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Speaker 1: Never duper cur Now, before the Iran conflict kicked off,

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Speaker 1: the US economy was flying, while New Zealand was struggling

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Speaker 1: and Australia was stuck with that inflation problem. Sam Dickey

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Speaker 1: from Fisher Funds is with us to talk us through

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Speaker 1: this high Sam Hey, Heather, how different were things looking

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Speaker 1: for the US economy versus US and the Aussies.

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Speaker 2: Yes, very different stories across the three economies. So the

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Speaker 2: US was doing really well, sort of growing around three

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Speaker 2: percent the last couple of years, and inflation was continuing

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Speaker 2: to fall and it's almost at the Central banks target.

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Speaker 2: So that's otherwise known as Goldilocks, that really powerful combination

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Speaker 2: of strong growth and falling inflation. Ozzie had been growing okay,

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Speaker 2: somewhere in the middle about one and a half to

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Speaker 2: two percent, but it has an inflation problem. Inflation started

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Speaker 2: rising again last year. It's around three point five percent today,

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Speaker 2: well above the Central Bank's target. And then there's New

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Speaker 2: Zealand and then out of recession as we know, and

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Speaker 2: inflation hasn't really behaved that well either. It stayed higher

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Speaker 2: than than the US and headline inflation started rising last year.

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Speaker 2: So the US is sprinting Ozzie's been on a tree

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Speaker 2: mill again fighting a head wind. In New Zealand's been

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Speaker 2: on the stretcher.

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Speaker 1: So why has the US been able to pull this

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Speaker 1: whole thing off so much better than we have all

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Speaker 1: the Aussies?

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Speaker 2: Well, I mean, if we do start with the Aussies,

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Speaker 2: they just couldn't kill inflation. They got that double dose

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Speaker 2: out of the back of COVID, so massive COVID stimulus

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Speaker 2: like we all did from the government and a commodity

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Speaker 2: windfall that kept the economy running red hot. Now that

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Speaker 2: commodity tail in Australia is kind of fading fast, so

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Speaker 2: they face a tricky dismount as they're fighting yesterday's inflation

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Speaker 2: still but tomorrow's growth engine is sputtering. And as you know,

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Speaker 2: New Zealand has had hard off the post COVID boom.

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Speaker 2: Our house prices ran harder than most OECD countries that

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Speaker 2: two year fixed mortgage phenomenon, whereby we were hit in

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Speaker 2: the pocket pretty hard. You know, that mortgage bill went

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Speaker 2: for around two billion their quarter to six billion. And

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Speaker 2: then the US just has stuff that we don't have.

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Speaker 2: So they have nine their mortgages fixed for thirty years.

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Speaker 2: So there's a real staggered impact on the consumer. And

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Speaker 2: of course we've talked about this nauseam and the massive

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Speaker 2: AI investment going on over there, and of course they've

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Speaker 2: got a lot more fiscal large s, so they're running

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Speaker 2: kind of six percent fiscal deficits over there, which is

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Speaker 2: nearly double their fifty year average.

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Speaker 1: Now that a run has kicked off, though, does this

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Speaker 1: blow up the US advantage or does it tilt the

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Speaker 1: playing field for each of the countries.

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Speaker 2: It's no one knows how it's going to turn out.

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Speaker 2: But if the oil prices stay high, it's say over

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Speaker 2: one hundred dollars a barrel for a few months. On

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Speaker 2: the face of it, before we consider the all important consumer,

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Speaker 2: the US and Ausia are better off at a national level,

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Speaker 2: so they're both long oil or they are net oil exporters,

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Speaker 2: and you know that we're the odd one out. We're

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Speaker 2: a genuine net energy importer. So basically it's a at

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Speaker 2: tax on every Kiwi household. But the reality is consumers

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Speaker 2: in all countries get hit in the pocket at the pump.

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Speaker 2: So the only other nuance I would say is we're

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Speaker 2: kind of match fit for a tough environment over here,

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Speaker 2: and I don't say that lightly. That would just likely

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Speaker 2: prolong the temperate economy in New Zealand, whereas, given the

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Speaker 2: really high expectations of ongoing strong growth in the US

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Speaker 2: kind of muddied by the upcoming mid terms, I think

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Speaker 2: there could be a more painful adjustment over there.

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Speaker 1: Okay, what does this mean then for investors?

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Speaker 2: You know, as we've discussed, trying to read the tea

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Speaker 2: leaves on geopolitics is always fraught, but especially so this time.

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Speaker 2: And I think there've been six different reasons and five

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Speaker 2: different objectives floated by various people in the US administration,

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Speaker 2: and they all contradict each other at some point in time.

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Speaker 2: But just keep an eye on those circuit breakers you

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Speaker 2: and I talked about in April last year heither, which

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Speaker 2: was President Trump doesn't care about the stock market and

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Speaker 2: Wall Street per se, but he cares about hurting Main

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Speaker 2: Street and the higher oil prices obviously, but also the

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Speaker 2: higher interest rates we're seen in the US as a

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Speaker 2: result of the rising inflation expectations will definitely be hurting

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Speaker 2: the person in the street. So hopefully that will cause

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Speaker 2: them to blink sooner rather than later. But in the meantime,

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Speaker 2: remember to use this as an opportunity to kind of

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Speaker 2: understand exactly what you own as an investor, make sure

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Speaker 2: you're as convicted as you thought you were. Use it

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Speaker 2: as an opportunity to speak to your advisor. And if

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Speaker 2: there are fabulous companies you wanted to buy yesterday that

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Speaker 2: are much cheaper today, it can be an opportunity as well.

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Speaker 1: Yeah, hey, thank you very much. Sam has always appreciated this.

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Speaker 1: Sam Dickey Fisher Funds For.

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Speaker 2: More from Heather Duplessy Allen Drive. Listen live to news talks.

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Speaker 2: It'd be from four pm weekdays, or follow the podcast

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