FEAR & GREED | Business NewsThis is Fear and Greed - The Week Ahead, where Sean Aylmer and Stephen Koukoulas discuss the major events, reports and releases that provide insight into the economy this week (with a look back at the events of last week too).
Welcome to Fear and Greed the week Ahead. I'm Sean Aylmer, and as always I'm joined by economist Stephen Kokulis. You'll find him at the kook dot com, t h E. K o UK, thecook dot com and on X using the handle the Kirk Stephen.
Good morning, A very good morning.
Now, Stephen, I don't make too fine a point on it, but I reckon you've done not much in the last week. You've had a weekend off. There was no economic data out last week, nothing happened. Well, that's not quite right. We had some reserved being board minutes. We're actually sort of interesting given this week's CPI figure. But have you relaxed. I suppose that's where I'm getting to here.
It's sort of relaxing. Yeah, there wasn't much out. There are bits and bobs from overseas. You know. We add the video results during the week, which of course everyone's very excited about because there's such a big company. But at the end of the day that sort of was not really that big anyway. So a lovely quiet week, but a chance to over the weekend to watch the cricket which has been very exciting. Of course, now that the all facing sort of dying down a little bit and ready for this week, which will be an absolute beauty.
So on that the monthly CPI figures are out this week, what do we think about that, particularly given what the Reserving Board minutes said last week about and in two quarters of lower CPI to make a change.
Yeah, the Board just sort of put a little bit more flesh around those bones that we've been hearing from from the governor other senior RBA officials when they really want to get that trimmed mean underlying inflation rate lower. Also the headline rate low off along the two I think is what they want to see. So the monthly figures are sort of interesting, they're important. There are another little tick along that timeline of lower inflation, and interestingly, for the numbers that come out later this week, market expectations are for an annual increase of about two point three percent, so it'll be the third month in a row that it's been within the two to three target ban. Now we all know it's largely not ex good, but largely due to those electricity substanties trimming quite a bit off. So the trimmed main measure is probably going to be a tick or two above three percent, so the RBI will be probably content but not convinced that that's the trigger they need to cut rates.
I've known as last week National Australia Bank in Westpac, the economics teams at both those organizations. Westpac, of course, he is Lucy Ellis, who used to be chief economists at the Reserve Bank. They've pushed back their forecast for rate cuts until at least May. I mean, Knab said May, Westpac said at least May.
They have, and I think the others, many others in the financial markets are also pushing them back, and I think finally that rhetoric from the IBA is sort of gaining some traction with them. But also what we're seeing from overseas now the Trump election win, as say, US bond yields and even US monetary policy expectations being scaled back and pushed further into twenty twenty five, partly because of the inflationary effects of what we think he's going to deliver tariff increases and great big company tax cuts and the like, which are very stimultary to the economy or inflationary. So the US market's been in a sense providing the lead the local market's been following. And again we should remember that labor force number from what was it two weeks ago now that confirmed unemployment in the low fours four point one percent, and that's part of the mandate. So in the sense we celebrate low and employment, of course we do. But if it's coming at these sort of low levels, with interest rates where they are, the feeling is we don't need to cut rates because we've got the economy rolling along at an okay pace, even though some people are feeling a little bit of financial squeeze right now.
Okay. Capital expenditure figures are out this week. They're the ones that every month and they come out. I say to you, Stephen, please explain them, because I just reckon, they're hard.
They're hard, but they're fun.
That is the fundamental difference, Duren, you and I. You are happy to go for the hard stuff, not me.
Yep, this is these are great because what they basically do in summary, they reveal how much the private sector is investing in machine enery and equipment and buildings and structures. There's a couple of other little bits and bobs, but they're the main two things. So are we building office blocks, hotels, shopping centers, factories, warehouses, or buying computers, lays, trucks and these sorts of things. The machinery and equipment really really important part of the economy in any sense, but when you wanted to get productivity, obviously productivity requires some capital dejection too. That's what they show. Now these thingures will show the quarterly change in CAPEX for the September quarter. This is one of the building blocks into the GDP numbers. So the expectations are for a very small rise. Last quarter it fell, so just a little bit of a statistical rebound, nothing big, so hoping it's a positive sign. But they also include this is where the fun part is Sewan, that you really get your teeth into, is they have expectations. So the firms say how much are you expecting to invest in machinery, equipment, building and structures next financial year. So as that number goes up and down, the company X y Z says, oh, we're going to best two point three billion dollars on machinery, We're going to build a new hotel. Whatever. Those I'm just going to those expectations numbers, and as they change from quarter re quarter, we get a better feel for what the business sector is thinking about cap X. So that's why they are important. I know the Reserve Bank looks at them very very closely, even though they might not be as sexy and as prominent as inflation and unemployment and GDP and these sorts of things.
I'm sold totally just before we go around of time. But the Reserve Bank of New Zealand meet this week.
Yeah, quickly on rbn Z. They've already cut rates a few times they're meeting, and given the economies in a pretty dice space over there, we're looking for over twenty five or fifty. The jury is out what what they cut. But a cut is almost baked into the cake. It's just whether it's twenty five or fifty basis points.
Everyone's saying speak cutting except for us, Stephen.
Except us with a lone range at the moment. Yeah, well maybe that'll change. But let's see what happens to our local data as well.
Who knows, Stephen. Enjoy your week, Sean. That was Economist Stephen kokulis better known as the Kirk. You can find him at the cook dot com and follow him on X using the handle the Kirklimb Sean al Matt, And this is fear and greed, the weak ahead
