1 00:00:00,080 --> 00:00:02,040 Speaker 1: It's not like this hasn't been coming either, but you 2 00:00:02,080 --> 00:00:03,360 Speaker 1: might want to pay a bit of attention to the 3 00:00:03,400 --> 00:00:06,520 Speaker 1: value of our dollar or lack of it against the Australian. 4 00:00:06,519 --> 00:00:08,600 Speaker 1: We're at a three year low eighty eight something. It's 5 00:00:08,600 --> 00:00:10,719 Speaker 1: getting a bit embarrassing, isn't it. Mark lists in the 6 00:00:10,720 --> 00:00:13,800 Speaker 1: investment Or is the investment director for Craig's Investment Partners 7 00:00:13,840 --> 00:00:16,840 Speaker 1: and is back with us. Mark morning, Good morning, Mike. 8 00:00:16,920 --> 00:00:17,840 Speaker 2: There's going very well. 9 00:00:17,880 --> 00:00:20,439 Speaker 1: Indeed, the Australian story, first of all, is this the 10 00:00:20,480 --> 00:00:23,120 Speaker 1: divergence of a couple of economies. Their story versus our 11 00:00:23,200 --> 00:00:24,439 Speaker 1: story is and more to it than that. 12 00:00:25,840 --> 00:00:27,600 Speaker 2: Yeah, I think that is the crux of it. And 13 00:00:27,640 --> 00:00:32,000 Speaker 2: more importantly, it's the interest rate differentials, which are already 14 00:00:32,760 --> 00:00:34,519 Speaker 2: there's a little bit of a gap there, but that 15 00:00:34,640 --> 00:00:38,880 Speaker 2: gap is expected to get wider as Australia cuts rates 16 00:00:39,080 --> 00:00:43,159 Speaker 2: more slowly because the economy is stronger, because inflation is 17 00:00:43,320 --> 00:00:46,080 Speaker 2: still a little higher than they would like, and we 18 00:00:46,159 --> 00:00:50,239 Speaker 2: are obviously looking at more rate cuts than we expected, 19 00:00:50,440 --> 00:00:51,760 Speaker 2: and not for the right reasons. 20 00:00:51,920 --> 00:00:55,000 Speaker 1: No, indeed, not where does eighty eight sit historically. 21 00:00:54,480 --> 00:00:59,760 Speaker 2: Speaking, historically eighty eight is actually right on the long term. 22 00:01:00,320 --> 00:01:02,480 Speaker 2: If you look at sort of the last twenty five years, 23 00:01:02,560 --> 00:01:05,000 Speaker 2: eighty eight is bang on. Obviously, there was a time 24 00:01:05,040 --> 00:01:08,200 Speaker 2: when we hit parody, and there was a time when 25 00:01:08,200 --> 00:01:10,319 Speaker 2: we were down as low as sort of seventy three, 26 00:01:10,440 --> 00:01:13,119 Speaker 2: so there's been a pretty wide range against the Aussie dollar. 27 00:01:13,160 --> 00:01:16,560 Speaker 2: Eighty eight is right on where it's been over that 28 00:01:16,600 --> 00:01:18,960 Speaker 2: twenty five year period, but it's quite a bit lower 29 00:01:18,959 --> 00:01:21,120 Speaker 2: than we've seen in recent times. We were up at 30 00:01:21,160 --> 00:01:24,800 Speaker 2: almost well, I think it was ninety four almost in April, 31 00:01:25,800 --> 00:01:28,319 Speaker 2: so we're off a good five or six percent since 32 00:01:28,760 --> 00:01:29,680 Speaker 2: just a few months back. 33 00:01:29,800 --> 00:01:32,280 Speaker 1: I like early nineties. That feels about right to me. 34 00:01:32,360 --> 00:01:34,520 Speaker 1: It feels like we're sort of okay and they're okay 35 00:01:34,600 --> 00:01:36,040 Speaker 1: and the world is in the right place. Or is 36 00:01:36,080 --> 00:01:37,440 Speaker 1: that just me making stuff up? 37 00:01:38,520 --> 00:01:40,679 Speaker 2: No, there's definitely a sweet spot. You know, as an 38 00:01:40,760 --> 00:01:44,080 Speaker 2: exporting nation, you want a lower currency. And remember that 39 00:01:44,520 --> 00:01:48,480 Speaker 2: Australia is even number number two or number three for 40 00:01:48,560 --> 00:01:52,640 Speaker 2: goods exports behind China, so about thirteen odd percent. It's 41 00:01:52,680 --> 00:01:54,720 Speaker 2: also one of our biggest I think it is our 42 00:01:54,760 --> 00:01:57,800 Speaker 2: biggest tourism market, isn't it. Some forty odd percent of 43 00:01:57,800 --> 00:02:01,760 Speaker 2: international arrivals come from OZ so if our dollar is 44 00:02:01,800 --> 00:02:03,960 Speaker 2: weak compared to their and hopefully there's more of them 45 00:02:04,000 --> 00:02:07,280 Speaker 2: coming here, and it's good for exporters, but it doesn't 46 00:02:07,800 --> 00:02:10,200 Speaker 2: It means we're poorer in a global sense, and it 47 00:02:10,280 --> 00:02:14,600 Speaker 2: means that anything we import from over there is more expensive. 48 00:02:14,639 --> 00:02:16,799 Speaker 2: So you definitely want it to be too don't want 49 00:02:16,800 --> 00:02:17,800 Speaker 2: it to be too low, do you? 50 00:02:18,000 --> 00:02:19,800 Speaker 1: And how much of this is a global story? I mean, 51 00:02:19,800 --> 00:02:21,880 Speaker 1: when I'm looking at the pound at forty three, I mean, 52 00:02:21,919 --> 00:02:24,080 Speaker 1: for goodness sake, I mean, you can't afford to travel anymore? 53 00:02:24,200 --> 00:02:26,520 Speaker 1: Is that normal historically speaking as well? 54 00:02:27,520 --> 00:02:29,720 Speaker 2: Yeah, that one is the one. The other one that 55 00:02:29,760 --> 00:02:31,680 Speaker 2: really stands out to me, Mike, And this one sort 56 00:02:31,680 --> 00:02:33,919 Speaker 2: of flies under a bit under the radar because we 57 00:02:33,919 --> 00:02:35,560 Speaker 2: talk a lot about the Aussie dollar. We talked about 58 00:02:35,560 --> 00:02:39,000 Speaker 2: the greenback obviously, but the euro. We're at about forty 59 00:02:39,120 --> 00:02:43,119 Speaker 2: nine against the euro, and the long term average there 60 00:02:43,240 --> 00:02:46,400 Speaker 2: is about fifty six odd and the last time we 61 00:02:46,480 --> 00:02:49,600 Speaker 2: were under fifty against the euro was sort of late 62 00:02:49,720 --> 00:02:54,000 Speaker 2: two thousand and nine, early twenty ten. That's the one 63 00:02:54,040 --> 00:02:56,480 Speaker 2: that really is at its lowest levels we've seen in 64 00:02:56,520 --> 00:02:57,320 Speaker 2: a long time. 65 00:02:57,680 --> 00:03:00,600 Speaker 1: So good for exporters, but unfortunately we also like to 66 00:03:00,680 --> 00:03:02,679 Speaker 1: import stuff, and that's where the problem lies. 67 00:03:02,480 --> 00:03:06,480 Speaker 2: Isn't it one hundred percent? And also you know that 68 00:03:06,480 --> 00:03:09,320 Speaker 2: puts a bit of upward pressure on our inflation backdrop, 69 00:03:09,440 --> 00:03:13,040 Speaker 2: doesn't it with the tradeaball's inflation, Because if we're paying 70 00:03:13,040 --> 00:03:15,320 Speaker 2: more for those imports, and we do import a lot 71 00:03:15,320 --> 00:03:19,480 Speaker 2: of products, then that that can sort of be a 72 00:03:19,560 --> 00:03:22,000 Speaker 2: challenge in terms of the cost of living. But look, 73 00:03:22,040 --> 00:03:24,320 Speaker 2: our economy is in a difficult spot, as you well know, 74 00:03:24,639 --> 00:03:28,560 Speaker 2: and I think a weaker currency is one of those 75 00:03:28,639 --> 00:03:33,040 Speaker 2: shock absorbers that hopefully will help dig us out of 76 00:03:33,040 --> 00:03:35,000 Speaker 2: this hole over the next little while, as it will 77 00:03:35,040 --> 00:03:36,360 Speaker 2: boost that export sector. 78 00:03:36,600 --> 00:03:40,080 Speaker 1: So does economic growth fix the problem? If twenty six 79 00:03:40,200 --> 00:03:42,600 Speaker 1: comes right, do we see a rectification of some of 80 00:03:42,640 --> 00:03:44,160 Speaker 1: the numbers we've just talked about. 81 00:03:45,080 --> 00:03:48,720 Speaker 2: In theory, You do, because the reason the currency is lows. 82 00:03:48,760 --> 00:03:51,480 Speaker 2: You've got a weak economy, you've got expectations of more 83 00:03:51,560 --> 00:03:54,000 Speaker 2: rate cuts in an ocr that goes lower than we 84 00:03:54,080 --> 00:03:57,800 Speaker 2: thought before. Let's say that moving into twenty twenty six, 85 00:03:57,880 --> 00:04:00,360 Speaker 2: that does give us the boost and the recovery that 86 00:04:00,400 --> 00:04:03,400 Speaker 2: we're hoping for, so you get some slightly better growth, 87 00:04:04,320 --> 00:04:07,440 Speaker 2: and growth usually goes hand in hand with more demand 88 00:04:07,520 --> 00:04:11,320 Speaker 2: and potentially more inflation pressures. The central bank is then 89 00:04:11,360 --> 00:04:14,680 Speaker 2: in a position to at least stop cutting interest rates, 90 00:04:14,680 --> 00:04:17,560 Speaker 2: and there's maybe rate hikes on the horizon. You know, 91 00:04:17,600 --> 00:04:19,520 Speaker 2: that's not a bad thing if they're coming for the 92 00:04:19,600 --> 00:04:22,440 Speaker 2: right reasons, and if that sort of puts US in 93 00:04:22,480 --> 00:04:26,400 Speaker 2: a stronger relative position to the Aussies, to the Americans, 94 00:04:26,400 --> 00:04:28,919 Speaker 2: to whoever else, then you might see a bit of 95 00:04:28,920 --> 00:04:32,960 Speaker 2: a stabilization or a bit of upward pressure on the currency. 96 00:04:33,000 --> 00:04:35,320 Speaker 2: And that's how it's supposed to work in theory. It's 97 00:04:35,360 --> 00:04:38,760 Speaker 2: supposed to act as that natural adjustment mechanism. 98 00:04:39,000 --> 00:04:42,120 Speaker 1: Always appreciate the expertise might go well. Michaelister, investment director 99 00:04:42,160 --> 00:04:44,239 Speaker 1: at Craig's Investment Partners. 100 00:04:44,279 --> 00:04:47,159 Speaker 2: For more from The Mic Asking Breakfast, listen live to 101 00:04:47,279 --> 00:04:50,360 Speaker 2: news talks they'd be from six am weekdays, or follow 102 00:04:50,400 --> 00:04:51,960 Speaker 2: the podcast on iHeartRadio.