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Speaker 1: Together duple cls.

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Speaker 2: Something quite weird is going on in the US economy.

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Speaker 2: The big drivers of the US economy being the housing market,

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Speaker 2: the consumer, and the goods and services sectors are all

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Speaker 2: running apparently at very different speeds. Under the hood. Sam

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Speaker 2: Dickey from Fisher Funds is with us. He's been having

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Speaker 2: a look at it.

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Speaker 1: A Sam, good evening.

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Speaker 2: Okay, So let's look at each of these ones individually.

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Speaker 2: So let's look at the housing market. What parts of

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Speaker 2: it are running at different speeds?

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Speaker 1: Yes, super interesting, weird. As you said, under the hood,

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Speaker 1: they are in an extremely different speed. So take new

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Speaker 1: build or new home sales. Those numbers are at decade

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Speaker 1: high so ten year highs, whereas the number of existing

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Speaker 1: or secondhand home sales are at ten year lows. In fact,

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Speaker 1: existing home sales are at twenty five year lows.

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Speaker 2: And what about the US, by the way, can you

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Speaker 2: explain that? Why is that happening?

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Speaker 1: Yeah, So it's to do with the rapid rise and

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Speaker 1: mortgage rates. So if you think about it, most people

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Speaker 1: who own home in the US sign mortgages or I

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Speaker 1: think the eight you're ninety percent of them sign mortgages

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Speaker 1: below three percent, So they're sitting on two and a

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Speaker 1: half three percent mortgage rates, and the prevailing mortage rate

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Speaker 1: in the US has sort of was seven and a

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Speaker 1: half percent now about six and a half percent. So

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Speaker 1: the only reason and that mortgage is fixed for thirty years,

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Speaker 1: so the only reason you'd have to refinance that is

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Speaker 1: if you sold your house and moved, So even though

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Speaker 1: you might have to move for a job or whatever,

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Speaker 1: you're just not selling your house, so you're trapped in

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Speaker 1: your mortgage. Whereas that people do need housing demandments this

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Speaker 1: household formation every year in the US, so that the

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Speaker 1: new homes of satiating that demand.

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Speaker 2: What about the US consumer then? What are you seeing

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Speaker 2: under the hood there?

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Speaker 1: So the midden high end consumers in pretty good health.

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Speaker 1: So overall retail sales in the US about three percent,

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Speaker 1: which is very solid certainly to New Zealand anyway, and

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Speaker 1: the mid and high end consumers probably growing faster around

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Speaker 1: four percent. But the low end consumer is in pain

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Speaker 1: and they're spending as probably flat or going backwards, so

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Speaker 1: they're effectively in recession.

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Speaker 2: Yeah, and that's pretty self explanatory, right, we can figure

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Speaker 2: out why that is and what's going on with the

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Speaker 2: freight market.

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Speaker 1: Yes, we've got in at a decent freight recession in

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Speaker 1: the US for the past eighteen to twenty four months.

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Speaker 1: So I think about the volume of goods transported. They've

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Speaker 1: been pretty anemic, and freight rates have been falling pretty sharply,

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Speaker 1: and the manufacturing sector, which is part and parcel of

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Speaker 1: a very weak freight market, is effectively been in recession. However,

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Speaker 1: that the service is part of the economy, and again

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Speaker 1: this is the two speed and nature of this. A

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Speaker 1: lot of these key drivers has been very strong. So

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Speaker 1: think of services as finance, healthcare, restaurants, air traveled. That

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Speaker 1: part of the US economy has thankfully been booming.

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Speaker 2: Why has it been booming.

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Speaker 1: Well, so particularly talking about that. Remember the back end

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Speaker 1: of COVID, you during COVID, the back end of pop COVID.

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Speaker 1: We talked about this before we all wanted to buy goods.

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Speaker 1: You remember this, global supply chains were all snarled up.

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Speaker 1: So if you're aboarding one bike, the bike shop ordered

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Speaker 1: three and it was big waiting lessons on everything from

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Speaker 1: boats to car parks around the world. And then, as

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Speaker 1: always the case with these kind of Bullworth effects, the

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Speaker 1: supply chains unstarved and all the inventtry arrived at once,

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Speaker 1: and by that stage we didn't want these bikes anymore.

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Speaker 1: We were more interested in going to restaurants and traveling

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Speaker 1: and all that good stuff. So we had this huge

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Speaker 1: kind of glut of goods inventory around the world, and

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Speaker 1: that's taken eighteen to twenty four months to unwine, and

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Speaker 1: hence the freight market in the US, which carries all

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Speaker 1: these surrounders in recession.

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Speaker 2: I see, Okay, Now, I can't imagine that this is

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Speaker 2: normal at all? Is it?

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Speaker 1: No? Usually? I mean, the driver's under the foot of

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Speaker 1: any set that can move a little bit in different directions,

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Speaker 1: but that this extreme sort of dispersion is quite unusual.

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Speaker 2: What does it mean for investors? Sam, What should investors

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Speaker 2: take from this?

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Speaker 1: I just think that we just need to be aware

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Speaker 1: that the global economy still isn't working properly. I know

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Speaker 1: you and I have talked about this quite a few times,

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Speaker 1: So we need to be more cautious than usual on

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Speaker 1: Macreek and I forecasts, and more cautious than usual debts.

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Speaker 1: You know, if you study in the company and its history,

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Speaker 1: that that history won't necessarily repeat because this is quite

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Speaker 1: a weird economic cadence. Ruin right now.

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Speaker 2: Sam, Thank you as always really appreciate your very interesting

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Speaker 2: insights into what's going on that Sam Dickey of Fisher

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Speaker 2: Funds For more from Heather Duplessy Allen Drive, Listen live

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