1
00:00:00,120 --> 00:00:02,440
Speaker 1: Now Brendan Larsen Milford Asset Management is with me. Hy

2
00:00:02,520 --> 00:00:06,200
Speaker 1: Brendan even he that, Okay, government shutdown in the US

3
00:00:06,640 --> 00:00:08,760
Speaker 1: really starting to have an effect because we're currently flying

4
00:00:08,760 --> 00:00:10,920
Speaker 1: totally blind when it comes to official data. What's going

5
00:00:10,920 --> 00:00:11,319
Speaker 1: on here?

6
00:00:12,600 --> 00:00:15,080
Speaker 2: Yeah, look, there's still certainly a lot of fireworks going

7
00:00:15,080 --> 00:00:18,400
Speaker 2: off to spite no official government data. But I think

8
00:00:18,400 --> 00:00:20,759
Speaker 2: it is worth sort of stepping back first to understand

9
00:00:20,840 --> 00:00:24,119
Speaker 2: why we're actually in this government shutdown. Each year, the

10
00:00:24,200 --> 00:00:26,680
Speaker 2: US federal budget needs to be approved by Congress for

11
00:00:26,720 --> 00:00:30,480
Speaker 2: spending across key departments. So of Congress and the President

12
00:00:30,560 --> 00:00:33,200
Speaker 2: can't agree on a budget, the US government is legally

13
00:00:33,240 --> 00:00:35,800
Speaker 2: required to shut down as there's no authority to spend.

14
00:00:36,320 --> 00:00:39,320
Speaker 2: So that means non essential government operations stop and essential

15
00:00:39,360 --> 00:00:40,800
Speaker 2: services operate without pay.

16
00:00:40,880 --> 00:00:43,600
Speaker 1: Yeah, and why is it that Congress and the President

17
00:00:43,640 --> 00:00:44,680
Speaker 1: can't agree on the budget.

18
00:00:45,560 --> 00:00:47,200
Speaker 3: Yeah, So this is a really important point.

19
00:00:47,520 --> 00:00:50,800
Speaker 2: So the Democrats are making healthcare a priority, so they're

20
00:00:50,840 --> 00:00:53,720
Speaker 2: wanting to reverse changes made to Medicaid and Trump's Big

21
00:00:53,760 --> 00:00:56,959
Speaker 2: Beautiful Bill. So these changes were effectively making it more

22
00:00:57,000 --> 00:01:01,080
Speaker 2: difficult to get healthcare cover by changing work requirements and

23
00:01:01,120 --> 00:01:04,600
Speaker 2: more frequent eligibility checks. They also want to renew these

24
00:01:04,600 --> 00:01:07,920
Speaker 2: ACA tax credits, which really just provide cheaper health insurance

25
00:01:08,000 --> 00:01:11,120
Speaker 2: for low income consumers. So the changes were made to

26
00:01:11,240 --> 00:01:13,280
Speaker 2: free up spending for other areas of the bill. But

27
00:01:13,360 --> 00:01:15,600
Speaker 2: Democrats are really pushing back quite aggressively on this.

28
00:01:15,720 --> 00:01:17,480
Speaker 1: Okay, talk to me about the timing of this and

29
00:01:17,480 --> 00:01:18,360
Speaker 1: what the impact is.

30
00:01:19,959 --> 00:01:21,720
Speaker 2: So, yeah, the timing is probably a hard one, but

31
00:01:21,720 --> 00:01:23,560
Speaker 2: I'd say that this isn't the first time we've had

32
00:01:23,600 --> 00:01:26,560
Speaker 2: a government shutdown. In fact, it's the twenty first funding

33
00:01:26,600 --> 00:01:30,160
Speaker 2: gap and the third shutdown under President Trump. The last

34
00:01:30,160 --> 00:01:33,679
Speaker 2: shutdown was actually under his administration twenty nineteen and was

35
00:01:33,720 --> 00:01:34,560
Speaker 2: the longest.

36
00:01:34,200 --> 00:01:36,520
Speaker 3: In history in that lasted thirty five days.

37
00:01:37,080 --> 00:01:40,280
Speaker 2: We're fourteen days in now, and polymarket odds suggest a

38
00:01:40,319 --> 00:01:41,480
Speaker 2: sixty five percent.

39
00:01:41,240 --> 00:01:43,720
Speaker 3: Chance of this one lasting more than thirty days.

40
00:01:44,360 --> 00:01:47,400
Speaker 2: On the sort of economic impact, the shutdown means that

41
00:01:47,440 --> 00:01:50,560
Speaker 2: around seven hundred and fifty thousand federal employees have been

42
00:01:50,600 --> 00:01:54,480
Speaker 2: placed on furlough, so they're not getting paid. Historically, we've

43
00:01:54,520 --> 00:01:56,960
Speaker 2: seen growth slow down in that time period as a

44
00:01:57,000 --> 00:01:59,760
Speaker 2: result of that, but a roughly equal catch up and

45
00:01:59,760 --> 00:02:02,760
Speaker 2: growth in the sort of following quarter. The difference this

46
00:02:02,800 --> 00:02:05,280
Speaker 2: time is that we know, following DOGE and these other

47
00:02:05,320 --> 00:02:07,760
Speaker 2: sort of announcements that the Trump administration have wanted to

48
00:02:07,800 --> 00:02:10,040
Speaker 2: reduce the size of the government, and so there is

49
00:02:10,080 --> 00:02:15,240
Speaker 2: some risk of layoffs of these furloughed employees, and we've

50
00:02:15,240 --> 00:02:17,080
Speaker 2: seen sort of Trump make noise of this already.

51
00:02:17,360 --> 00:02:20,040
Speaker 1: Yeah, Now, before I let you go, Brandon Brandan and

52
00:02:20,040 --> 00:02:21,960
Speaker 1: I just want to talk to you about the tariff

53
00:02:21,960 --> 00:02:24,040
Speaker 1: threats from Trump last week. How's that playing out of

54
00:02:24,080 --> 00:02:24,400
Speaker 1: the moment.

55
00:02:25,440 --> 00:02:27,880
Speaker 2: Yeah, Look, the market was clearly focused on this announcement.

56
00:02:27,919 --> 00:02:29,919
Speaker 2: We saw a big reaction, but really there has been

57
00:02:30,000 --> 00:02:33,320
Speaker 2: ongoing tit for tat over recent months. So the US

58
00:02:33,440 --> 00:02:36,920
Speaker 2: had actually been agitating by placing more Chinese companies on

59
00:02:36,960 --> 00:02:40,480
Speaker 2: their trade restriction list and banning Chinese carriers from flying

60
00:02:40,480 --> 00:02:45,000
Speaker 2: over Russia on US bound flights. In response, China reciprocated

61
00:02:45,000 --> 00:02:48,600
Speaker 2: many measures, but more importantly, placed further controls around their

62
00:02:48,680 --> 00:02:52,160
Speaker 2: rare earth that are critical to many US interests, including

63
00:02:52,200 --> 00:02:55,520
Speaker 2: military equipment and technology as well. And so that's really

64
00:02:55,600 --> 00:02:58,639
Speaker 2: what culminated in these threats from President Trump on Friday

65
00:02:59,040 --> 00:02:59,640
Speaker 2: of a new one.

66
00:02:59,600 --> 00:03:02,000
Speaker 3: Hundred BIS tariff on top of existing tariffs.

67
00:03:02,600 --> 00:03:04,840
Speaker 2: And so where that goes from here is still unknown,

68
00:03:05,360 --> 00:03:08,200
Speaker 2: but President Trump and President g we're supposed to be

69
00:03:08,240 --> 00:03:10,480
Speaker 2: having a meeting at the APEX summit later this month,

70
00:03:10,919 --> 00:03:13,120
Speaker 2: and so hopefully we get some sort of resolution ahead

71
00:03:13,160 --> 00:03:13,320
Speaker 2: of this.

72
00:03:13,880 --> 00:03:15,720
Speaker 1: Yeah very much, Hey, Brett Brandan, thank you very much

73
00:03:15,720 --> 00:03:18,560
Speaker 1: for talking us through that. Brendan Lars and Milford Asset Management.

74
00:03:19,120 --> 00:03:21,360
Speaker 1: For more from Heather Duplessy Allen Drive.

75
00:03:21,520 --> 00:03:22,919
Speaker 3: Listen live to news Talks.

76
00:03:22,960 --> 00:03:26,120
Speaker 1: It'd be from four pm weekdays, or follow the podcast

77
00:03:26,240 --> 00:03:27,240
Speaker 1: on iHeartRadio