Monday 13 January 2025
The Aussie dollar hits its lowest level since the pandemic.
And more, including:
Economists think that weaker than expected inflation might mean an interest rate cut next month.
Opposition Leader Peter Dutton hits the new year in full campaign mode.
Plus the local sharemarket makes solid gains, Star Entertainment sits on the brink of administration, and Meta ends its fact checking operations as it looks to get closer to Donald Trump.
Plus don’t miss the latest episode of How Do They Afford That? - dealing with a financial hangover. Get the episode from APPLE, SPOTIFY, or anywhere you listen to podcasts.
Today on Fear and Greed, the Aussie dollar hits its lowest level since the pandemic. Economists think that weaker than expected inflation might mean an interest rate cut next month, and Opposition leader Peter Dutton hits the new year in full campaign mode. Plus the local share market makes solid gains. Star Entertainment sits on the brink of administration, and Meta ends its fact checking operations as it looks to get closer to Donald Trump. Welcome to Fear and Greed, daily business news for people who make their own decisions. It is Monday, the thirteenth of January twenty twenty five. I'm Michael Thompson and good morning Sean Aylmer.
Good morning, Michael, Sean.
We're back with our regular programs, although the morning shows this week will be a touch abbreviated, just a little bit shorter of the normal, but back to full length everything normal next week, full shows, daily interviews, afternoon editions, ask Fear and Greed plenty more. There is an interview still as well this week, so there's still plenty of good listening. There's no shortage level in Fear and Greed.
Yeah, and look, we neither of us have really been working full time over the last three or four weeks. Now we're back. So much has happened in the past four weeks, and it's not just Donald Trump and Elon Musk, so much other stuff going on in markets, in the economy, in politics here locally. It's just a good time to be back.
Michael, Yeah, it certainly is. I'm genuinely excited about it, Sean. The main story this morning, the Aussie dollar has hit its lowest level since the COVID nineteen pandemic, heading towards sixty one US since this is extraordinary.
Ouch sixty one point three eight cents on Friday now September last year was more than sixty nine cents, but back down towards sixty one cents. The US sense now against the Euro in the end, it's off as well, not quite as much, certainly not as much as the US dollar. A lot of that is about the of the US dollar. What is a really good measure is a trade weighted index. It actually measures the Australian currency against all our training partners. We fell below sixty on the twy basis on Friday. That's been happening on and off for the last two or three weeks. Only two times in the last twenty years have we regally been below sixty in terms of twy one was COVID one was a global financial crisis. These ain't good. Not good for holiday makers clearly, especially if you're going to the US. Bad news there, Michael. The main reason for this is the benign inflation figures that we got last week. We'll talk more about that in a moment. Also, the outlook for commodities ain't that good. The Aussie dollar is a commodity currency. They have commodities to do well. If core prices are all prices, goal prices go up, then the Aussie dollar tends to follow it. That's not happening at the moment. Is this good or bad? It's actually good for the economy. Imports become more expensive, so people buy local stuff, Our exports become cheaper. It's actually a boost for economic growth. So if you're having a holiday, not so good, but in terms of the economy, not so bad.
Sean. I love the fact that you asked yourself whether it's all bad. It feels as though our first kind of proper showback for the year, and you're trying to prove that I'm not really needed anymore.
Well now I was having that you jump in.
I'm just listening. I've forgotten how to talk to you, and I've just become a listener now over the last few weeks I've been listening to the interviews that you've been doing. Anyway, I will pick up on one thing that you said about the boost for economic growth. That boost could well work against the Reserve Bank of Australia cutting interest rates anytime soon, couldn't it.
Yes, there's plenty going on, So the main influences on interest rates at the moment, Inflation remains number one. Last week, the Australian Bureau Statistics monthly CPI Consumer Price Index number came out, came in at two point three percent, obviously well within that two to three percent big target range. But we know from last year that headline rate, that two point three percent headline rate is all about energy rebates. You've got to look at the underlying rate that came in at three point two percent in November, down from three and a half percent in October. Only A partial series tells part of the story only. But Michael, in this case, the trend is our friend. Inflation is heading in the right direction, So that suggests that maybe the Reserve Bank will shift on rates. Is the weekly Aussie dollar will give the Reserve Bank pause for thought, though it actually acts as a stimulator to the economy. That's a good thing, but the Reserve Bank needs to take that into account when it's thinking about inflation. Ain Zed chief economists last week, Quarie's chief economists last week both came out and said, we think that interest rates might actually fall next month. February next month, not March, not April, February there could be a rate cut. Bond markets of price in a seventy two percent chance of rate cut next month. It is a live option.
Do you remember a time when there's been so much uncertainty over interest rates because we have had, now oversay the last year, so many predictions as to when rates were going to come down, and it seems that every single economist, that every single bank has had to reassess their forecasts every single time another piece of data comes out.
Yeah, I mean, I think it's actually longer than that. It's ever since COVID, because remember, we're wondering when rates were going to go up, So we're going to go up they're going to go up, and they didn't, and then suddenly they shot up. And what it is. Ever since the GFC, there's been a really abnormal period of montrepolicy rates have been low since then. We're back to the new normal, which is the pre two thousand and seven period. And it's a guessing game again.
So do you think economists then have a harder job now than they did, say, fifteen years ago, twenty years ago.
I think it's about the same as twenty years ago, but harder than ten years ago. So the POSTGFC two thousand and seven to twenty twenty one, that was the easy time.
Okay, al right now, Sean, we are going to take a very quick break. We have a lot still to discuss. We're talking Peter Dutton's vision for Australia, We're talking about Facebook and Donald Trump. So much still to come. We'll be back in a moment with the rest of the day's business news. Sean oppositionally to Peter Dutton, has outlined his vision for Australia in a major speech yesterday, saying he will focus on tax, migration and education.
It sunds like there's an election around the corner.
It does just have that ring to it, doesn't it. These are the big issues, aren't they?
Yeah, Well, he was speaking in Melbourne. Is He said things like it's the last chance to reverse the economy and social decline of Australia. He said Australia may never never recover if Anthony Alberize he's reelected. A sliding doors moment, another favorite of mine. Talk about the views, values and visions of every day Australians. He talked about anythoningy alb and easy being the weakest ever prime minister. Very heavy on vision, very heavy on vision. Talked about small government using business to drive growth, lower and simpler taxes. Family is the mainstay of society. A late nation within its means nothing non policy, I mean tax, migration and education. Yep. But don't try and dig deeper into yesterday's speech because there's nothing on those policies as such. It was significant that it was in Melbourne because the Coalition hasn't done well minute this current parliament. There are thirty nine seats in Victoria. It has just eleven, mostly Labor has, the Greens has and the Teals also have some. The opposition hopes to win seats like chisholm Aston, Goldstein mckewen sort of Melbourne seats. They're really hoping for that, and so the fact that yesterday he came in more or less launched the year in Melbourne is very significant and he's on campaign footing and I'm sure Anythony albanisis as well.
So did you actually refer to it as a sliding doors moment?
Yeah?
Yeah, You've got to love that because that term did actually come from the movie. It wasn't something that was around before that. The Gwyneth Paltrow movie actually defined that. Now you've got kind of would be prime ministers quoting it as though it is just a term that has just entirely entered the everyday vernacula.
Yeah, totally. I never liked that movie.
Yeah, but you're a terrible judge of films because you haven't seen any. I'm amazed that you've seen sliding doors, to be honest, reruns.
I actually saw Gladiator too over the break. Well that's not even true. I saw about forty five minutes of it, but it just wasn't holding my attention.
God, God, we've got a lot to cover this year, Sean. Let's talk about the share market. Shall we. The local market, you've got to say started twenty twenty five reasonably well, although it's quite away from the high December of early December last year.
Yes, so let's say it almost hit eighty five hundred early in December last year. Six weeks ago it fell to below eighty one hundred just before Christmas. It's now around eighty three hundred, so halfway between that point. So I suppose you know, the first couple of weeks it's been okay, it's up about a little over one percent this so far this year, the real estate investment trust the property companies have done best, and that's on this interest rate speculation. Energy companies have done pretty well too. That's because prices are a bit better than the financials and healthcare. Think of the big banks there. They've actually done pretty well so far this year too. Now that's on the back of expectations of our interest rates. Financials and healthcare is get hit by that. Those two sectors were big, big winners last year. You can't really expect them to repeat that this year, but they've started off pretty well. Worse to have been utilities and staples consumer staples. So I think Woolly's calls. They're not secl cool. They just putter along the whole time, so they tend to underperform when interest rates start falling. Very very difficult to have much confidence about twenty twenty five if you read through the investment analysts, and most of them think that it'll be a positive year. But Donald Trump tariff's what's all that mean for China, global trade, Australia, how they interacted in that global trade? In tax wars. Donald Trump's talking about this big cut in corporate tax rates that could trigger other economies to do it. Very very difficult to know exactly what's going to happen.
Sean one stock one story, really one corporate story that was a standout in twenty twenty four and also in twenty twenty three. Because this keeps on going. There's been the underperformance and the dismal performance of Star Entertainment and that continues now into twenty twenty five.
Yeah, on Friday it said it has seventy nine million dollars in the bank. You might think that's a lot of money. It's been one hundred and seven million in the last three months. Gamblers are staying away, Turnovers not good, expenses continue to grow, including fines for their different license breaches. They're still facing an ods TRAK fine that could be up to three hundred million dollars. That will wipe out that seventy nine million really really quickly. The New South Wales and Queensland government are refusing to bail out the company. The Queensland Premier said that made that very clear. On Friday, David chris A fully said he won't bail out Star, but he might negotiate with any new owner if necessary. That's not really a big site. There's not a sign of confidence on the Premier of the state says we're not going to go help them, but we will negotiate with any new owner.
Oh god, it's just like okay, all right there, they're just waiting for you to fail.
It is analyst. Now, I think there's about fifty to fifty chance that Star won't make it if fall into administration. Oh wow, now it could. There's still got options. It's got a fifty percent stake in Queen's Wharf and Brizzy that could be sold that with a lot of money. On Friday's share price fell fifteen percent. It's now training Michael at eleven cents a share over the break. I didn't take much notice of share prices eleven share six like six weeks ago, well, six months ago it was about five times that level, but six weeks ago it was double that level. Is the eleven cents a share amazing?
That's dismal. All right, we talked local markets. What's happening on Wall Street?
Okay, So current expectations are for just one rate cut in the US this year. About two months ago, we thought there'd be four rate cuts. Before we went before Christmas, it was two rate cuts. Now it's down to one. Part of that is because the economy is doing pretty well. Over the U weekend and strong employment figures came out. It adds to the fewer rate cut arguments. Wall Street fell sharply. It's around one and a half percent lower over the weekend. That's where it is for the twenty twenty five year to date. China sher market's kind of interesting. Worst starts the new year since twenty sixteen, down five percent. That is on the back of the Donald Trump ambiguity one of the better word so plenty going on in China particularly, but also on Wall Street and markets until Donald Trump takes over and it's just it's a weekly of way today. I think he actually, you know, he says he's going to make changes immediately, and on that day one he could come out and place tariffs and all sorts of things on. So a lot of uncertainty around the place, Sewan.
It's a good time to mention the interview that we have today, that is with William lu who is from Wham Global Wilson Asset Management Global, and he is talking about six overseas stocks that you may not have considered.
Yes, now, a couple of those stocks. You know the names of a couple of them I had no idea on. And William is based in New York, knows plenty about what do buy cell not just in US MARC, but European markets as well. So if you're an investor interested in investing, is well worth a lism Yeah?
Sure is he? Now you mentioned Donald Trump. His influence Sean is cutting a sway through many companies, including Meta, the owner of Facebook.
I think this is quite a remarkable story in that it shows how corporate US is responding to Donald Trump. Mark Zuckerberg has announced a free speech overhaul Meta will now can Facebook's fact checking program. Instead, the going to rely on community to flag ins information. That's exactly what X does, so we don't need fact checking. If it's wrong, someone will tell us that type of thing. MET is also going to weaken its hate speech policies. It's replaced its global policy chief, Nick Kleig, with a prominent Republican an ally of Donald Trump, a guy called Joel Kaplan. It's a pointed Dana White to the board. Now Donald White, CEO of the UFC, big time Trump confidante. Over the weekend, it dumped its diversity, equity and inclusion efforts, and it actually came out and said they're going to dump it. Zuckerberg appeared on Joe Rogan's podcast. He said corporates had become culturally muted, they needed more masculine energy, and we need to celebrate aggression a bit more. Wow. I just think I don't know what to say about that. I think it speaks for itself.
Oh, that's that's quite extraordinary. One last one, Sean, because this has been the big story that everyone's been focusing on over the last few days, that the pictures have been shocking. The four wildfires around Los Angeles continue to rage.
Yeah, they do it in a dozen people are still missing. Sixteen people have been killed so far the largest fire and the Palisades is spreading east now threatens the wealthy neighborhood of Brentwood. Unfortunately, gusty winds are back their forecast for the next few days as well. That's not going to help anyone.
Goodness me, all right, Sean. That's the end of our first full show for the year. Big year ahead, right, very big year ahead, very exciting. And also a quick mention of the summer series that we have had if you have not had a listen, there is so much there to go back through. And we talked about the William Lou, the interview with William Lou that's being published today. There are so many other ones along those lines, with a whole bunch of investors and analysts, people who know a whole bunch of different sectors here and overseas, looking at a whole bunch of different companies. A lot of good ideas for investors, just places to start your research and just to factor maybe into your considerations.
Yeah, definitely, all right.
Sean, thank you very much.
Thanks Michael.
It is Monday, the thirteenth of January, twenty twenty five. Make sure you're following the podcast and please join us online on LinkedIn, Instagram, x TikTok and Facebook. Oh, Michael Thompson, and that was fear and greed. Have a great day.