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Speaker 1: Heller Duper.

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Speaker 2: We are living through one of the most challenging periods

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Speaker 2: for economic forecasting in decades. Traditional indicators are pretty much

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Speaker 2: contradictory at the minute. Sam Dickey from Fisher Funds is

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Speaker 2: with me on this, Hey, Sam, hey EIM I mean

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Speaker 2: it is confusing and contradictory at the minute, isn't it?

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Speaker 1: It is very confusing in contradictory. A good example of

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Speaker 1: that actually is if you dive beneath the headline growth

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Speaker 1: numbers to the real time data. So two arms of

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Speaker 1: the Federal Reserve in the US, the New York Federal

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Speaker 1: Reserve and the Atlanta Fed, calculate essentially a daily GDP number,

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Speaker 1: and they have slightly different calculation methods. But before COVID,

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Speaker 1: those differences were sort of plus and minus one percent apart,

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Speaker 1: and since COVID they're more like plus or minus three

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Speaker 1: percent apart. So forecasting era has tripled. And those are

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Speaker 1: essentially insiders versus the average punter on the street. And

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Speaker 1: they're both arms of the Federal Reserve with similar forecasting techniques.

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Speaker 1: And if you listen to people like Capital Economics, the IMF,

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Speaker 1: the World Bank all are complaining that forecasts are as

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Speaker 1: free agile as they've seen in decades. And you and

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Speaker 1: I have spoken about the reasons why. The primary reason

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Speaker 1: is global economic policy uncertainty indexes. Well, they have eased

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Speaker 1: a little bit, are still near fifty year high, so

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Speaker 1: that policy whiplash continues.

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Speaker 2: Yeah, So where are we at do you think in

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Speaker 2: the global and local economic.

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Speaker 1: Cycle critical juncture? I think in tons of dispersion. So

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Speaker 1: the US growth has generally been pretty robust, it's held

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Speaker 1: the world up, still growing around three percent. That we're

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Speaker 1: sort of multi speed over there. So the consumer is

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Speaker 1: still in the game. Thankfully, seventy two percent of GDP

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Speaker 1: is the consumer, and so MasterCard gives us that sort

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Speaker 1: of wonderful bird's eye view of the global consumer. And

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Speaker 1: they just said last week consumer spinning remains healthy, supported

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Speaker 1: by wage growth that continues to outpace inflation. Of course,

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Speaker 1: anything related to tech and AI is booming, but the

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Speaker 1: manufacturing sector is in contraction. Europe is kind of limping

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Speaker 1: along at about half percent growth despite the spinning that's

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Speaker 1: going into defense and infrastructure over there. China threw a

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Speaker 1: ton of stimulus at its economy as it slowed last year,

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Speaker 1: and I spoke about this and we saw a bit

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Speaker 1: of a pickup, so that's grown about five percent, and

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Speaker 1: back here in New Zealand we sort of hunting for

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Speaker 1: those green shoots. So in short, US robust but slowing,

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Speaker 1: Europe and New Zealand limping along the bottom, and China's

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Speaker 1: still healthy at five.

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Speaker 2: Percent and where to from here?

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Speaker 1: The US is creaking. It's been underpinned by a really

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Speaker 1: strong labor market for years and I'm sure your listeners

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Speaker 1: are aware. Last week we saw not only the current

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Speaker 1: month jobs number hit recessionary type territory, but they revised

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Speaker 1: down the previous two months to recession type levels as well,

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Speaker 1: so only adding fifty thousand jobs a month. And we're

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Speaker 1: hearing that from companies too. But Jamie Diamond, the CEO

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Speaker 1: of JP Morgan, reminded us that as employment falls, obviously

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Speaker 1: you will see more stress on the consumer in the

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Speaker 1: second half. And China growth is still pretty robust and

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Speaker 1: they definitely stand ready to throw more stimulus added of things.

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Speaker 1: And Europe and New Zealand they'll find it hard to

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Speaker 1: grow rapidly if the US slows, But they are at

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Speaker 1: very very different points in the cycle bouncing along the bottom,

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Speaker 1: and there are green shoots and things like tourism and

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Speaker 1: agricultural exports.

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Speaker 2: Yeah, which is good news, I suppose. So what should

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Speaker 2: investors take from all this? What should they make of it?

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Speaker 1: Well, given how bullish sentiment is and how hard the

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Speaker 1: stock markets are bounced in the last few months, the

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Speaker 1: next few months could be trickier, as markets will be

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Speaker 1: much more sensitive to any deterioration in the macroeconomic picture.

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Speaker 1: But they're really really good news is either the Federal Reserve.

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Speaker 1: The US Central Bank has tons of room to cut

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Speaker 1: rates in the US, so the amount that inflation is moderated,

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Speaker 1: the feed could probably cut rates by another one hundred

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Speaker 1: to one hundred and fifty basis points, but it's been

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Speaker 1: stubbornly on hold, worried about Tariff's reigniting price pressures. But

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Speaker 1: they're kind of running out of reasons not to cut rates.

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Speaker 1: So last Friday, after that week's jobs number, the market

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Speaker 1: kind of did the job for them and priced at

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Speaker 1: another two rate cuts. So there there is some a

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Speaker 1: cushion there if things do slow on the second half,

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Speaker 1: as you should probably expect. Sam.

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Speaker 2: Thanks so much, mate, I enjoy your evening. Sam Dickey

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Speaker 2: Official funds.

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