1 00:00:00,080 --> 00:00:03,120 Speaker 1: Now stock markets have rebounded again today, the oil prices 2 00:00:03,160 --> 00:00:06,040 Speaker 1: back down below one hundred US dollars a barrel. It 3 00:00:06,040 --> 00:00:08,720 Speaker 1: seems to be a response to Donald Trump earlier today 4 00:00:09,039 --> 00:00:11,880 Speaker 1: saying the war would be over soon. Matt Goodson, Assault 5 00:00:11,880 --> 00:00:15,920 Speaker 1: Funds Management Managing Director and with us now home, Matt evening, 6 00:00:16,320 --> 00:00:18,160 Speaker 1: how are we sitting compared to yesterday? 7 00:00:19,720 --> 00:00:23,360 Speaker 2: Well, New Zealand market did rally today, but weekend off 8 00:00:23,400 --> 00:00:25,800 Speaker 2: over the course of the afternoon and actually closed flat, 9 00:00:25,880 --> 00:00:29,480 Speaker 2: which was a little bit disappointing after yesterday's three percent 10 00:00:29,560 --> 00:00:33,240 Speaker 2: four in Australia. In Australia was up around one and 11 00:00:33,240 --> 00:00:35,320 Speaker 2: a half two percent and it's only up about point 12 00:00:35,360 --> 00:00:37,560 Speaker 2: hay at the moment as we're coming into their clothes. 13 00:00:37,880 --> 00:00:41,080 Speaker 1: Okay, Now, what does this mean that the that people 14 00:00:41,120 --> 00:00:42,800 Speaker 1: have had a look at what Donald Trump's had to say, 15 00:00:42,800 --> 00:00:45,120 Speaker 1: investors have looked at and not put too much stock 16 00:00:45,120 --> 00:00:45,400 Speaker 1: in it. 17 00:00:46,720 --> 00:00:52,440 Speaker 2: Well, unusually for Trump, he's made conflicting statements as to 18 00:00:52,479 --> 00:00:55,760 Speaker 2: what he's actually going to do. And then the other 19 00:00:55,840 --> 00:00:59,440 Speaker 2: question is can the US actually just walk away? Do 20 00:00:59,600 --> 00:01:03,520 Speaker 2: their war goals coincide with those of Israel? And what 21 00:01:03,560 --> 00:01:06,360 Speaker 2: does that leave a run doing? Have a key question 22 00:01:06,520 --> 00:01:09,920 Speaker 2: here really for the world is devastrates of Hormuz reopen. 23 00:01:11,000 --> 00:01:12,560 Speaker 2: At the moment, you have about six and a half 24 00:01:12,640 --> 00:01:16,840 Speaker 2: million barrels of oil production shut in, and that's really 25 00:01:16,880 --> 00:01:18,880 Speaker 2: a key crunch point for the global economy. 26 00:01:19,520 --> 00:01:20,840 Speaker 1: I mean, I take it from the fact that the 27 00:01:21,920 --> 00:01:24,800 Speaker 1: markets haven't rebounded to yesterday's levels that we are not 28 00:01:24,920 --> 00:01:27,320 Speaker 1: believing him, right, We're not buying his argument that it's 29 00:01:27,360 --> 00:01:29,279 Speaker 1: going to be over soon. And that is probably wise 30 00:01:29,319 --> 00:01:31,200 Speaker 1: on our part, isn't it, Matt, Because that's the most 31 00:01:31,280 --> 00:01:33,559 Speaker 1: likely outcome is that this goes on for a bit longer. 32 00:01:35,000 --> 00:01:38,319 Speaker 2: Quite possibly. The point here is just the sheer level 33 00:01:38,319 --> 00:01:41,920 Speaker 2: of uncertainty. So now we saw oil peak one hundred 34 00:01:41,920 --> 00:01:44,319 Speaker 2: and fifteen a couple of days ago, got down to 35 00:01:44,319 --> 00:01:46,800 Speaker 2: the mid eighties this afternoon, it's now back up around 36 00:01:46,880 --> 00:01:50,240 Speaker 2: ninety ninety one dollars a barrel of WTI, and US 37 00:01:50,320 --> 00:01:53,440 Speaker 2: futures are just down a touch. So the market is 38 00:01:53,480 --> 00:01:57,000 Speaker 2: going to be very volatile and reactive. Latest to unpredictable 39 00:01:57,040 --> 00:01:57,680 Speaker 2: headline here. 40 00:01:58,280 --> 00:02:00,040 Speaker 1: Now, what are you picking for Air New Zealand and 41 00:02:00,080 --> 00:02:01,080 Speaker 1: how is it looking for them? 42 00:02:02,840 --> 00:02:05,560 Speaker 2: It's tough, It's really tough. It's not just the oil 43 00:02:05,600 --> 00:02:09,640 Speaker 2: price which they are largely hedged too. It's the refining margin, 44 00:02:10,320 --> 00:02:13,680 Speaker 2: and those margins have gone through the roof. And what 45 00:02:13,800 --> 00:02:17,280 Speaker 2: will happen as oil gets harder together, as you'll see 46 00:02:17,280 --> 00:02:21,440 Speaker 2: more and more refineries go offline and resource most of 47 00:02:21,480 --> 00:02:26,960 Speaker 2: our oil from Singapore and facing a very difficult situation 48 00:02:27,040 --> 00:02:28,920 Speaker 2: unless the straits of all News open up in the 49 00:02:28,919 --> 00:02:33,760 Speaker 2: near future. So refining margins could go very high indeed 50 00:02:35,880 --> 00:02:38,560 Speaker 2: until those straights open up. And then if refineries do 51 00:02:38,600 --> 00:02:41,480 Speaker 2: close down, there are quite long legs and bringing them 52 00:02:41,520 --> 00:02:44,560 Speaker 2: back up again and getting a stable and getting a 53 00:02:44,600 --> 00:02:48,400 Speaker 2: stable run through them. So I think people should expect 54 00:02:48,440 --> 00:02:52,880 Speaker 2: materially higher airline prices for a period of time until 55 00:02:52,880 --> 00:02:53,639 Speaker 2: this is resolved. 56 00:02:53,840 --> 00:02:55,880 Speaker 1: From an investment perspective, would the wise thing to do 57 00:02:56,040 --> 00:02:57,680 Speaker 1: just be to be a cool head and sit tight. 58 00:02:57,840 --> 00:02:59,240 Speaker 1: To have a cool head and sit tight. 59 00:03:00,800 --> 00:03:05,880 Speaker 2: I think. So this action in itself is stagflationary, lower growth, 60 00:03:05,960 --> 00:03:11,080 Speaker 2: higher inflation, and it comes actually following data from the 61 00:03:11,200 --> 00:03:13,640 Speaker 2: US on Friday night, which had pretty weak jobs and 62 00:03:13,960 --> 00:03:20,480 Speaker 2: quite high wage inflation. So for New Zealand it's quite 63 00:03:20,760 --> 00:03:23,560 Speaker 2: it's just painful. We were just starting to climb out 64 00:03:23,560 --> 00:03:25,320 Speaker 2: of what had been a pretty tough period for the 65 00:03:25,360 --> 00:03:30,040 Speaker 2: economy and this shock comes along. So look, I think 66 00:03:30,080 --> 00:03:32,880 Speaker 2: the best thing to do for most investors is really 67 00:03:32,960 --> 00:03:37,360 Speaker 2: to stay put rather than run away at the lows. 68 00:03:37,920 --> 00:03:39,920 Speaker 1: Matt, I see that there are some who are privately 69 00:03:40,040 --> 00:03:43,280 Speaker 1: saying we should brace ourselves for another recession in this country. 70 00:03:43,320 --> 00:03:44,080 Speaker 1: Is that premature? 71 00:03:46,280 --> 00:03:50,160 Speaker 2: If this lasts a considerable period of time, that's certainly possible. 72 00:03:51,000 --> 00:03:52,920 Speaker 2: But we've been very bolish on the outlook for our 73 00:03:52,920 --> 00:03:55,560 Speaker 2: economy this year. We're having in terms of trade boom 74 00:03:55,560 --> 00:03:59,119 Speaker 2: if you look at dairy prices, red meat prices, horticultural prices, 75 00:04:00,080 --> 00:04:02,160 Speaker 2: The lagged impact of the sharp harping and zed rate 76 00:04:02,240 --> 00:04:05,360 Speaker 2: cuts last year finally starting to come through. So I 77 00:04:05,360 --> 00:04:09,120 Speaker 2: do think it's premature to call a recession at this stage. 78 00:04:09,480 --> 00:04:11,600 Speaker 2: If we're still talking about the straits of Well has 79 00:04:11,600 --> 00:04:13,960 Speaker 2: been closed in six months, maybe that's a different matter. 80 00:04:14,040 --> 00:04:15,880 Speaker 1: Yeah, brilliant, Hey, thank you very much. Matter as always, 81 00:04:15,920 --> 00:04:20,240 Speaker 1: Matt Goodson, Salt Funds Management, Managing Directory. For more from 82 00:04:20,279 --> 00:04:23,560 Speaker 1: Hither Duplessy Allen Drive, listen live to news talks. 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