0:06

The number of companies appointing administrators

0:08

soars as the post-COVID world hits

0:11

the small and medium-sized business market.

0:14

Federal Treasurer Jim Chalmers hints at a

0:16

big spending budget and children

0:18

abandon free-to-air TV. Welcome

0:20

to Fear and Grie, daily business news

0:23

for people who make their own decisions.

0:25

It is Monday the 22nd of April,

0:27

2024. I'm Michael Thompson and good morning,

0:29

Sean Aylmer. Good morning, Michael. Sean,

0:31

after the show, you have an interview coming up

0:33

today with Matt Wachter, who is the Chief Investment

0:36

Officer, Asia Pacific at Morningstar.

0:39

Yes, so it's all about asset allocation. Often we

0:41

talk about investing in equities. We do a little

0:43

bit of that with Matt, but it's mostly about

0:45

how much do you put in equities, how much

0:48

do you put in bonds, how much do you

0:50

put in infrastructure and property, or at least is

0:53

now a good time to be investing

0:55

in those different asset classes. Asset allocation

0:57

often gives you very, very

0:59

critical to what return you earn over the

1:01

longer term. And so certainly for

1:03

any investor, this is a must listen, Michael.

1:06

I could not agree more. And of course, as

1:08

you say, we are not an investing podcast and

1:10

you should seek professional advice, but it is an

1:13

interesting perspective from a professional who is doing this

1:15

kind of stuff every day as

1:17

to kind of some of the things to think about

1:19

at this time. So it is definitely worth sticking around

1:21

for. It is a must listen. The

1:23

main story this morning, Sean, the number

1:26

of companies appointing administrators hit a record

1:28

high in March rising to 1,131. It

1:33

is the first time since 2015

1:35

that insolvencies rose above a thousand

1:38

in a single month. And

1:40

the number is up 26% on

1:42

a year earlier, according to the

1:44

Australian Securities Investments Commission. The corporate

1:47

watchdog expects companies entering external administration

1:49

to hit 10,000 this financial year,

1:51

the highest level in a decade.

1:53

Insolvency experts say the rush of

1:56

insolvencies, which is expected to continue

1:58

all calendar year, In

2:00

large part is a hangover from COVID and

2:02

the government subsidies used to boost the economy.

2:04

As they have entered companies have had to

2:07

trade on their own terms. Cash

2:09

flows become a major problem for many companies.

2:11

In the nine months to the end of

2:13

March, nearly 8,000 companies

2:15

entered external administration and around one

2:17

quarter were construction related. For the

2:20

month of March, construction and solvencies

2:22

were the second highest on record.

2:24

Accommodation and food services was the

2:27

next largest category. There is a

2:29

lot of pain out there Michael

2:31

in that small and medium sized

2:33

enterprise space. And there's

2:36

also been a couple of very high

2:38

profile failures in just the last

2:40

week. Yeah, so Brisbane based electric vehicle

2:42

charging business, Tritium, they've been on the

2:45

show over the past couple of years.

2:48

One of the directors was on the

2:50

show. Well, it's gone into voluntary administration

2:52

failing to find a sustainable model after

2:54

pivoting towards the US. The NASDAQ listed

2:57

company was originally considered an Australian success

2:59

story, but its fortunes have plummeted. And

3:01

there's already a process underway to sell

3:03

the business and assets. A month ago,

3:05

Prime Minister Anthony Albanese said Tritium's decision

3:08

to close its Australian factory and

3:10

produce its charges in the US

3:12

was a lost opportunity. Maybe,

3:14

well, it hasn't been able to make it

3:16

work in the US either. And only after

3:18

a month, doesn't seem very long. Tritium is

3:20

probably one of those businesses that the

3:23

government's future made in Australia program might

3:25

have looked at. Another one

3:27

that might have gotten looking to that future

3:29

made in Australia cohort is

3:32

chemicals group QENIS. It

3:34

called in voluntary administrators last week as

3:36

well. Now the plastic maker runs manufacturing

3:38

plants in Victoria and New South Wales,

3:40

employs about 700 people. Basically the input

3:43

cost to making plastic got too much

3:45

for it. So it's closed down as

3:47

well. There is a lot of pain

3:49

out there among SMEs and

3:51

a bunch of them are going into some

3:53

form of restructuring or

3:56

administration. And that of course,

3:58

that means a very uncertain time for the US. for

4:00

those 700 employees, for instance, of that

4:02

particular company. Yeah, absolutely. And the tritium

4:04

people and all the companies that are

4:06

going into voluntary administration, often the administrators

4:08

will come in and cut costs and

4:10

that sometimes, regularly,

4:12

means job losses. Indeed. Now,

4:15

local markets, how do they finish up on Friday? The

4:17

S&P, RSX200, closed down 1% to 7,567 points. There

4:22

were losses across the large caps. In fact, all 17

4:25

of the largest companies on the borscht ended

4:27

lower, led down by Macquarie, Waterskiew

4:29

and Wysek, the four major banks dropped

4:31

by 1% or more as did Wesfarmers,

4:33

Goodman Group, Woolies, Rio Tinto and QBE.

4:36

For the full week, the market was down to 3%. Now,

4:38

that's the worst single week

4:41

in six months. Notwithstanding the

4:43

RSX200 hit a new record a few weeks

4:45

back, the market is pretty much flat for

4:47

the year. The good news, I

4:50

suppose, is that futures trading suggests

4:52

the RSX200 will bounce somewhat today,

4:54

helped by an apparent easing of

4:56

tensions between Iran and Israel. All

4:59

right, checking international markets now

5:01

thanks to Blue Chip Communication,

5:03

the expert helping financial services

5:05

companies market, communicate and grow,

5:07

visit bluechipcommunication.com.au. What's

5:10

been happening over the weekend? Well, Wall

5:12

Street was stable after Tehran played down

5:14

an Israeli strike on a military facility

5:17

in Iran. The hopes are

5:19

that the attack won't trigger reprisals from

5:21

Iran and as a result, Bonni

5:23

L and Equities rose. The International Energy

5:25

Agency said there was no damage to

5:27

any of Iran's nuclear sites from the attack

5:30

that helped lower tensions somewhat. Gold

5:32

fell back from the $2400 US level. Brent

5:35

Crude fell back below $90 US a barrel. Bitcoin

5:38

gained a bit while the Aussie dollar is fetching 64.2

5:40

US cents. Everyone's

5:43

favorite stock, Nvidia, that's

5:45

worth a mention this morning. It dropped 10%

5:48

over the weekend. It

5:51

was after a key hardware partner,

5:53

Super Micro Computer, failed to give

5:55

preliminary results. Now, 10% is

5:58

a lot on the back of that. I just reckon

6:00

there was nervousness around what's happening

6:02

in Israel and Iran. In

6:05

fact, it's run so hard. So people

6:07

were very prepared to sell it off.

6:10

That's about $180 billion

6:13

in value, much more than the

6:15

total value of BHP. That

6:17

is staggering. And Super Micro

6:19

Computer sounds like a company out of the

6:21

80s, doesn't it? It does. It's

6:24

like, this is what we think is the

6:26

future of computing. Super Micro Computer. Anyway,

6:30

once again, that is what I took out of that story just

6:32

then. That's still $180 billion. That

6:34

is a lot of value. Amazing.

6:37

Ten percent of it. All right. We'll be back in a

6:39

moment with the rest of the day's business news. Sean,

6:49

Federal Treasurer Jim Chalmers has hinted that

6:51

there might be a fair chunk of

6:53

money in the budget for the future

6:55

Made in Australia green subsidy policy. You

6:57

mentioned this one before. Dr. Chalmers was

6:59

in Washington in recent days for IMF

7:02

and World Bank meetings. He said the

7:04

government is considering substantial investments, but

7:06

they wouldn't add to inflationary pressures. Now,

7:08

he said they were about making sure

7:11

the economy can be more competitive and

7:13

more productive, notwithstanding critics' fears that they

7:15

are a return to protectionism. Previously, the

7:17

government's played down the size of the

7:20

investments, not over the weekend. The federal

7:22

budget is just three weeks away. Chalmers

7:25

said they'll include an updated

7:27

monetary and fiscal strategy aimed

7:29

at boosting national resilience against

7:31

an increasingly hostile global backdrop.

7:33

Sean, you know how today,

7:35

being Monday, we have a new episode

7:37

of Fear and Greed, The Week Ahead out. And

7:40

that features our resident economist, Stephen Kukula,

7:42

who gets very excited about everything to

7:44

do with economics and the economy. Do you

7:47

reckon when you say that there's three

7:49

weeks now until the budget, can you

7:51

just picture on the Kuk's desk that

7:53

there is a calendar that he's actually

7:55

circled and he crosses each day off?

7:57

It's like one of those kind of

7:59

advent calendars. Yeah, it's my six step

8:01

of the budget. It's a budget Jim Chalmers a

8:04

face of Jim Chalmers under every little flip that

8:06

you push up Every at the end of the

8:08

day. Yep Yeah, you open that little door take

8:10

out the little chocolate and close it back up

8:12

knowing that every day getting one day

8:14

closer to The budget you have a very

8:16

unusual mind Michael. Well, yeah,

8:19

I just go straight to chocolate. Don't I

8:21

just Fiction writer, you know

8:23

like yeah you write novel fiction novel

8:25

It's that sometimes where your mind takes

8:27

you is a little unusual a little

8:29

odd and unfortunately You

8:32

have to go with me When

8:35

we head off on these tangents, let's get

8:37

back on track Shawn the preliminary auction clearance,

8:39

right? I love how I said, let's get

8:41

back on track as though you're the one

8:43

that took us off track Like come on

8:45

Shawn get back on track the preliminary auction

8:47

clearance right across capital cities for the past week

8:49

has come in I don't you gotta say a

8:52

robust 74.4%

8:54

that's up from a week ago and continuing.

8:56

It's been a pretty strong run for the

8:58

housing market this year Sydney

9:00

came in at 74% while Melbourne

9:02

was a much improved 73% If

9:05

you take the final numbers of what we're

9:07

talking about at the moment is the preliminary

9:09

clearance rate the final numbers Melbourne over the

9:11

past month or so is averaging around 63%

9:14

Sydney's averaging around 70% back

9:16

to those prelim Clearance rates Adelaide

9:18

was the standout of the past week. It

9:20

came in at 86.5% Brisbane with 75% and

9:23

Canberra 68% Shawn

9:27

this is interesting in 2011 teenagers spent

9:29

on average 75

9:32

minutes every day watching commercial television Nowadays

9:35

broadcasters say that figure is just

9:37

13 minutes. That's an 83% decline

9:42

Yes, and for children between 5 and

9:45

12 remember used to put them in front of

9:47

the TV to keep them amused Well,

9:49

they're at about 16 minutes according

9:51

to lobby group free TV It

9:55

has many ramifications. The one of those

9:57

is putting the government under pressure to

10:00

change rules around major sporting events. The

10:02

government doesn't allow pay TV companies like

10:04

Foxtel to bid for major sporting events

10:06

until one of the FidoAer networks has

10:08

had a chance to make an offer.

10:11

We're talking about the Olympics, AFL,

10:13

NRL, any soccer, the Australian Open

10:16

Tennis. But the law doesn't include

10:18

streaming platforms like Netflix, Stan, Amazon,

10:20

Disney Plus. According to the

10:23

Financial Review, some of those have started

10:25

broadcasting sporting events and live

10:27

streaming is now 20% of

10:30

all FidoAer viewing with many

10:32

new homes no longer even

10:34

having a TV aerial. So

10:37

why should FidoAer get a run at major

10:39

sporting events when people aren't watching

10:41

FidoAer anymore? It's a pretty good question.

10:44

It actually is a good question. And

10:47

I don't have an answer for it.

10:50

No, but it just shows how when

10:52

kids are, well teenagers let's

10:54

say, are only watching 13 minutes

10:57

of FidoAer every day, many,

11:00

many, many more minutes on

11:02

online in some capacity. It's

11:05

I don't think my kids ever watch

11:07

FidoAer. Well, even the sporting codes they

11:09

probably watch on Foxtel. So I don't

11:11

know that they would even know how

11:13

to get to 9, 10, 7 or 2. No, I think you're

11:20

absolutely right. It has been such a

11:22

dramatic change in just what just over

11:24

a decade. Yeah, incredible. Now

11:26

wait times for planned surgery in Australia's

11:28

public hospitals has hit a new record

11:30

at almost 49 days

11:32

according to a new report from the

11:34

Australian Medical Association. The AMA

11:37

says Australians are now waiting almost

11:39

twice as long on average for

11:41

planned surgery than they were 20

11:43

years ago. The report also says

11:45

emergency departments remain congested and the

11:47

proportion of people who complete their emergency

11:49

presentation in four hours or less is

11:52

just 56%. Therefore 44%

11:55

are there for more than four hours. This 56% is

11:58

the lowest number since and

12:00

much worse than the pre-COVID years. According

12:03

to media reports, the report found

12:05

the national proportion of individuals receiving

12:07

Category 2 planned surgeries on time

12:09

has fallen to the lowest point

12:12

on record. Now Category 2, we're

12:14

talking heart valve replacements, congenital cardiac

12:16

defects, surgery of fractures.

12:19

These aren't cosmetic or elective. These

12:21

are necessary surgeries and the long

12:23

waits can cause serious pain and

12:25

risk to patients. Woodside's

12:28

first quarter revenue tumbled more than

12:30

30% thanks to lower oil and

12:32

gas prices which have fallen from

12:34

the highs recorded during

12:36

Russia's invasion of Ukraine. Revenue

12:39

for the March quarter fell to just under US$3 billion.

12:42

For the quarter, I still think that's

12:44

a lot of money. It was lower

12:46

than analysts forecast and it sent Woodside's

12:48

share prices sharply lower initially before

12:50

it recovered to close flat on Friday. Remember

12:52

Friday was not a good day for the

12:54

market, so in actual fact Woodside outperformed. The

12:57

average realised price of a barrel of oil was down from

12:59

US$85 12 months ago to US$63. Woodside's

13:05

AGM takes place in Perth on Wednesday. The

13:07

company set to face angry shareholders over

13:09

its climate strategy. Some

13:12

large shareholders have already

13:14

indicated they'll vote against Woodside's

13:16

transition plan and the reappointment

13:18

of Chair Richard Goida. While

13:20

talking about Richard Goida on Friday

13:22

he announced he'll bring forward his

13:24

retirement as Chair of Qantas to

13:26

this week. He was supposed to finish at the end

13:29

of June but that very much is the end of

13:31

the clearing out of Qantas's

13:33

senior management. Okay, turning

13:35

to international news now and the

13:37

US House of Representatives has approved

13:39

over US$60 billion in military aid

13:42

for Ukraine and its fight against

13:44

Russia in a major breakthrough after

13:46

months of inaction on Capitol Hill.

13:49

The Ukraine aid was part of

13:51

a US$95 billion package of national

13:53

security bills that also includes US$26

13:55

billion for Israel and US$8 billion

13:57

for the Indo-Pacific region as well

13:59

as the bill that could result in

14:01

TikTok being banned from US app stores. According

14:04

to the Financial Times, many democratic

14:06

politicians cheered and waved Ukrainian flags

14:08

on the House floor when the

14:10

legislation passed. This has been going

14:12

on for months. US President

14:15

Joe Biden said the vote sent a

14:17

clear message about the power of American leadership

14:19

on the world stage. The aid comes

14:22

at an important moment for Kyiv

14:24

in its war against Russia's invasion.

14:26

Those troops have seized the initiative

14:28

on the battlefield recently, exploiting Kyiv's

14:30

lack of arms and munitions after

14:32

failure of Ukraine's counter offensive last

14:34

year. And as US

14:36

supply and military assistance was blocked, that will

14:39

now flow through to

14:41

Ukraine, which obviously will benefit

14:43

that country. Sean, the

14:45

world's biggest election has begun, with up

14:47

to 1 billion Indians heading to the

14:49

polls over the next six weeks. And

14:52

Prime Minister Narendra Modi is expected to be returned

14:55

for a third term. India

14:57

is the world's fastest growing major

14:59

economy and Modi is considered the

15:01

architect of the success. His BJP

15:03

party is focused on accelerating growth

15:05

and addressing stubborn problems such as

15:07

low levels of investment, youth unemployment

15:10

and rudimentary infrastructure, especially in the regional areas

15:12

of the country where the bulk of the

15:14

population live. BJP also wants

15:17

to encourage Hinduism, the religion of about

15:19

80% of the population. The

15:21

logistics of this election are quite phenomenal.

15:23

There are 543 seats in India's lower

15:26

house and whoever wins most gets the

15:28

peak to PM. The election

15:30

goes for a long time because of

15:32

the logistics involved. Accessing the 969 million

15:35

registered voters takes time. Also,

15:40

rules mandate, there needs to be

15:43

a poll within two kilometres of

15:45

every habitation. So where people live, there needs

15:48

to be a poll within two kilometres. That

15:51

means 1.1 million polling

15:54

stations served by 15

15:57

million electoral agents who move

15:59

from place to place starting last Friday

16:01

finishing on June 1. Then

16:03

the votes are counted, votes start counting on June 4.

16:06

Quite an amazing exerciser. Just

16:08

the logistics of that. That

16:11

is something else altogether isn't it? 1.1

16:14

million polling stations. Incredible. That

16:16

is just amazing. I love that there's 15

16:18

million electoral agents. Like the size, just the

16:20

number of people there is equivalent to like

16:22

the voting population of Australia. Yeah, that's right.

16:25

Yeah, yeah, yeah. True. That's

16:28

incredible. Well, we've kind of almost

16:30

touched on this before when we

16:32

were talking about people not watching

16:34

commercial TV anymore. Netflix has posted

16:36

its best start to the year

16:38

since 2020, attracting more new customers

16:40

than expected thanks to a strong

16:42

slate of original programs and

16:44

a crackdown on password sharing.

16:47

I know this is one of your favorites Michael.

16:49

You're very upset about the crackdown on password sharing.

16:51

Well, I haven't seen any of the new shows

16:53

on Netflix. Any of that strong

16:56

slate because I've been locked out of

16:58

Netflix. Not that

17:00

I was password sharing. I was

17:02

locked out for unrelated reasons. Right.

17:04

I'm just coincided with that timing.

17:06

Please go on. Netflix added

17:08

9.33 million customers in the first quarter of

17:10

the year from all over the world though

17:13

there was particular strength in the US and

17:15

Canada. As you subscribers help Netflix beat

17:17

forecasts for sales and earnings, the growth

17:19

is in part due to Netflix's crackdown

17:21

on password sharing according to Bloomberg. The

17:23

company estimated more than 100 million

17:26

people were using an account

17:28

for which they didn't pay.

17:30

Interesting. Also helping has been

17:32

a bunch of hit shows including limited series

17:35

such as Fool Me Once. Not

17:37

so sure about that one. Grazilda.

17:39

Okay. Dramas The Gentleman.

17:43

Didn't like that one. Three Body Problem. Never

17:45

seen it. And the reality show

17:47

Love is Blind. No idea on that one.

17:50

The only problem is that the outlook for

17:52

coming months isn't as good for Netflix. The

17:54

group's share price fell sharply over the weekend.

17:56

So that streaming service accounts for about 8%

17:58

of time. or

18:00

Netflix, not streaming services, Netflix itself, but

18:03

8% of TV viewing in the US.

18:06

That's a lot. Huge amounts. Yeah.

18:10

That is huge. I will just point out, do

18:12

you remember back in 2017 when Netflix,

18:14

I think they tweeted it, didn't they?

18:17

That love is sharing a password. Do you remember

18:19

that? Oh, I don't know. Oh,

18:22

and it's the thing that people often kind of

18:24

hold up to them and going, what changed Netflix?

18:27

So kind of pro sharing and pro love and

18:29

all this kind of thing and sharing passwords and

18:31

kind of keeping families together.

18:34

All that kind of thing. And now there's

18:36

this crackdown. Money. I suppose

18:38

money changes a lot of things, doesn't it,

18:40

Sean? Anyway, I don't have a B in

18:42

my bonnet at all, Sean. And instead I

18:44

will suggest that we move on with haste

18:46

to the fear and greed daily interview. Your

18:48

guest today is Matt Wachter, Chief Investment Officer,

18:50

Asia Pacific at Morningstar. Yep.

18:52

Sure is. We talk about asset

18:54

allocation. Where's that?

18:57

You know how you handle bonds in the current

19:00

environment, equities in the current environment, property infrastructure, that

19:02

type of stuff. Yeah. And

19:04

Matt does a really good job of just running through each of those

19:06

areas as you kind of ask him about it and we just just

19:09

just knocks them all down one by one. It

19:11

was really, really interesting. It's well worth a listen

19:13

if you're an investor. It is up next in

19:15

the fear and greed playlist on your podcast platform

19:17

or at fearandgreed.com.au and don't forget about fear and

19:20

greed the week ahead with Stephen Kukoulis. Yep.

19:22

Well, this week we find a March quarter

19:24

inflation figures and Stephen's very excited about that.

19:26

Yeah, he certainly is as well as the

19:28

budget in a few weeks with his advent

19:30

calendar. Thank you very much, Sean. Thank

19:33

you, Michael. It's Monday, the 22nd of

19:35

April, 2024. Make sure

19:37

you're following the podcast and please join

19:39

us online on LinkedIn, Instagram, X, TikTok

19:41

and Facebook. I'm Michael Thompson and that

19:43

was fear and greed. Have a great

19:45

day.