WEBVTT - Quick Bite: How will Trump impact the NZ economy? 🇺🇸💰 0:00:01.000 --> 0:00:04.480 You're listening to a share these podcast, I'm interested. 0:00:04.600 --> 0:00:08.560 We mentioned the uncertainty that's been created in the world 0:00:09.080 --> 0:00:12.560 by the US presidential election. People trying to work out 0:00:13.000 --> 0:00:15.640 what's going on there. I mean, I know it's MAGA 0:00:15.760 --> 0:00:18.840 is the acronym, but it's almost like vuka volatile uncertain 0:00:19.400 --> 0:00:23.079 complex and always forget ambiguous. As the last one. Is 0:00:23.079 --> 0:00:26.520 that a pretty fair depiction of how investors are looking 0:00:26.560 --> 0:00:29.560 at what that election means for the prospects of growth 0:00:29.880 --> 0:00:32.839 and where rates and where exchange rates and things are 0:00:32.880 --> 0:00:34.879 going to go, and how that could affect our economy. 0:00:35.920 --> 0:00:38.159 Yeah, I mean the investors are scrambling around trying to 0:00:38.159 --> 0:00:41.720 figure out exactly what this means. Now. Clearly with the 0:00:41.760 --> 0:00:44.559 cryptocurrencies a rally doe very strongly. I mean, are just 0:00:44.600 --> 0:00:48.400 purely a speculative, as said anyway, But the speculation is 0:00:48.440 --> 0:00:51.040 that President Trump has been saying some nice things about it, 0:00:51.080 --> 0:00:53.239 and Elon Musk is in there, and he's got his 0:00:53.320 --> 0:00:55.720 doge coin I think it is if it still exists, 0:00:55.720 --> 0:00:58.040 and the department that he's heading there has got the 0:00:58.080 --> 0:01:03.880 same dog acronym. There are a first letters, so people 0:01:03.920 --> 0:01:06.920 are looking at that asset. There's a feeling that maybe 0:01:07.240 --> 0:01:09.679 inflation in the United States is going to be higher 0:01:09.680 --> 0:01:11.880 than would otherwise be the case because of the tariffs 0:01:11.880 --> 0:01:16.720 which are going on materials goods going into America. Already, 0:01:16.760 --> 0:01:20.960 firms in Australia are holding pre tariff increased sales by 0:01:21.040 --> 0:01:23.440 now before the price goes up for goods coming in 0:01:23.520 --> 0:01:27.440 from Mexico, from Canada, China, et cetera. Of course, what 0:01:27.480 --> 0:01:29.360 we don't know is how much of all of these 0:01:29.400 --> 0:01:33.039 threats for tariff changes are really just bargaining positions to 0:01:33.120 --> 0:01:37.319 get something else in exchange, either better trade access or 0:01:37.360 --> 0:01:41.640 something of relevance in the geopolitical sphere, for instance. We 0:01:42.360 --> 0:01:45.800 cannot know, and so this is going to be an 0:01:45.880 --> 0:01:49.680 environment of high uncertainty for the next two four years, 0:01:49.720 --> 0:01:53.040 et cetera. For New Zealand, the risks lie a bit 0:01:53.120 --> 0:01:58.280 on the downside here because we export minimally processed commodities 0:01:58.320 --> 0:02:00.280 to the rest of the world. A lot of the 0:02:00.320 --> 0:02:03.600 rest of the world has strong farm lobby groups who 0:02:03.640 --> 0:02:06.280 would like our stuff not to be going in there. 0:02:06.560 --> 0:02:09.880 And if we're looking at a world reverting more towards 0:02:10.000 --> 0:02:16.320 mercantilist policies of tariffs to somehow protect your domestic producers, manufacturers, farmers, 0:02:16.320 --> 0:02:19.640 et cetera. We do risk getting a bit lost in 0:02:19.639 --> 0:02:22.360 the wash there and having some negative outcomes. So the 0:02:22.480 --> 0:02:26.240 environment for ourselves has become riskier over for the next 0:02:26.240 --> 0:02:29.200 four years, and that may just constrain some investment in 0:02:29.200 --> 0:02:31.440 New Zealand in this period of time. The intrast rate 0:02:31.480 --> 0:02:34.960 implications difficult to figure out, but I'd say interest rates 0:02:34.960 --> 0:02:37.760 again not going as low as people are thinking because 0:02:37.760 --> 0:02:40.040 of some enhancement of the inflation risk. 0:02:40.639 --> 0:02:42.160 If we were trying to wrap it all up for 0:02:42.200 --> 0:02:44.679 how to make the best out of twenty twenty five, Tony. 0:02:44.960 --> 0:02:48.760 I think people anticipate some recovery in the economy, the 0:02:48.880 --> 0:02:52.200 labor markets improving. You asked earlier on Garth about the 0:02:52.240 --> 0:02:54.400 unemployment rate. You know, we're four point eight percent at 0:02:54.400 --> 0:02:57.600 the moment, go to five point five percent. I guess 0:02:57.639 --> 0:03:00.399 I'm not greatly concerned about that. We had six point 0:03:00.440 --> 0:03:03.560 seven percent back in about twenty twelve. I think eleven 0:03:03.600 --> 0:03:06.519 point one percent or so back in about nineteen ninety two. 0:03:06.560 --> 0:03:10.040 You know, we've seen far higher unemployment rates in the past. 0:03:10.200 --> 0:03:12.640 That will act as a constraint on the strength of 0:03:12.720 --> 0:03:16.400 recovery and consumers spending for a lot of twenty twenty five, 0:03:16.480 --> 0:03:20.520 so I think there's more rationalization to come in the 0:03:20.560 --> 0:03:24.720 retail hospitality sector. And because we're in sort of the 0:03:24.800 --> 0:03:28.120 last stages of the weakness for the economy, that doesn't 0:03:28.160 --> 0:03:31.040 mean things improve for businesses generally. As we see that 0:03:31.240 --> 0:03:35.120 the failures liquidations are picking up because some firms do 0:03:35.200 --> 0:03:37.520 not have the cash flow for the final three to 0:03:37.600 --> 0:03:39.600 six months of the period of weakness. It might the 0:03:39.600 --> 0:03:44.440 ird demanding tax payments, etc. We will see further weeding 0:03:44.480 --> 0:03:47.800 out across all sectors, but the scene is being set 0:03:47.880 --> 0:03:51.520 for better activity in our economy, mainly the second half 0:03:51.560 --> 0:03:54.400 of twenty twenty five and twenty twenty six rather than 0:03:54.440 --> 0:03:57.720 the first half of twenty twenty five. Conversely, for the 0:03:57.760 --> 0:04:00.800 biggest parts of the falls and interest rates, that'll be 0:04:00.880 --> 0:04:03.440 done and dusted, I think, quite frankly by the middle 0:04:03.600 --> 0:04:06.720 of twenty twenty five. Investing involves for risk you might 0:04:06.760 --> 0:04:09.160 lose the money you start with. We recommend talking to 0:04:09.200 --> 0:04:10.680 a licensed financial advisor. 0:04:11.400 --> 0:04:15.240 We also recommend reading product disclosure documents before deciding to invest. 0:04:15.480 --> 0:04:17.880 Everything you're about to see and hear is current at 0:04:17.880 --> 0:04:18.760 the time of recording.