WEBVTT - Is economic recovery stalling? 0:00:03.160 --> 0:00:06.240 Kyonda, and welcome to Shared Lunch, brought to you by Chase's. 0:00:06.400 --> 0:00:07.520 I'm Helen Madison. 0:00:08.039 --> 0:00:11.559 Today we take a pulse check on the economy. I'll 0:00:11.600 --> 0:00:15.000 be speaking with Infametrics principal economist Brad Olsen. 0:00:15.160 --> 0:00:18.919 The worry now a little bit more is that households, businesses, 0:00:18.960 --> 0:00:22.200 and professional forecasters are all now thinking that there is 0:00:22.239 --> 0:00:23.599 a bit more inflation to come. 0:00:23.680 --> 0:00:25.480 So what does this mean for investors? 0:00:25.680 --> 0:00:28.200 It's only a temporary pause that we're seeing with these tariffs, 0:00:28.360 --> 0:00:30.720 and that some of the results could still be pretty damaging. 0:00:30.840 --> 0:00:32.200 What should you be looking out for? 0:00:32.520 --> 0:00:34.680 Everyone's trying to figure out what the sweet spot is 0:00:34.720 --> 0:00:37.000 and sort of how to balance what is a lot 0:00:37.000 --> 0:00:38.519 of uncertainty. 0:00:38.000 --> 0:00:39.000 And what should you ignore. 0:00:39.080 --> 0:00:40.920 It's been the sort of recognition from a lot of 0:00:40.920 --> 0:00:44.680 people that, hey, sometimes that the markets have been over 0:00:44.800 --> 0:00:47.760 correcting or a bit overly worried about things and then 0:00:47.800 --> 0:00:48.919 seem to come back the other way. 0:00:49.000 --> 0:00:51.840 Before we get started, here's some important information. 0:00:52.320 --> 0:00:54.920 Investing involves the risk you might lose the money you 0:00:54.960 --> 0:00:58.240 start with. We recommend talking to a licensed financial advisor. 0:00:58.960 --> 0:01:02.800 We also recommend eating product disclosure documents before deciding to invest. 0:01:03.040 --> 0:01:05.440 Everything you're about to see and here is current at 0:01:05.440 --> 0:01:06.320 the time of recording. 0:01:06.480 --> 0:01:09.000 Welcome Brad, great to see you again. It's been a while. 0:01:09.240 --> 0:01:11.600 It has been a while. In goodness, what a lot 0:01:11.640 --> 0:01:14.800 has happened in the economy in that intervening period. Seems 0:01:14.800 --> 0:01:16.600 like we've gone from the brink of World War III 0:01:16.760 --> 0:01:20.280 to ceasefires, to tariffs to everything else. I mean, it's 0:01:20.319 --> 0:01:21.920 been a pretty wild ride. 0:01:21.720 --> 0:01:22.200 It has. 0:01:22.920 --> 0:01:27.039 Let's start here at home and think about our economy 0:01:27.280 --> 0:01:31.360 and growth. It appears that we are sort of stepping 0:01:31.440 --> 0:01:34.120 up a little bit after all the kind of recession talk, 0:01:34.360 --> 0:01:37.520 et cetera, et cetera. However, it appears to me that 0:01:37.560 --> 0:01:40.760 the only real growth we're seeing is in the rural sector, 0:01:41.080 --> 0:01:44.520 with milk prices, with beef for burgers to the US, 0:01:44.600 --> 0:01:48.720 which is good for exports, and then that yellow gold butter. 0:01:49.640 --> 0:01:52.000 You're definitely right, I mean, the rural sector is definitely 0:01:52.040 --> 0:01:55.080 powering the early stages of the economic recovery. You look 0:01:55.080 --> 0:01:57.400 at the likes of the trade numbers we've got coming through, 0:01:57.400 --> 0:02:00.760 commodity prices all in a better place. I think it's 0:02:00.800 --> 0:02:02.920 true as well when you look across the world. That's 0:02:02.960 --> 0:02:05.800 also partly a supply story. From other providers. So you 0:02:05.840 --> 0:02:08.679 look at the likes of butter, milk, other dairy products, 0:02:08.800 --> 0:02:12.440 New Zealand productions actually up, which is unusual when prices 0:02:12.480 --> 0:02:14.720 are sort of at the levels that they are. But 0:02:14.760 --> 0:02:16.760 it's production out of the likes of Europe and the 0:02:16.760 --> 0:02:19.680 Americas that haven't been doing quite as well. New Zealand's 0:02:19.680 --> 0:02:21.720 able to provide everyone else wants to pay for it. 0:02:21.760 --> 0:02:24.120 We've been doing not too bad. You look at also 0:02:24.160 --> 0:02:26.360 the numbers though, so the milk payout that's come through 0:02:26.440 --> 0:02:30.119 has generated over nineteen billion of money that'll be going 0:02:30.160 --> 0:02:33.040 back into the primary sector. What's interesting is in the 0:02:33.080 --> 0:02:35.519 season just finished, you're talking something like four point five 0:02:35.680 --> 0:02:38.519 four point six billion dollars more than the season before. 0:02:39.160 --> 0:02:42.280 That's more money coming through than the entirety of the 0:02:42.280 --> 0:02:44.880 lower interest rates that households be paying this year. So 0:02:44.919 --> 0:02:47.359 the primary sector is definitely a very critical part at 0:02:47.400 --> 0:02:50.040 the start. The question is does it continue. Because you 0:02:50.120 --> 0:02:52.360 do start to see a few of those numbers that 0:02:52.480 --> 0:02:55.960 likes the latest couple of global dairy trade options, they've 0:02:56.000 --> 0:02:58.160 fallen back a touch and I think that does just 0:02:58.200 --> 0:03:00.800 suggest again things are all right for the minute, but 0:03:00.840 --> 0:03:02.880 a bit of a question going forward in terms of 0:03:02.919 --> 0:03:05.359 how strong it will be. Fonterra has also made it 0:03:05.440 --> 0:03:07.600 quite clear that they think there's effectively a bit of 0:03:07.600 --> 0:03:10.760 a downside risk. They've come out that said, you know, 0:03:10.840 --> 0:03:13.440 milk prices at ten bucks for the season ahead, but 0:03:13.480 --> 0:03:16.200 it could range anywhere between eleven and eight. That's a 0:03:16.240 --> 0:03:19.079 three dollar range, the biggest they've ever provided, and more 0:03:19.120 --> 0:03:21.200 on the downside than there is the upside. I guess 0:03:21.200 --> 0:03:23.120 that's almost the tone for the second half of this 0:03:23.200 --> 0:03:25.720 year is Yep, there's a recovery coming through, but it's 0:03:25.760 --> 0:03:27.560 a very cautious and slow one. 0:03:27.919 --> 0:03:30.960 Is it only the rural sector that are actually going 0:03:31.040 --> 0:03:33.440 leaps and bounds or are other do you see other 0:03:33.480 --> 0:03:35.560 sort of green shoots? Which is a bit of a 0:03:35.600 --> 0:03:38.520 hackneyed phrase at the moment, but I'll use it anyway. 0:03:38.640 --> 0:03:40.680 First three months of this year looked all right. You 0:03:40.720 --> 0:03:44.600 saw economic activity that expanded actually quite a bit apecent, 0:03:45.120 --> 0:03:47.800 you know, some of the biggest increase in quarterly growth 0:03:47.840 --> 0:03:50.360 that we've seen amongst a lot of our international partners. 0:03:50.400 --> 0:03:52.840 I think the challenges after that, once you start to 0:03:52.840 --> 0:03:54.880 get into April, you have the lights of the tariff 0:03:54.920 --> 0:03:57.839 slow down and everything else that's come through you've seen 0:03:57.880 --> 0:04:00.280 some of those indicators that have fallen back. At the 0:04:00.280 --> 0:04:02.200 start of this year, there were a few parts the 0:04:02.320 --> 0:04:05.520 likes of there was some better manufacturing numbers that were 0:04:05.520 --> 0:04:09.160 coming forward. You also saw better professional services activity, so 0:04:09.200 --> 0:04:12.440 you're getting you know, business services going a bit more again. 0:04:12.480 --> 0:04:14.600 Both of those look like they've fallen back of touch 0:04:14.640 --> 0:04:18.279 as we've moved through into the mid year period, manufacturing 0:04:18.440 --> 0:04:22.640 and services and disease falling back into sort of contractionary territory. 0:04:22.720 --> 0:04:25.400 So just that feeling of yes, there's a recovery, but 0:04:25.440 --> 0:04:27.320 it's a bit more stop start. It's a bit more 0:04:27.960 --> 0:04:30.560 slow to get going than we might have first expected. 0:04:30.600 --> 0:04:32.719 And I feel like a lot of people ask me 0:04:32.800 --> 0:04:35.480 these days, you know, economist said survived till twenty five 0:04:35.560 --> 0:04:37.360 and I sort of have to respond and say, look, 0:04:37.400 --> 0:04:39.240 we've got into the thirty first of December for that 0:04:39.360 --> 0:04:41.719 come true. But it is going to be a slow 0:04:41.760 --> 0:04:43.039 slog I think for this year. 0:04:43.920 --> 0:04:46.320 Yeah, it feels like one step forward to back to 0:04:46.400 --> 0:04:49.599 some degree. I mean, the cost of food seems to 0:04:49.680 --> 0:04:53.320 still keep rising, fuel keeps rising, and whether that's because 0:04:53.320 --> 0:04:54.479 of the conflicts and the like. 0:04:55.520 --> 0:04:57.640 Yeah, I mean, where are we at with inflation. 0:04:58.080 --> 0:05:01.480 Inflation's uncomfortable at the moment, and like probably more uncomfortable 0:05:01.480 --> 0:05:03.920 than we would have first been expecting some people in 0:05:03.920 --> 0:05:07.400 our forecasting that headline inflation might go through three percent 0:05:07.520 --> 0:05:09.920 towards the second half of this year. Now, that of course, 0:05:09.920 --> 0:05:11.920 would be the first time that it had breached that 0:05:12.000 --> 0:05:15.200 three percent high point of the highest that the Reserve 0:05:15.279 --> 0:05:18.120 Bank generally wants it to go. Now, yes, there's an 0:05:18.120 --> 0:05:20.839 expectation a short term, but there does just seem to 0:05:20.839 --> 0:05:24.279 be enough sort of remaining inflationary pressure to make us 0:05:24.320 --> 0:05:27.160 a little bit worried. And some people often ask, you know, 0:05:27.400 --> 0:05:29.279 how do you have this when you've got the economy 0:05:29.279 --> 0:05:32.000 that's in such a tough zone. You know, it's not 0:05:32.040 --> 0:05:35.279 really a conducive environment right to raise prices, but you're 0:05:35.279 --> 0:05:37.359 still seeing them. And I do wonder if we're starting 0:05:37.440 --> 0:05:40.400 to see almost a twenty twenties version of stagflation. Now 0:05:40.440 --> 0:05:42.640 that's a big word to use. I'm not saying we're 0:05:42.640 --> 0:05:45.320 going back to the nineteen seventies. It's a very different environment, 0:05:45.520 --> 0:05:47.240 but you do just get the feeling that there's a 0:05:47.240 --> 0:05:51.200 little bit more of that inflationary undercurrent sitting around food 0:05:51.240 --> 0:05:55.320 price inflation's now reaccelerated to four point four percent. What's 0:05:55.360 --> 0:05:58.039 interesting is that last time it got sort of to 0:05:58.120 --> 0:06:00.359 this high level, and I think you know now at 0:06:00.360 --> 0:06:02.679 the highest food price inflation since the end of twenty 0:06:02.680 --> 0:06:05.560 twenty three. The difference is at that point it was very, 0:06:05.640 --> 0:06:09.080 very broad based, lots of stuff increasing in price all 0:06:09.080 --> 0:06:11.760 the time, whereas now it's a bit more concentrated to 0:06:11.800 --> 0:06:14.640 a more limited set of items. But the big increases. 0:06:14.880 --> 0:06:16.440 You look at the likes of butter up sort of 0:06:16.480 --> 0:06:19.839 fifty sixty percent the last year, mints and beef prices 0:06:19.920 --> 0:06:23.280 higher again because those international prices. You look at the 0:06:23.360 --> 0:06:27.279 likes of coffee, chocolate, olive oil, all of those increasing 0:06:27.600 --> 0:06:31.000 all the But it's also it's not everything, but it's 0:06:31.000 --> 0:06:33.640 the stuff that you notice so so much more, and 0:06:33.720 --> 0:06:36.200 I think that's probably the difference. You've also got the 0:06:36.279 --> 0:06:39.159 likes of oil prices, yes, fluctuating quite a lot this year. 0:06:39.400 --> 0:06:41.080 But the real one, I think, and the kicker for 0:06:41.120 --> 0:06:43.960 households at the minute, is energy prices. You look at 0:06:44.000 --> 0:06:47.520 electricity and gas now rising at the fastest they've been 0:06:47.560 --> 0:06:50.000 going in over ten years, and again it's just that 0:06:50.160 --> 0:06:53.000 uncomfortable piece where from a household perspective. You've got food 0:06:53.000 --> 0:06:55.719 prices going up, you've got energy costs going up. And 0:06:55.720 --> 0:06:59.480 the worry now a little bit more, is that households, businesses, 0:06:59.520 --> 0:07:02.880 and prefertional forecasters all now thinking that there is a 0:07:02.880 --> 0:07:06.520 bit more inflation to come. Inflation expectations have increased, not 0:07:06.640 --> 0:07:09.960 massively again, not to red alert danger zones, but just 0:07:10.000 --> 0:07:12.520 to enough of a position where again the worry starts 0:07:12.560 --> 0:07:14.080 to creep in, sort of a bit of a pit 0:07:14.120 --> 0:07:16.920 in the bottom of your stomach around inflation sitting by, 0:07:17.200 --> 0:07:19.040 and I think that's why the reserve banks in this 0:07:19.160 --> 0:07:22.960 really challenging position where they're going the economy doesn't look great, 0:07:23.080 --> 0:07:25.120 and I worry again. You look back to where we've 0:07:25.120 --> 0:07:27.400 been a couple of years back, the likes of inflation 0:07:27.520 --> 0:07:29.560 when it started to get bad. It was at a 0:07:29.600 --> 0:07:32.520 time when we thought the economy wouldn't allow inflation to 0:07:32.680 --> 0:07:35.520 pass through, and we sort of almost conveniently at the time, 0:07:35.640 --> 0:07:39.920 ignored actual inflation starting to creep up again. Not fully 0:07:39.960 --> 0:07:42.040 back in the same position, but it seems a little 0:07:42.080 --> 0:07:44.200 bit too similar to completely ignore it. 0:07:44.760 --> 0:07:47.480 That's a good segue to the Reserve bank. By the 0:07:47.520 --> 0:07:50.880 time this episode goes to air. They will have actually 0:07:51.640 --> 0:07:54.200 the Reserve Bank will have actually announced. 0:07:53.720 --> 0:07:54.960 What the official cash rate is. 0:07:55.480 --> 0:07:58.560 Everybody's been hoping it would be another reduction, but it 0:07:58.560 --> 0:08:01.600 does feel like consensus is they will hold. 0:08:02.000 --> 0:08:05.720 What was your prediction, We're expecting a hold as well, 0:08:06.080 --> 0:08:07.880 to keep their official cash rate where it is at 0:08:07.880 --> 0:08:10.600 three point twenty five percent, but also expecting that there 0:08:10.600 --> 0:08:13.560 could be a further cut at some point later in 0:08:13.560 --> 0:08:16.080 the year. And I guess that's where again that nervousness 0:08:16.080 --> 0:08:19.000 creeps in that it's a little bit hard to justify 0:08:19.160 --> 0:08:22.560 moving right this moment. You know, there's still the clarification 0:08:22.640 --> 0:08:25.160 of what happens with the tariffs around the world, still 0:08:25.160 --> 0:08:26.960 a bit more data to come through when it comes 0:08:26.960 --> 0:08:30.000 to inflation and similar and so I think again that 0:08:30.080 --> 0:08:31.960 sort of question of where does the Reserve Bank go 0:08:32.120 --> 0:08:34.560 next is probably the bigger one, and they'll have a 0:08:34.559 --> 0:08:37.319 better opportunity in August to be able to explain not 0:08:37.360 --> 0:08:40.160 only the most recent decision, but also what that future 0:08:40.200 --> 0:08:43.240 pathway looks like, because that's what everyone's concentrated on. Is 0:08:43.280 --> 0:08:44.959 there a lot left to go? Are we close to 0:08:45.000 --> 0:08:47.280 the end? Have we already seen the end? Quite a 0:08:47.320 --> 0:08:49.080 lot of options going forward. 0:08:49.320 --> 0:08:52.240 Yeah, I suppose they're sending out letters at the moment. 0:08:52.280 --> 0:08:57.440 According to Trump's officials and to you know, lots of 0:08:57.480 --> 0:09:00.480 countries that actually probably have quite high tarifs, they do 0:09:00.520 --> 0:09:03.840 something quite quickly, So you're right, we probably might have 0:09:03.920 --> 0:09:05.600 to wait until that happens. 0:09:05.720 --> 0:09:07.640 And I mean you look at the market reaction as well. 0:09:07.720 --> 0:09:10.280 I mean, when the tariffs originally came through at the 0:09:10.280 --> 0:09:12.079 start of April like that, that was a bit of 0:09:12.080 --> 0:09:14.520 a mountdown on the markets. What's I think interesting is 0:09:14.559 --> 0:09:17.160 that even in recent times you've seen this sort of 0:09:17.160 --> 0:09:20.960 the markets actually continue to push higher on some economic news, 0:09:21.160 --> 0:09:24.640 but almost conveniently forgetting that there's it's only a temporary 0:09:24.640 --> 0:09:26.840 pause that we're seeing with these tariffs, and that some 0:09:26.880 --> 0:09:29.240 of the results could still be pretty damaging. I mean, 0:09:29.280 --> 0:09:32.840 recently we've seen an agreement with between the US and Vietnam. 0:09:33.120 --> 0:09:35.400 They came out and said, look, twenty percent tariff. Now 0:09:35.400 --> 0:09:37.840 that's lower than the forty six I think percent they 0:09:37.880 --> 0:09:40.880 started with. Twenty percent tariff on everything coming out of 0:09:40.960 --> 0:09:43.439 Vietnam is still quite a lot though, and into the 0:09:43.520 --> 0:09:46.000 US market becomes quite important because that's where a lot 0:09:46.000 --> 0:09:50.040 more manufacturing is based. Anything that transits through Vietnam sitting 0:09:50.040 --> 0:09:53.520 at forty percent tariffs and the US gets completely you know, 0:09:54.160 --> 0:09:57.240 free access into the market. Like that's still pretty bad 0:09:57.360 --> 0:10:00.640 for economic expectations going forward. So I'm a little bit 0:10:00.679 --> 0:10:03.600 worried again that people are sort of quite happily blase 0:10:03.800 --> 0:10:06.520 because it's been such a tough ride knowing what's coming next. 0:10:06.760 --> 0:10:10.640 But if that's any indication again economic growth globally will slow. 0:10:10.760 --> 0:10:13.160 If you're seeing those levels of teriffs. They might be 0:10:13.160 --> 0:10:15.240 better than what was announced in April, but they're not 0:10:15.280 --> 0:10:17.280 good for global economic growth. 0:10:17.480 --> 0:10:19.720 And that's even with China and I think the UK 0:10:19.960 --> 0:10:23.280 sort of negotiating, and we'll obviously see other negotiations in 0:10:23.320 --> 0:10:26.120 the next month or so. But yeah, it feels still 0:10:26.280 --> 0:10:27.160 somewhat bleak. 0:10:27.040 --> 0:10:27.440 Doesn't it. 0:10:27.520 --> 0:10:29.559 Yeah, very challenging, and I mean it's one of those 0:10:29.600 --> 0:10:31.439 things for New Zealand, of course, we rely on the 0:10:31.440 --> 0:10:34.520 global economic environment to trade. At the moment, I think 0:10:34.520 --> 0:10:37.319 we're actually probably not too badly placed. People were still 0:10:37.320 --> 0:10:39.960 buying our food stuff, so we're selling to consumers a 0:10:39.960 --> 0:10:42.679 lot more if we were selling sort of semi manufactured 0:10:42.720 --> 0:10:45.040 goods or sort of intermediate goods that went into the 0:10:45.040 --> 0:10:47.920 production process. If we were selling cars, you'd be in 0:10:47.960 --> 0:10:50.200 a very, very tough spot. And having been in Korea 0:10:50.240 --> 0:10:52.520 earlier this year, when again they are a lot more 0:10:52.559 --> 0:10:54.880 wedded to not only the US economy, but to some 0:10:54.960 --> 0:10:57.800 of that more manufactured stuff, they were definitely sort of 0:10:57.800 --> 0:11:00.439 feeling the pinch a whole lot quicker than we were now. 0:11:00.520 --> 0:11:04.640 Interest rates also always have a bearing on house prices, 0:11:06.240 --> 0:11:08.120 so the rate cuts. 0:11:07.800 --> 0:11:10.560 That we've had, we've had several I think it's two. 0:11:10.559 --> 0:11:15.160 Hundred and twenty five basis points over the last few months. However, 0:11:15.280 --> 0:11:18.520 it doesn't appear that the heat has come back into 0:11:18.600 --> 0:11:19.720 that housing market. 0:11:20.040 --> 0:11:22.400 No, not at all. And despite the fact that you 0:11:22.400 --> 0:11:25.360 know you've got some fairly attractive interest rates on offer, 0:11:25.679 --> 0:11:28.160 you just haven't seen that same level of buyer demand 0:11:28.280 --> 0:11:30.640 spark up to the same degree. At the same time, 0:11:30.679 --> 0:11:33.160 you've got a huge number of houses that are still 0:11:33.200 --> 0:11:35.480 on the market. I think there's a few elements that. 0:11:35.520 --> 0:11:37.560 One is the fact that there is literally half a 0:11:37.640 --> 0:11:40.760 year's worth of normal sales setting available on the market. 0:11:41.000 --> 0:11:43.400 Takes a while to clear that backlog. You've also got 0:11:43.400 --> 0:11:45.400 a lot of new builds that have only sort of 0:11:45.440 --> 0:11:49.439 recently been finished up, a lot of selling activity potential 0:11:49.520 --> 0:11:52.200 in the market, not as many buyers coming through. You've 0:11:52.240 --> 0:11:54.560 seen the likes of net migration pull back, so your 0:11:54.600 --> 0:11:58.160 population growth has slowed. But I think particularly again, it's 0:11:58.160 --> 0:11:59.640 interesting sort of when you look at some of the 0:11:59.640 --> 0:12:03.520 indicat after that tariff announcement in April, there did seem 0:12:03.559 --> 0:12:06.880 to be a real feeling amongst potential buyers that they 0:12:06.920 --> 0:12:09.440 actually weren't quite as keen to clamber in, you know, 0:12:09.520 --> 0:12:12.040 worries around the likes that interest rate they might be paying, 0:12:12.080 --> 0:12:14.440 and what it might be in the future, the risk 0:12:14.480 --> 0:12:16.000 of do I have a job or not? Will this 0:12:16.120 --> 0:12:19.280 completely upset the apple cart, probably more importantly for some 0:12:19.360 --> 0:12:23.239 people that probably had their potential deposit in their investments, 0:12:23.320 --> 0:12:24.840 all of a sudden they didn't have as much of 0:12:24.840 --> 0:12:27.480 a deposit as before. That means that there's still no 0:12:27.600 --> 0:12:29.760 real reason that prices are going to be bid up, 0:12:29.920 --> 0:12:31.880 and I think for a while then you'll start to 0:12:31.960 --> 0:12:35.280 we'll continue to see yes, probably some price rises, but 0:12:35.520 --> 0:12:38.160 very very muted as you go through the next couple 0:12:38.200 --> 0:12:39.960 of years. And that's probably not a bad place for 0:12:40.040 --> 0:12:42.600 New Zealand. What's interesting is it does now mean that 0:12:42.600 --> 0:12:46.040 people are increasingly going well, okay, housing market doesn't have 0:12:46.080 --> 0:12:48.520 a lot of immediate growth in it. Where am I 0:12:48.559 --> 0:12:50.520 making money now? And that seems to be the piece 0:12:50.520 --> 0:12:53.360 where people are casting around a lot more for not 0:12:53.440 --> 0:12:56.960 only money making options, but a wider variety of those options. 0:12:57.280 --> 0:13:01.440 That's a nice segue into the Cheesies Quarterly Index, which 0:13:01.440 --> 0:13:04.679 we have released this week. And definitely there is a 0:13:04.679 --> 0:13:09.560 correlation we've seen between interest rates and investor sentiment. We've 0:13:09.559 --> 0:13:12.000 got data for the last five years, which is, you know, 0:13:12.000 --> 0:13:14.840 it's a good metric, and it would appear that when 0:13:15.000 --> 0:13:19.480 rates have come down there is more immediacy in terms 0:13:19.520 --> 0:13:20.199 of investing. 0:13:20.840 --> 0:13:21.719 What would you. 0:13:21.640 --> 0:13:23.880 Say, I think there's a few elements to it. One 0:13:23.960 --> 0:13:27.520 is that generally, as your interest rates come lower, some 0:13:27.600 --> 0:13:30.400 of your sort of less risky options, you know, putting 0:13:30.400 --> 0:13:33.240 money into term deposits or similar just isn't nearly as 0:13:33.280 --> 0:13:36.240 attractive anymore. When it becomes a little bit harder to 0:13:36.240 --> 0:13:38.200 make those returns, you're having to sort of, you know, 0:13:38.320 --> 0:13:41.680 change around or think about adjusting your risk profile. I 0:13:41.679 --> 0:13:44.600 think it's also though, that as those interest rates come down, 0:13:44.600 --> 0:13:47.200 they do normally stimulate a bit more economic activity on 0:13:47.240 --> 0:13:50.040 the whole, both here and around the world. That generally 0:13:50.040 --> 0:13:53.080 means more economic activity, more selling for the businesses that 0:13:53.120 --> 0:13:56.080 you might be investing in, better returns, and similar over time. 0:13:56.120 --> 0:13:59.120 So it's sort of reassuring to see that. I think. Also, though, 0:13:59.160 --> 0:14:01.400 the big challenge in recent times has been that greater 0:14:01.520 --> 0:14:04.800 level of volatility that you've seen coming forward. There's been 0:14:04.840 --> 0:14:07.640 a lot of rebalancing, both from retail investors but also 0:14:07.679 --> 0:14:10.480 the big institutional guys. Everyone's trying to figure out what 0:14:10.520 --> 0:14:13.080 the sweet spot is and sort of how to balance 0:14:13.120 --> 0:14:15.520 what is a lot of uncertainty, and the best way 0:14:15.559 --> 0:14:18.360 for that seems to be less picking one deliberate strategy 0:14:18.360 --> 0:14:21.000 and going all in and more having that quite a 0:14:21.040 --> 0:14:24.000 bit more diversified option, which is reassuring to see because 0:14:24.040 --> 0:14:26.160 that seems to be the best method. But people are 0:14:26.280 --> 0:14:28.960 very much trying to sort of seek out those different opportunities. 0:14:29.280 --> 0:14:33.560 We're also seeing subset of investors which is growing actually 0:14:33.600 --> 0:14:37.720 looking to other emerging sectors, like we're talking AI, we're 0:14:37.720 --> 0:14:42.120 talking crypto, we're talking defense tech, we're talking autonomous vehicles, 0:14:42.120 --> 0:14:48.320 which it's quite exciting in some respects. Obviously, commercialization with 0:14:48.400 --> 0:14:52.240 these sort of new tech aspects are coming to the fore. 0:14:52.520 --> 0:14:55.120 I think also though, the availability of some of these 0:14:55.120 --> 0:14:57.960 options to investors is new, right, Like, there are some 0:14:58.080 --> 0:15:01.520 exciting opportunities there, but some of these again are a 0:15:01.560 --> 0:15:03.760 little bit more unproven. And look, if you want to 0:15:03.760 --> 0:15:06.160 take that big risk, you might get that big return, sure, 0:15:06.440 --> 0:15:09.080 but equally it might not come off to the same degree. 0:15:09.320 --> 0:15:11.320 I remember, even a couple of years ago, you started 0:15:11.320 --> 0:15:13.720 to see a few more businesses that have basically sold 0:15:13.800 --> 0:15:17.120 nothing at that point, and the evaluations continue to skyrock 0:15:17.280 --> 0:15:20.400 higher and higher on this expectation of better things to come, 0:15:20.560 --> 0:15:23.520 coupled with the fact that people are seeking those sort 0:15:23.520 --> 0:15:27.440 of higher returns because inflation has been high, economic pressures 0:15:27.440 --> 0:15:30.200 have come on. They are few people like say, not 0:15:30.240 --> 0:15:32.520 all of them, but that growing subset caen to find 0:15:32.560 --> 0:15:35.400 a different opportunity, and I guess hoping to be not 0:15:35.440 --> 0:15:37.720 necessarily the first, but in that sort of early wave 0:15:37.840 --> 0:15:40.280 of adopters and investors, because that's where you start to 0:15:40.280 --> 0:15:42.320 make some of those longer gains. Over time, you get 0:15:42.320 --> 0:15:45.040 an early you sort of ride that wave through. What 0:15:45.120 --> 0:15:47.240 will be interesting, I think is that at some point 0:15:47.280 --> 0:15:49.120 you will have some of these options that don't perform 0:15:49.120 --> 0:15:51.880 as well. That's just how the market works. It'll be 0:15:51.920 --> 0:15:54.200 interesting to see how people respond to that in terms 0:15:54.240 --> 0:15:56.160 of do they get a little bit burned and then 0:15:56.200 --> 0:15:58.880 immediately withdraw or do they go, look, actually, this is 0:15:58.920 --> 0:16:01.080 how the markets work. I'm going to be sort of 0:16:01.280 --> 0:16:03.520 happy to keep in it for that longer period of time. 0:16:03.680 --> 0:16:06.120 I think that people generally will stick around. They're often 0:16:06.120 --> 0:16:09.120 going to be younger investors who are have a bit 0:16:09.160 --> 0:16:11.600 more risk tolerance, willing to ride the wave for longer. 0:16:12.240 --> 0:16:14.200 I mean, it's something that also comes up a lot 0:16:14.240 --> 0:16:16.880 more in conversation. You know, people have been asking recently 0:16:17.120 --> 0:16:21.080 about the likes of AI, about gold, about carbon credits, 0:16:21.080 --> 0:16:24.600 about you know, crypto and similar. But also what's interesting 0:16:24.640 --> 0:16:27.960 I think is even some of the subsets of certain industries. 0:16:28.000 --> 0:16:31.000 You know, defenses are often a lot hotter and of 0:16:31.080 --> 0:16:34.760 greater interest these days. You know, questions around will actually 0:16:34.800 --> 0:16:36.760 how do you what are you looking for when it 0:16:36.800 --> 0:16:40.000 comes to defense assets? You know, it's not necessarily the 0:16:40.080 --> 0:16:42.320 usual will if consumers get to spend more than things 0:16:42.360 --> 0:16:44.640 will be better for defense as well. I think that 0:16:44.680 --> 0:16:47.080 the geopolitics is going to be a whole lot more challenging, 0:16:47.120 --> 0:16:49.960 so different drivers I think means that people are also 0:16:50.000 --> 0:16:52.640 seeking out a different sort of information than what they've 0:16:52.640 --> 0:16:53.200 had before. 0:16:53.480 --> 0:16:55.480 And I do see like even in the US they're 0:16:55.520 --> 0:16:59.240 thinking about being able to use your crypto assets as 0:16:59.320 --> 0:17:03.480 part of your for a house. Even in Germany they're 0:17:03.480 --> 0:17:06.280 looking at banks are looking at being able to transact 0:17:06.320 --> 0:17:08.800 in crypto. I mean, we're not there yet, but it 0:17:08.840 --> 0:17:13.080 does seem to be continuing to increase in demand. 0:17:13.840 --> 0:17:17.200 Absolutely not only increase in demand, but becoming more mainstream. 0:17:17.280 --> 0:17:19.520 You know, again, you go back sort of five, certainly 0:17:19.520 --> 0:17:22.080 ten years ago, and let's be quite honest, crypto was 0:17:22.119 --> 0:17:24.800 not mainstream. It was very much fringe. It was seen 0:17:24.840 --> 0:17:28.439 to be you know, different odd at some points. I 0:17:28.480 --> 0:17:30.000 still think, you know, for a lot of people that 0:17:30.040 --> 0:17:31.560 you've got to keep your wits about you in some 0:17:31.640 --> 0:17:34.880 of those areas because for sort of every sensible approach 0:17:34.920 --> 0:17:37.600 that's being taken in some areas to crypto, there's another 0:17:37.640 --> 0:17:39.840 fart coin that comes out every second day as well. 0:17:39.920 --> 0:17:43.560 Like the variety there makes it hard sometimes to sort 0:17:43.560 --> 0:17:47.399 of say crypto is this and be an all encompassing statement. 0:17:47.440 --> 0:17:49.280 There's a bit of variety in there, but it is 0:17:49.320 --> 0:17:52.520 becoming more mainstream. There's certainly more opportunity that starts to 0:17:52.560 --> 0:17:56.240 come through, and I guess also slightly challenging to say this, 0:17:56.359 --> 0:17:58.600 but I think it's real that you look around the world, 0:17:58.880 --> 0:18:01.440 less trust and government and similar means that people are 0:18:01.520 --> 0:18:04.000 again just wanting to hedge their bets a little bit 0:18:04.040 --> 0:18:05.960 more in terms of where they sort of park their 0:18:05.960 --> 0:18:08.080 money and their assets. And I think again, for a 0:18:08.080 --> 0:18:10.960 lot of people, it's not necessarily saying, look, I'm going 0:18:11.000 --> 0:18:13.679 all in on any one sect or whatever it happens 0:18:13.680 --> 0:18:16.840 to be, but I'm quite keen. As an investor these days, 0:18:16.920 --> 0:18:19.080 it seems on average to be a bit more exposed 0:18:19.080 --> 0:18:21.520 to a lot of things, and that sort of broad, 0:18:21.600 --> 0:18:24.119 diverse exposure does mean that you can pick up some 0:18:24.200 --> 0:18:27.120 of those gains when some of those newer asset classes 0:18:27.160 --> 0:18:29.600 start to emerge and provide you more potential. And I 0:18:29.600 --> 0:18:32.520 think this is where it's been interesting seeing people develop 0:18:32.560 --> 0:18:35.199 the last couple of years when there has been this 0:18:35.359 --> 0:18:39.320 sort of implicit conversation amongst New Zealanders around their risk tolerance, 0:18:39.560 --> 0:18:41.960