sean Aylmer: helped BHP and Rio Tinto, they were both up by

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Sean Aylmer: more than 3% while Fortescue Metal was up more than 1%.

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Sean Aylmer: The banks did well. Westpac, National Australia Bank, and ANZ,

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Sean Aylmer: they're all raised by more than 2% while Commonwealth Bank jumped by 1.7%.

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Sean Aylmer: Those six stocks, BHP, Rio, and the four banks, are

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Sean Aylmer: half the top 12 on the index. So if they go up,

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Sean Aylmer: it's hard for the index not to go up. In fact,

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Sean Aylmer: all 11 sectors of the benchmark index ended higher yesterday, and

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Sean Aylmer: about 85% of stocks of the top 200 rose. Away

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Sean Aylmer: from the ASX, the Aussie dollar is trading around 72.3

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Sean Aylmer: US cents. While oil prices are broadly unchanged over the

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Sean Aylmer: past 24 hours, gold prices have jumped back a bit

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Sean Aylmer: though towards 1,760 US dollars an ounce.

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Michael Thompson: What  about  Wall  Street?  What's  happened  overnight?

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Sean Aylmer: Well, a stopgap spending bill to avoid a government shutdown

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Sean Aylmer: this week helped Wall Street recover some of its early losses.

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Sean Aylmer: With a couple of hours of trading left in the session,

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Sean Aylmer: the NASDAQ was higher, and the Dow Jones Industrial Average

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Sean Aylmer: and S&P 500 were both lower. European markets were mixed

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Sean Aylmer: overnight with the STOXX Europe 600 up a bit, and

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Sean Aylmer: London's FTSE lower.

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Michael Thompson: We'll be back in a moment with the rest of

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Michael Thompson: the day's business news. But before we do that, a

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Michael Thompson: very quick reminder about our new daily newsletter. You can

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Michael Thompson: sign up for it at FearandGreed.com.au. Sean, have you signed up?

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Sean Aylmer: Have I signed up? I've signed up three times. I've

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Sean Aylmer: got three different email addresses. Each one!

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Michael Thompson: Fantastic.

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Sean Aylmer: I'm  inflating  the  numbers.

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Michael Thompson: Do what Sean does. Head to FearandGreed.com.au and sign up everybody

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Michael Thompson: in your family, everybody in your workplace. We'll be back

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Michael Thompson: in a moment.

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Michael Thompson: Sean, plenty of stories around this morning. Let's start with COVID.

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Michael Thompson: What's the latest? It was a pretty shocking day for

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Michael Thompson: the Victoria yesterday.

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Sean Aylmer: It was. Victoria recorded 1438 cases yesterday, up more than

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Sean Aylmer: 500 from the day before and five deaths. Premier Daniel

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Sean Aylmer: Andrews blamed it non-compliance with the lockdown rules, specifically around

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Sean Aylmer: the AFL Grand Final on Saturday. There were reports last

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Sean Aylmer: night that dozens of supermarkets across Melbourne close this weekend

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Sean Aylmer: because so many staff are affected and in isolation. Coles

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Sean Aylmer: has 3000 employees in isolation across Victoria and New South Wales.

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Sean Aylmer: The supermarket has already reduced hours at some stores. Woolies

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Sean Aylmer: said that up to five of its stores may have

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Sean Aylmer: to close. In New south Wales, there were 941 cases

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Sean Aylmer: recorded yesterday and six deaths. The number of cases was

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Sean Aylmer: up a bit, but it's pretty much plateaued in that state.

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Sean Aylmer: There are a number of cases though in regional areas

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Sean Aylmer: and several country towns have gone into lockdown. About 87%

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Sean Aylmer: of the state's population over the age of 15 have

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Sean Aylmer: now had at least one jab, and nearly 64% have

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Sean Aylmer: had two. And in news from that state, which is

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Sean Aylmer: making me very happy, schools will reopen it a week

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Sean Aylmer: earlier than expected with a staggered start beginning on October 18.

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Michael Thompson: Yeah, great news for parents in New South Wales. What about, though,

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Michael Thompson: away from the two big states. What's happening in Queensland

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Michael Thompson: and the ACT?

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Sean Aylmer: Queensland recorded six new local cases yesterday with a number

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Sean Aylmer: of regions now going into stage two restrictions. The crowd

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Sean Aylmer: for the National Rugby League Grand Final, which is on Sunday,

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Sean Aylmer: may have to be reduced to about 75% of capacity

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Sean Aylmer: the Premier said yesterday. Though it's not quite clear who'll

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Sean Aylmer: miss out on that. The ACT hit a 90% one jab milestone yesterday.

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Sean Aylmer: While 64% of the population is fully inoculated, there were

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Sean Aylmer: 31 new COVID cases recorded yesterday. And in South Australia,

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Sean Aylmer: an interstate trucker tested positive. Finally on COVID, with a

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Sean Aylmer: boost in numbers of Moderna and Pfizer jabs available, all Australians,

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Sean Aylmer: including those over 60 will now have access to those

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Sean Aylmer: inoculations from today.

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Michael Thompson: Yeah, it's interesting, Sean. It seems to be that a

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Michael Thompson: lot of doctors, surgeries, and medical centres seem to be

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Michael Thompson: promoting that they've got Pfizer shots available.

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Sean Aylmer: Exactly,  and  the  pharmacies  around  my  place  are  doing  the 

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Sean Aylmer: same  thing.  So  obviously  supply  is  no  longer  a  problem.

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Michael Thompson: Yeah.  Now  this  is  an  interesting  one.  Foxtel  is  far 

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Michael Thompson: and  away  Australia's  most  successful  cable  channel,  but  it's  never 

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Michael Thompson: made  money,  and  streaming  does  seem  to  have  overtaken  it. 

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Michael Thompson: Yesterday  though,  CEO  Patrick  Delaney  outlined  a  different  future.

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Sean Aylmer: He sure did. Foxtel is 65% owned by News Corp, which dominates it.

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Sean Aylmer: It's always bid hard for sports rights. It's expensive, relative

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Sean Aylmer: to newer streaming services, and it just has a touch

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Sean Aylmer: of old world about it. Mr. Delaney wants to change that,

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Sean Aylmer: yesterday saying Foxtel was becoming a digital streaming led business.

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Sean Aylmer: He's targeting 5 million subscribers in three years time, and

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Sean Aylmer: it sounds like he wants to list on the ASX.

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Sean Aylmer: Now the company currently has about 3.9 million subscribers. The

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Sean Aylmer: shift for the group has already begun. It's Kayo streaming

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Sean Aylmer: service has 1.1 million subscribers. It also has Binge, Foxtel Now,

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Sean Aylmer: and the just announced Flash. And sports rights around the

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Sean Aylmer: world are increasingly going to streaming companies. Nine Entertainment has

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Sean Aylmer: the rights to rugby in Australia, and its streaming subsidiary

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Sean Aylmer: Stan launched a sports service on the back of it. But

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Sean Aylmer: it's a very, very competitive market. And Foxtel will be

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Sean Aylmer: up against Netflix, Amazon Prime, Disney Plus, Stan, and many more.

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Michael Thompson: Yeah,  I've  got  all  of  those,  but  I've  always  got 

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Michael Thompson: room  for  more.  Now,  Sean,  you  ran  through  the  economy 

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Michael Thompson: earlier  on.  I  know  you  love  credit  data,  but  you 

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Michael Thompson: didn't  mention  it.  What's  going  on  there?  Not  with  the 

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Michael Thompson: fact  that  you  didn't  mention  it,  but  what's  going  on 

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Michael Thompson: with  the  credit  data?

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Sean Aylmer: You  were  kind  of  right.  I  wanted  to  get  the 

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Sean Aylmer: credit  data  in  the  main  story,  because  it's  worth  it, 

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Sean Aylmer: but  I  couldn't  quite  manage  to  jam  it  in.  Anyway...

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Michael Thompson: Now's  your  chance.  Let's  go.

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Sean Aylmer: People are accessing credit, no doubt about it. And the

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Sean Aylmer: figures from the Reserve Bank yesterday show exactly what the

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Sean Aylmer: regulators are worried about. Credit growth for housing remains really high,

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Sean Aylmer: though it is down from its June peak. In fact,

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Sean Aylmer: housing credit in August was more than 6% higher than a year earlier. Remember,

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Sean Aylmer: this is when almost 50% of the population was in lockdown.

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Sean Aylmer: It's only a matter of time until regulators use prudential

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Sean Aylmer: controls to slow down lending growth, and that means making

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Sean Aylmer: it harder to get a home loan.

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Michael Thompson: Sean,  what's  making  headlines  in  today's  news  media?

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Sean Aylmer: The Australian this morning is reporting that the Minerals Council of Australia,

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Sean Aylmer: which represents major resources companies, including BHP, Rio Tinto, and

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Sean Aylmer: Whitehaven Coal has endorsed a net zero by 2050 target.

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Sean Aylmer: That's significant for that sector. And the Financial Review's annual

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Sean Aylmer: power list has also been released this morning. For the

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Sean Aylmer: first time in years, the Prime Minister isn't ranked the

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Sean Aylmer: most powerful person in the country. Scott Morrison comes in

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Sean Aylmer: at number two, while the Premiers as a group; that's

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Sean Aylmer: New South Wales' Gladys Berejiklian, Victoria's Daniel Andrews, Queensland's Annastacia Palaszczuk,

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Sean Aylmer: and Western Australia's Mark McGowan combined take the top spot.

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Michael Thompson: We're running through some of the other stories around today.

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Michael Thompson: Rio Tinto, one of the world's largest mining companies, wants

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Michael Thompson: to start processing minerals in North America that are considered

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Michael Thompson: key to US national security. Mining copper produces mineral rich waste,

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Michael Thompson: which can be used from missiles to wind turbines, and

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Michael Thompson: Rio basically wants to take advantage of that.

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Sean Aylmer: Staying in the exploration sector, ASX listed Core Lithium will

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Sean Aylmer: develop the Northern Territories' first lithium mine, less than 100 kilometres

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Sean Aylmer: from Darwin. It will be Australia's eighth lithium mine, though

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Sean Aylmer: two of those aren't operating at the moment, and the

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Sean Aylmer: company hopes to be selling the metal by the end

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Sean Aylmer: of next year.

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Michael Thompson: Now  explosives  Orica's  share  price  jumped  14%  after  providing  upbeat 

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Michael Thompson: commentary  on  its  ammonium  nitrate  business.  The  company,  which  provides 

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Michael Thompson: explosives  to  miners,  including  the  coal  companies,  has  been  hit 

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Michael Thompson: hard  by  COVID  and  bans  from  China  on  Australian  coal 

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Michael Thompson: exports,  and  its  share  price  is  down  40%  since  the 

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Michael Thompson: beginning  of  the  pandemic.

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Sean Aylmer: Those shareholders will be very happy with that 14% jump yesterday. Finally, Michael,

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Sean Aylmer: Federal Coalition MPs want to introduce a new bill that

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Sean Aylmer: will cap the pay of Telco executives, including Telstra boss

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Sean Aylmer: Andy Penn, unless service levels improve. The 17 MPs say

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Sean Aylmer: Telcos need to be more accountable. I'm not sure about that one.

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Sean Aylmer: I think it's pretty rough to actually pay a CEO

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Sean Aylmer: based on whether their company's doing a good job or not.

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Michael Thompson: You  clearly  have  good  service  at  your  household,  Sean.

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Sean Aylmer: Clearly,  clearly.

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Michael Thompson: Now  what's  the  key  overseas  news  this  morning?

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Sean Aylmer: Well, China's factory output fell in September. That's the first

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Sean Aylmer: drop since the pandemic began last year. It shows the

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Sean Aylmer: damage the power outages across China are having on the

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Sean Aylmer: world's second largest economy, which as we know, is already slowing.

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Sean Aylmer: The good news is that away from the factories, the

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Sean Aylmer: construction and services sectors in China are picking up. Also,

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Sean Aylmer: Joe Biden and Congressional Democrats are negotiating two very important

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Sean Aylmer: pieces of legislation at the moment, which the US President needs to

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Sean Aylmer: get his reform agenda through and will have flow on effects

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Sean Aylmer: throughout the global economy, including Australia. One is his US$1.2

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Sean Aylmer: trillion US dollar bipartisan infrastructure bill, and the other is a US$3.5

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Sean Aylmer: trillion US dollar investment in the American social safety net. And COVID-19 has

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Sean Aylmer: picked up again in the United Kingdom, with cases up

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Sean Aylmer: more than one fifth as school children pass on the

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Sean Aylmer: infection to parents. There are currently around 58,000 new cases

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Sean Aylmer: every day in the UK.

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Michael Thompson: All  right,  up  next  is  the  daily  interview.  And  this 

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Michael Thompson: morning,  you're  talking  to  Kristiaan Rehder  from  Kardinia  Capital  about  the 

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Michael Thompson: stocks  to  watch  as  the  economy  emerges  from  lockdown.

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Sean Aylmer: I really enjoyed this discussion with Kristiaan. We went through

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Sean Aylmer: six or seven different sectors. He told me what he

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Sean Aylmer: thought of them and the stocks he liked. Well worth

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Sean Aylmer: a listen.

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Michael Thompson: Yeah, absolutely. That's up next in the Fear and Greed

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Michael Thompson: playlist on your podcast platform, or at FearandGreed.com.au. Thank you, Sean.

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Sean Aylmer: Have  a  great  day,  Michael.

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Michael Thompson: It's Friday, the 1st of October 2021. Make sure you're following

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Michael Thompson: the podcast. Join us online on LinkedIn, Twitter, and Facebook,

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Michael Thompson: and sign up for our free daily newsletter at FearandGreed.com.au. I'm

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Michael Thompson: Michael Thompson, and that was Fear and Greed. Have a

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Michael Thompson: great day.