0:06

inflation flatlines for the third consecutive

0:08

month. The freefall in productivity plaguing

0:10

the Aussie economy comes to an

0:13

end, and chocolate eggs might be

0:15

about to get a whole lot

0:17

more expensive as cocoa hits record

0:19

prices. Welcome to Fear and Grie,

0:21

daily business news for people who make their own

0:24

decisions, it is Thursday the 28th of March 2024.

0:26

I'm Michael Thompson

0:28

and good morning Adam Lang. Good morning

0:31

Michael. Do you reckon Sean Aylmer misses

0:33

being part of the show on weeks

0:35

like this where there's actually still a fair

0:37

bit happening, you got kind of inflation data,

0:39

you've got kind of a lot happening in

0:41

politics, I reckon he would miss it. Yeah,

0:44

while he and Jackie are sunning themselves

0:46

in Bali, I reckon this is the

0:48

first thing on their mind. What's Fear

0:50

and Grie doing? Yeah, I'm sure he's

0:52

really, really worried about us right now.

0:54

We will ask him that next week

0:56

when he comes back. Now, after the

0:58

show, Adam, you have an interview coming

1:00

up today with Deanna Messina,

1:03

Deputy Chief Economist at AMP. Now,

1:05

that is all about the main

1:07

story this morning. So we may

1:09

as well jump into that. Inflation

1:11

is stabilising. The Australian Bureau of

1:13

Statistics monthly CPI figures show

1:15

the third month of no change to the

1:17

annual inflation rate in February. And Michael, doesn't

1:19

this feel like good news? It's at 3.4%.

1:22

That's a touch lower than the 3.5% expected

1:24

by the

1:27

markets, which gave them extra confidence

1:30

yesterday. So Treasurer Jim Chalmers welcomed

1:32

the flat figures saying they show

1:34

inflation remaining at its lowest level

1:36

in two years. The figures show

1:39

that rental price rises continue to

1:41

bite though, as do higher insurance

1:43

premiums, but food costs have pulled

1:45

back a bit. Taylor Swift even got

1:48

a mention from the Australian Bureau of

1:50

Statistics for increasing hotel prices in Sydney

1:52

and Melbourne over the month. However, accommodation

1:55

and air fares fell elsewhere following the

1:57

end of the peak January school holiday

1:59

period. Overall, the heiress to I

2:01

may have caused a spike in price

2:04

for a few hotels, but the economy

2:06

largely shook it off. Is. It

2:08

like that. Michael. I. Did not like

2:10

that one. Beats It is one

2:13

of my absolute pet peeves. Is

2:15

table worse, his tireless Taylor Swift

2:18

song fossils and references into these

2:20

have you Stopped Leaning in to

2:22

Taylor Swift? Oh Lord

2:24

Goodness. my. Goodness

2:27

may adam us, I can I

2:29

move on with a few days

2:31

if I just completely ignore everything

2:34

that you've saved for the last

2:36

thirty seconds as just move on

2:38

with what this means for interest

2:40

rates. Yeah. That's a great

2:42

question in most economists and not expecting

2:44

the started to derail the Reserve Bank

2:46

of astride his plans, this main so

2:49

likely be on hold for a bit

2:51

longer and speculation about right Cats will

2:53

continue. However, we get a quarterly rate

2:55

of the.in April ahead of the next

2:57

my hobby I meetings which will provide

3:00

a lot more details. This will be

3:02

the critical one to watch for any

3:04

potential shift in the Central banks position.

3:06

Online retail sales data from Mad also

3:08

released this week. so is a slowing

3:10

and growth. Over Sabri online, he

3:13

still outpacing brought a retail sales,

3:15

but it looks like pressure on

3:17

consumer spending is translating into less

3:19

shopping overall. Now that is perhaps

3:22

a signal that demand and therefore

3:24

price rises will continue to soften.

3:26

as the Rb I hopes. Are

3:29

other six local markets, and there was a

3:31

a bit of a slump in trading yesterday

3:33

morning, but that was more than recovered. A

3:36

bit of a boost after those Cpr. Das

3:38

had the I Six two hundred close up

3:40

North Point five percent, Seven thousand, Eight hundred

3:43

and twenty points. It was a particularly strong

3:45

day for consumer staples, health care, and industrials.

3:47

Woolworths was at one point nine percent calls.

3:49

At one point six percent. Tech and material

3:52

had a way to die, but it came

3:54

after a pretty strong performance earlier in the

3:56

late. Another. one worth mentioning

3:58

michael southern cross Media Group's Chair Rob

4:01

Murray brought forward his retirement to yesterday

4:03

and Platinum Asset Management's share price had

4:05

a sharp 21.1% fall after losing $1.4

4:07

billion in mandated funds

4:12

from a client looking to

4:14

rebalance its exposure away from

4:16

benchmark agnostic global equity managers.

4:19

Taking a look at international markets

4:21

now and this is thanks to

4:23

Blue Chip Communication, the experts helping

4:26

financial services companies, markets, communicate and

4:28

grow, visit bluechipcommunication.com .au

4:30

and Adam, a lot of talk

4:32

about crypto at the moment. That

4:34

there is Michael and crypto stocks are

4:37

getting heavily shorted. In fact, there's $11

4:40

billion in short interest against crypto

4:42

at the moment and that's according

4:44

to an S3 Partners report. The

4:46

majority is against micro strategy and

4:48

Coinbase global. Some of this

4:50

could be hedging and some may well be

4:53

an expectation that Bitcoin's rally might soon

4:55

be over. Separate to crypto

4:57

Michael, BlackRock CEO Larry Fink is

4:59

warning that the US public debt

5:01

situation is urgent and that the

5:03

government needs policies to encourage economic

5:05

growth rather than relying on higher

5:07

taxes and cutting spending. He's

5:10

worried a high debt America could make

5:12

it harder to fight inflation down the

5:14

track as hiking interest rates would be

5:16

tougher. He also warned that the US

5:18

can't take it for granted that global

5:20

investors will always continue to want to

5:23

buy US debt, particularly with other countries

5:25

growing their own capital markets.

5:27

Gold is trading at just a touch

5:30

under US $2,200 and the Aussie dollar

5:32

is fetching around 65.3 US

5:34

cents. I know Sean always kind

5:37

of laments the lack of action in the

5:39

Aussie dollar and so it's just nice to

5:41

see that even in his absence, we've managed

5:43

to keep it nice and stable for him.

5:46

Yeah, we haven't mucked it up while he's been gone.

5:48

There's still time for it to move. Unlikely though. We'll

5:50

be back in a moment with the rest of the

5:52

day's business news. Adam,

6:01

the Productivity Commission has called an

6:03

end to the quote freefall in

6:05

productivity that started in June 2022,

6:08

really kind of following

6:10

the pandemic. Michael, as you would expect,

6:12

I pay very close attention to the

6:14

Productivity Commission. Labor productivity

6:17

increased 0.5% in

6:19

the December quarter on the back of a 0.3% decline

6:21

in hours worked and

6:23

a 0.2% rise in output. The

6:26

Productivity Commission's latest bulletin released late

6:28

last night shows this was the

6:31

second quarter of increased productivity, but even

6:33

the last two quarterly reads didn't stop

6:35

productivity from falling 0.4% over the year

6:38

2023. The

6:42

Commission says the productivity bubble burst in

6:44

2022 after a sharp rise in productivity

6:46

and is now bottomed out. There's

6:49

been some downward pressure on productivity due

6:51

to newer, less experienced workers entering the

6:53

very tight jobs market, but it is

6:56

now recording rises in half of the

6:58

industries measured and that's good news. This

7:00

includes solid growth in productivity and

7:03

information, media and technology, accommodation

7:05

and food services. All this being said

7:07

though, productivity is still only nudging above

7:09

the 2015 to 2019 average

7:13

and that was well below pre-2000 levels. Isn't

7:16

that interesting to think that newer,

7:18

less experienced people coming into the

7:20

workforce because the

7:22

jobs market is so tight that that can

7:24

actually kind of reduce productivity because these are

7:26

people who don't yet know what to do

7:28

and how to work efficiently and productively. Yeah,

7:31

it makes sense doesn't it? I mean as

7:33

you recruit people, they have to be inducted

7:35

and trained before they can become fully productive.

7:37

Yeah, it makes complete sense, but you don't

7:39

tend to think of it as actually just having

7:41

a meaningful kind of material impact on

7:44

the statistics like this, but I guess it does.

7:47

And isn't that what makes data great Michael?

7:49

Oh gosh, oh no. Your

7:53

enthusiasm for data and for

7:55

statistics is frighteningly

7:57

contagious. Well that's obvious isn't it?

8:00

Yeah, I know. All right. Now,

8:02

this is an interesting one. Big one out

8:04

of Canberra yesterday. Big companies will need to

8:06

provide more reporting on their climate impact as

8:09

part of new legislation introduced to parliament yesterday

8:11

by Labor. Yeah, Michael, the

8:13

new mandatory climate reporting requirements will

8:15

align Australia with other countries. It's

8:18

aimed at giving more transparency to

8:20

investors by forcing big businesses to

8:22

ensure companies make high quality financial

8:24

disclosures about climate risks. Now,

8:27

this would require big listed and unlisted companies to

8:29

meet the rules from January 1. Other

8:31

big businesses would then be caught up in the rules

8:34

in a staggered way to phase them in. A

8:36

large part of this is to encourage

8:38

investment into businesses critical for the energy

8:41

transition and ensure Australia remains competitive on

8:43

the global stage. While

8:45

we're on the topic of energy, Adam,

8:48

will your home's next solar panels be

8:50

made in Australia? That sounds like I'm

8:52

doing an ad here, isn't it, for

8:55

solar panels? But it's a legitimate question

8:57

and the answer is a resounding maybe

8:59

because the

9:01

federal government is committing a billion

9:03

dollars to a new solar sunshot

9:06

program, which is just an awesome

9:08

name for a program. Yeah, that's

9:10

good. Cool. Sounds like something

9:12

James Bond would be involved in. The

9:14

government is hoping Australia can capture more

9:17

of the global solar manufacturing supply chain.

9:19

Yeah, Michael, this is encouraging. At the

9:21

moment, one in three Aussie households have

9:23

solar panels, but only 1% of them

9:26

are made in Australia.

9:28

The government wants to shift this, including

9:30

driving investment into solar panels in the

9:32

Hunter region, where the government announced this

9:34

new scheme. The full details are yet

9:37

to be published, but it's going to

9:39

include supply chain support, production

9:41

subsidies and grants. Yeah,

9:43

it sounds like good news. Now,

9:45

materials, financials and energy are the

9:47

most popular sectors among Aussie investors.

9:49

This is according to Self Wealth

9:52

Investor Report 2023, which

9:54

has just been released. Yeah, Michael, it

9:56

shows two thirds of all ASX trade

9:58

volume from 100. 29,000

10:01

local investors on the platform was concentrated

10:03

in those three sectors last year. Of

10:06

more than 10 billion

10:08

in equities traded through the service, outside

10:10

of ETFs, materials was more than 40%

10:12

of trades, followed by financials at about

10:14

13%, and energy was at almost 9%.

10:17

That's by volume. Another

10:20

really interesting finding was the behavior

10:22

of different generations. Older investors tended

10:25

to hold consumer staples, healthcare, real

10:27

estate, utilities and financial stocks. Younger

10:30

Gen X, millennials and generation

10:32

Zs preferred tech. Now Gen

10:34

Z interestingly also liked consumer

10:37

discretionary. That is interesting. Invest

10:39

in what we understand, right? I suppose that's the

10:41

case. That's

10:44

Warren Buffett's principle, isn't it? Yep, it

10:46

sure is. Maybe there's some wisdom there.

10:48

Now Adam, the coalition will develop a

10:50

policy that would allow courts to break

10:53

up colds and woolworms if they were

10:55

found to be misusing their market power,

10:57

say, for price gouging. Yeah,

11:00

Michael, I find this really interesting. The

11:02

divestment laws the opposition will work on

11:04

have come about following a push from

11:06

the Greens for similar laws. Now the

11:08

Nationals were on the edge of working

11:10

with the Greens to support them, following

11:12

investigations into the market powers of the

11:14

supermarket giants. Peter Dutton has now directly

11:16

stepped in to work with the Nationals

11:18

leader, David Littleproud, to stop a tie-up

11:20

with the Greens. Labor has

11:22

not been supportive of divestment power so

11:25

far and neither has the Business Council

11:27

of Australia. But the cost of living

11:29

crisis might make tougher rules on the

11:31

grocery giants more popular with voters. This is

11:33

one to watch. Yeah, and it is certainly

11:36

becoming a very, very big political issue, isn't

11:38

it? It may will end up being a

11:40

big election issue as we get closer and

11:42

closer to the election. I agree. Now,

11:45

turning to international news, by now I

11:47

think everyone will have seen that the

11:49

terrible footage of the Francis Scott Key

11:51

Bridge collapse in Baltimore in the US.

11:53

The tragedy has now forced shipping companies

11:56

to adjust their plans to reroute cargo

11:58

to other ports on the US. the

12:00

US East Coast. The bridge collapsed in

12:02

the early hours of yesterday morning local

12:04

time after a Singapore flag container ship

12:07

hit a pylon. Michael

12:09

this is tragic and it is a

12:11

human story first and foremost as we

12:13

know. The Baltimore port is the second

12:15

busiest on the US East Coast and

12:17

President Biden said the government there would

12:19

work hard to get the port back

12:21

up and running and the bridge rebuilt

12:23

with the government covering the cost but

12:25

this won't be a quick turnaround given

12:27

the complexities and the size of the

12:29

bridge and the need for investigations into

12:32

the incident. This could result in some

12:34

product delays and disruptions and shipping routes

12:36

are being adjusted. It will also be

12:38

disruptive for the US tracking industry. Adam

12:41

Apple's shipments of iPhones into China

12:43

fell by about a third in

12:45

February compared to the same time

12:47

last year. Now this makes it

12:49

the second consecutive month to show

12:51

a decline in the devices getting

12:53

shipped. There are new figures

12:55

from China's Academy of Information and

12:57

Communications Technology that indicate more trouble

12:59

for Apple in one of the

13:01

world's largest economies. There were 2.4

13:04

million foreign brands of smartphones shipped into

13:06

China in February. That compares to 5.5

13:08

million in January which was down almost

13:11

40% on the same time in 2023.

13:13

So Apple makes up

13:16

the lion's share of these phones by some stretch

13:19

and while the month was impacted by

13:21

the timing of the lunar new year,

13:23

it's not great news. Bloomberg is attributing

13:25

the slowdown in iPhone sales in China

13:27

to the strength of rival Huawei technologies

13:29

and reluctance from consumers to buy up

13:32

discretionary goods but it's a live question

13:34

whether this is going to be a

13:36

trend or just a blip. And

13:39

finally Adam with the Easter long weekend

13:41

kicking off tomorrow we are obviously all

13:43

thinking about chocolate. Not

13:46

just an Easter time Michael. But

13:49

especially an Easter time. Probably an Easter

13:51

time. But chocolate makers are

13:53

having a tough time because

13:55

cocoa futures have doubled this

13:57

year to above 10. $1000

14:00

for the first time ever this week. Yeah,

14:02

and Michael, cocoa has been one of the

14:05

top performing commodities and that is actually bad

14:07

news for our big chocolate producers in Australia

14:09

and abroad and for what we ultimately have

14:12

to pay on the supermarket shelf. Hershey

14:14

has now copped it because of

14:16

the higher cocoa input cost and

14:19

has been downgraded to neutral from

14:21

outperform by BNP Parabar Exane. Some

14:23

of the rising cocoa cost is

14:25

being attributed to new European Union

14:27

sustainability rules aimed at stopping the

14:29

sale of products that destroy forests.

14:31

But pretty bad harvests on the back

14:34

of bad weather and other growing challenges

14:36

in major cocoa regions like West Africa

14:38

have also played havoc with the supply

14:41

of cocoa and therefore the cost. But

14:43

apparently we don't need to be too worried about a

14:45

spike over the next few days. Analysts

14:48

suggest some of this might not hit shelf prices

14:50

for another 6 to 12 months, but that might

14:52

mean next Easter is a lot more expensive. So

14:55

this is essentially a long range chocolate forecast.

14:57

Yes, you heard it here first on fear

14:59

and greed. We are getting

15:01

in early. So basically the advice is

15:04

stock up now. Buy up. Yeah,

15:06

buy up for next Easter. This Easter. It's

15:09

a good form of hedging on chocolate.

15:11

It does not have that long a shelf

15:13

life, but I'm willing to give it a

15:15

crack. Up next is the fear and greed

15:18

daily interview you're speaking today with AMPs Deanna

15:20

Messina. Yeah, Michael. And look,

15:22

these inflation figures coming out, it's

15:24

so topical. It's so important for interest

15:26

rates and for everybody who's got

15:28

debt. So what we hear from

15:30

Deanna is just so critical, I think, to

15:32

understanding the context that we're trading in. Yeah,

15:34

absolutely. And Deanna is a great

15:36

communicator when it comes to this. Always worth a

15:39

listen. Up next in the fear and greed playlist

15:41

on your podcast platform or at fearandgreed.com.au. And of

15:43

course it is a public holiday tomorrow and then

15:46

again on Monday, but there is fear and

15:48

greed every day because we do not like

15:50

to rest. So there will be a

15:52

new episode tomorrow and there'll be a weekend edition as well.

15:55

On Saturday and Adam, it's you

15:57

versus me. At last.

16:00

I am so excited about this. Oh, mind you, last

16:03

time we did that, I lost. Well,

16:05

that's why I'm so excited about it because I rarely

16:07

win against Sean and I

16:09

just, I've been stockpiling stories this week.

16:12

Oh, I know. I've been

16:14

picking out the best stories, getting in early,

16:16

reserving them. So I look forward to our

16:18

competition on Saturday. Thank you very much, Adam.

16:21

Thank you, Michael. It's Thursday, the 28th of March, 2024.

16:25

Make sure you're following the podcast

16:27

and please join us online on

16:29

LinkedIn, Instagram, X, TikTok and Facebook.

16:31

I'm Michael Thompson and that was Fear and Greed

16:33

Business News. Have a great day.