WEBVTT - Bonus bite: Volatility, the vote, and Aussie energy prices

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<v Speaker 1>During over seven hundred and fifty thousand people using Chezy's

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<v Speaker 1>to build long term wealth and vest with no minimum

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<v Speaker 1>across the US, Australian and New Zealand share markets. Download

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<v Speaker 1>the cheesys app to get started. You're listening to a

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<v Speaker 1>Charsy's podcast continuing on with the election. If we just

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<v Speaker 1>dig into the energy sectors, one that's coming up a

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<v Speaker 1>bit like.

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<v Speaker 2>Can you talk about about you.

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<v Speaker 1>Know, what's happening there or what's going on and what

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<v Speaker 1>impact that could have.

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<v Speaker 2>Yeah, for sure.

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<v Speaker 3>So there's a couple things going with energy and the

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<v Speaker 3>kind of it's a bit of a mess, so you're

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<v Speaker 3>right to kind of call it out. In particular, we've got,

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<v Speaker 3>on one hand, both by the energy by the ways,

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<v Speaker 3>it's really big, a morphous thing because it kind of

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<v Speaker 3>includes lithium for batteries and coal for power stations and

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<v Speaker 3>oil for general use largely transportation other things.

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<v Speaker 2>It's going to go energy broader, So what is that.

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<v Speaker 3>So on one hand, you've got the government promising their Future

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<v Speaker 3>Made in Australia Fund which as part of that the

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<v Speaker 3>invest in local solar panel manufacturing. Now that's energy, and

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<v Speaker 3>the SENSUS Renewable Energy, So that that's kind of important.

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<v Speaker 3>You've got the opposition who are promisely take money out

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<v Speaker 3>of things like the Clean Energy Finance Corporation, which potentially

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<v Speaker 3>reduced the investment in renewables. The opposition also saying they're

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<v Speaker 3>going to have a policy to build at least seven

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<v Speaker 3>nuclear power plants around the country for power generation. That's

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<v Speaker 3>kind of going on. You've got the energy subsidies that

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<v Speaker 3>are currently on power bills from the current government.

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<v Speaker 2>They're probably to extend that for another six months.

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<v Speaker 3>The opposition saying well they will do it with fuel instead,

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<v Speaker 3>will reduce the fuel exercise. That means more oil and

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<v Speaker 3>gas being sold in Australia. So there's lots of those

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<v Speaker 3>pieces that are really moving all over the place. I

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<v Speaker 3>didn't touch on lithium. I will touch on lithium very quickly.

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<v Speaker 3>I think there's some lessons for lithium so on you.

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<v Speaker 3>And this is not the end of the story, by

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<v Speaker 3>the way, but I will I will talked to the

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<v Speaker 3>story to date, and that was people went, hey, lithium

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<v Speaker 3>equal EV's equals batteries.

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<v Speaker 2>Batteries equals lithium. Therefore lithium is good if.

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<v Speaker 3>EV sales grow, right, that's not actually wrong. That's entirely

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<v Speaker 3>logical from a demand perspective. What lots of people miss,

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<v Speaker 3>and I'll get back to why I'm talking about this

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<v Speaker 3>with energy more broadly, but lithium in particular matters as

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<v Speaker 3>well is what people didn't.

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<v Speaker 2>The factor in was the supply response.

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<v Speaker 3>So we had a boom and e boom in batteries,

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<v Speaker 3>boom and home batteries as mentioned that before, and then

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<v Speaker 3>an even bigger boom in supply.

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<v Speaker 2>So we know.

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<v Speaker 3>You know, there's no iron laws in economics, but one

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<v Speaker 3>of the closest to an iron law is the law

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<v Speaker 3>of supply and demand. If demand goes up, prices go

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<v Speaker 3>up at the given level of supply. If demand goes

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<v Speaker 3>up and supply goes up more, the curves shift and

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<v Speaker 3>I won't go through the boring economics of it, and

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<v Speaker 3>price actually can come down. So even though EV sales

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<v Speaker 3>are boomed, batteries are boomed and again I'm all for it, right,

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<v Speaker 3>but supplies grown by more, so the price is absolutely created.

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<v Speaker 3>So people who said and again think about thematically, I'm

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<v Speaker 3>by lithium because evs are going to be big.

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<v Speaker 2>There's only half the story, and that's why it's.

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<v Speaker 3>Really important back to energy more broadly, the other problem

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<v Speaker 3>with half the story we've seen go back to unfortunately

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<v Speaker 3>going to go back to tariffs for a second.

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<v Speaker 2>The world is freaked out about the potential of a

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<v Speaker 2>US and all global recession.

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<v Speaker 3>We know when there's economic downturns, oil prices or volumes

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<v Speaker 3>tend to fall because oil tends to power the global

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<v Speaker 3>economy at leat until we fix that properly with renewables

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<v Speaker 3>once and for all. But for now, at least oil

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<v Speaker 3>powers the global economy. When there's fears of it downturned,

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<v Speaker 3>guess what the oil price falls meaningfully. And so all

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<v Speaker 3>we've actually seen as well as all this sort of

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<v Speaker 3>stuff is in the energy space. Petrol prices, diesel prices

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<v Speaker 3>are coming down because the oil price is coming down

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<v Speaker 3>because the world's no longer sure we can use as

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<v Speaker 3>much as we used to if things do get tougher.

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<v Speaker 2>And so you ask at the energy sector.

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<v Speaker 3>My broadest fiel and energy, honestly, mate, is trying to

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<v Speaker 3>predict energy prices a really really, really really tough game

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<v Speaker 3>because you've got to predict the supply and the demand.

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<v Speaker 3>And again, if you don't believe me, go back three

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<v Speaker 3>and a half weeks and say, who predicted the oil

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<v Speaker 3>price would fall because Trump would unveil these massive so

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<v Speaker 3>called reciprocal tariffs, you know, horribly disproportioned to anything else

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<v Speaker 3>going on. And the oil price tanks, I mean maybe

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<v Speaker 3>three people predicted it, and I'll say predicted and again

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<v Speaker 3>the air quotes because they've probably predicted oil price falling

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<v Speaker 3>in Outher twenty five times and it hasn't happened.

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<v Speaker 2>But you had to kind of have a.

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<v Speaker 3>View on that, have a view on the price of

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<v Speaker 3>woodside patroleum for examples, that energy, or Santos or something else.

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<v Speaker 2>Because no matter what they do themselves, great production.

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<v Speaker 3>High no lost time, injuries, great scale, do all the

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<v Speaker 3>things they can do correctly, but every morning you've got

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<v Speaker 3>to look outside, you open open the blinds and go, oh,

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<v Speaker 3>what's the price today, and kind of cringe as they

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<v Speaker 3>check it.

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<v Speaker 2>They have no control over that.

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<v Speaker 3>And that's the biggest part by far, of any lithium, coal,

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<v Speaker 3>oil gas.

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<v Speaker 2>Pick your energy source.

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<v Speaker 3>It's the global market price that termines your returns, far far,

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<v Speaker 3>far more than then the company itself can do. And

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<v Speaker 3>I'm yet to find anyone who can reliably predict the

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<v Speaker 3>energy price to any reasonable degree to make it worth

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<v Speaker 3>an investment. So there are local issues.

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<v Speaker 2>There are local implications for the energy sective for sure.

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<v Speaker 3>I just want people to kind of make sure they

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<v Speaker 3>take the bigger picture, like the lithium supply and demand story.

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<v Speaker 2>Government policy is one small bit of it, and it's

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<v Speaker 2>not a tiny bit.

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<v Speaker 3>Individual companies may get those government contracts for the future

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<v Speaker 3>made in Australia.

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<v Speaker 2>There's other things that could happen.

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<v Speaker 3>Of course, nuclear power plants could be built and designed,

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<v Speaker 3>and there's lots of possibles. The other thing, by the way,

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<v Speaker 3>is if you're betting on government policy for an investment thesis,

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<v Speaker 3>you're probably taking more risks than you know and probably

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<v Speaker 3>more than you should.

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<v Speaker 1>I think investing involves for risk, you might lose the

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<v Speaker 1>money you start with. We recommend talking to a licensed

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<v Speaker 1>financial advisor. We also recommend breeding product disclosure documents before

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<v Speaker 1>deciding to invest.