Latest / The Curve / TCW20: US debt through the roof, Burberry stock and big NZ budget changes!

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TCW20: US debt through the roof, Burberry stock and big NZ budget changes! · The Curve

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  Hi and welcome to the Curve Weekly. The podcast that keeps you up to date with all the money,
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  business and stock market tea. Everyone should experience for us at least once in their lives
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  and Annie shouldn't miss out just because she can't afford it. Help me, I'm poor.
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  It's quite weird coming in here and having no idea what you did this weekend. Like,
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  normally I've got a bit of an inkling as to what happened, but I've got no clue now.
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  I don't imagine if I just didn't tell you. Well, I was thinking that there's things that
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  happened this week that I haven't told you about. And I know that you'd be like,
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  what? I didn't know that happened. What? Who did you have sex with? I don't know.
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  But I went on this random date with this guy I met at a cafe.
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  Anyways, it looks a long story, but basically my parents ended up showing up to the day,
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  and then they sat down and had a drink with us, and I was just like, oh, wow. Why?
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  Still was it interesting? Well, I was going for dinner with them afterwards, so they were picking
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  me up, but they always so late. So I said, come and see them thinking they'd get there at 730,
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  and they got that five to seven, and we just all know the drink. And I was like, oh, God.
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  How did you introduce him? I was just like, this is my friend. Did you remember his name?
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  That would be awkward. No, I didn't. It was a Uruguayan name. Oh, I really hope he's
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  almost into this podcast. So for now, I have very different tastes. I mean,
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  not that there's anything wrong with it. I didn't mean like that. No, I'm just meaning like just as a
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  yeah, we've only had a few crossovers, and they were not. What, what did you do this weekend?
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  I did a lot of admin. Oh, yeah. I know. Sorry, really boring podcast.
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  Yeah, and I caught up with lots of friends. It's like, because we're going to London soon. So
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  so many people like, oh, I'd love to have a drink before you go. And then like, my family's at me
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  to catch up with them. And it's just like, oh, we haven't talked about that on the podcast.
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  That's like going to London. It makes my popular, you know, we're going to London.
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  Yeah, we're going to London. Get to the bag. Yes, cat. We're doing like three or four months there.
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  I love how you say three. I'm doing four. What months are we going?
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  June, July, August, September. Oh, yeah, four months, four months.
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  I do always say three, don't I? No, I'm like, we're doing four, four months.
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  So I might say longer. Do you think it's quite interesting, because this whole time I've been a bit
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  skeptical. I don't know because I love my house. I know. I do definitely care not a four to
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  from a logistics standpoint and money standpoint. Yeah, I definitely don't think I can
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  afford to even go over three or four months. Yeah, leave it alone. Yolo.
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  I think he's about a budget. Who cares about finances and money.
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  We'll deal with future me later. Yeah. I was saying to be like, I'm not going to have enough
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  money to do any trips, like I can't. It's not in my budget to be able to go anywhere. And she was like,
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  look, you know, I should never say this, but you know, maybe you're going to have to take money
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  at your investments. I never see that. Never see that.
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  Like so off brand fairs. So off brand. We did not condign that. Do as I say, not as I do.
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  Just pay me more, maybe. Me. Like it's me. Like I'm like, oh god, one day will be on
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  hopefully earning a good old style up salaries. Yeah. We shouldn't really be complaining. We're
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  going to London in Europe. And very important if we're going to be a bit broke. Yeah. And I think it's
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  more just our lifestyles need adjusting. Yeah. Well, yours obviously does. I was like, how are you
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  flying? She was like, this is class. I was like, someone's not struggling that much. I have saved my
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  arse off. No, but my point is if you're like, oh, I can't afford to. And yet your flying business class
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  it makes me think, I really fucking can't afford to. No, but I guess for like, I'm trying to
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  justify this to someone in the weekend as well. I was like, for me, that is where I like,
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  where I love spending my money. Flying business class. Like that, you know, like people. Yeah.
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  Like for me, like that's just like, yeah, people have their different things that they spend their
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  money on. And that's why I would rather save up and spend my money on that, which sounds so
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  weird, because it's gone on 24 hours. There's nothing invented out there. But I think, because like,
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  I get really bad jet lag. And so I'm like, oh, you know how important my sleep is though. Like,
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  I am a little religious. I was person like, have to get up. I am so mechanical with like my
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  bedtime wake up time that throwing a ribbon time difference in there really scrubs with me. So,
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  yeah. Oh, I'm just planning my grandma's on the same planet as me. I'm planning on going
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  really joy star, just looking the part and hoping to go upgrade me. Yeah. That's my plan.
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  I'm not sure if it'll work. But I'm just like, oh, is there any other seats up front? You know,
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  when you walk on, accidentally turn right, instead of leaving. Oh, 14, be an economy. You know,
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  14, be in business. Oh, I'm not up the front with the pilot. Anyway, what's been happening
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  in the market? Well, I hope you've had your coffee. So, I haven't actually shit. Do I need to get one?
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  Yes, because we are on. We are on. We have lots to talk about. Yes, pretty good way across the US
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  and in New Zealand, not so much in Australia, but me. But the standout was the Nasdaq, which was
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  up 3.4%, which is huge. For one week, that's pretty big. And it's all around this news
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  in the US around the US debt ceiling. The debt ceiling. The debt ceiling. The debt or debt?
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  Debt ceiling. Okay. I wonder if anyone else has heard of it. You know, people are like, oh,
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  you're the debt ceiling. Well, it's, so the reason I'm talking about it is we actually got a
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  message from someone saying, hey, what the hell is going on with the New Zealand dollar? It's like
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  moving up around and around. And the US dollar is moving as well. And it's impacting my
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  investments. What's going on? And I say, just you wait. Just you wait to Monday. I didn't see that
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  message. I wonder what she was talking about. And it's true. It is something we should talk about
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  because it does impact, you know, if you've got US stocks, it will impact them because the currency
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  is moving around. But effectively, what is it? So take a seat back. If you will be borrow money
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  from someone. Yes. There's going to be limited amount that we can borrow. You can't go to
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  the bank and say, can I have a million dollars? No one's lending me any money.
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  Not even me. No, no, no. Beverly from BNZ keeps calling me and saying that my credit score is
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  just going down the toilet because I keep going into deficit. And she's like, your credit score,
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  you're not going to have very any money. I'm like, girl, I'm so far away from you. Girl.
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  Girl, I don't care. Yes. No, but there's a limit with any, with anything that you borrow from
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  anyone. If it's a bank, if it's a parent's, you know, if you keep going back to a parent saying,
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  can I borrow more and more money? There's going to be a point where they're like, hang on a second.
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  No. Yeah. Yeah. And they lend you that money on a number of different factors. It's like, okay,
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  has she paid me back before? You know, has she got the, do I think she's got the cash? All those
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  things come into it. So I'm just trying to set the scene here. Yeah. So the same is with the US
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  government. If they want to borrow money, then who are they answering to? They can't just keep
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  borrowing, borrowing, borrowings from the US Treasury. So they're effectively asking for money
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  to borrow more and more money. They're about $31 trillion in debt at the moment, which is crazy.
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  And there's a limit. There's a limit they can borrow. And that's the debt ceiling. So the
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  concerns over the last kind of week and then, you know, over the weekend, they got, they got
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  quite intense was that they're getting really, really close to that limit. And then it's like, okay,
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  what, what's next? What's, what, what can we do? You know, either we, there's kind of two,
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  two things that can happen. Firstly, is that the debt ceiling can get moved up and up and then you
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  just get, get into more and more debt. Does that affect inflation too? No. So this is a bit different.
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  So when the government borrows money, it does it through bonds. Anyway, so there is, you know,
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  once that debt ceiling is reached, the only alternative is to find other ways to pay for expenses.
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  So that healthcare, education, all that. But the most common one is that they default on their debt,
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  which means they got, sorry, we can't, so it's like me saying sorry, sorry, sorry, sorry for
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  company back. Shit. And you're going, excuse me, what? Which is really, really bad news, because when
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  you, when you purchase bonds or you invest in bonds, you do it with really reputable companies,
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  you do it with governments, because you know that it's pretty secure and it's a low risk
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  investment. If the USD default on its debt, then, you know, it's going to have a huge impact on GDP.
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  It's going to be pretty much a global financial crisis again. So this is why people are freaking out.
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  The other alternative is these negotiations and they just lift the debt ceiling and they go
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  into more and more debt. And so kind of towards the end of last week, there was real concerns that
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  default. So if they default, what actually happens? So that means the next time I go to you and say,
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  hey, so can I borrow some money? You go, no, no, no, last time you didn't pay me back.
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  So yes, if you want to borrow, you can pay me 20% interest. It just means it's way more expensive
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  to borrow money. Shit. Yeah. So this is what caused the US dollar to effectively drop, because
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  people were like, shit, you know, the US is in trouble. And then it kind of rebounded as there was
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  more positive news and negotiations around lifting that debt ceiling. But it says,
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  essentially, people don't want to own US. They don't own US currency. They don't want to own US
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  stocks. So they're kind of selling something. Oh, God. I just feel like, can I just be honest here for
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  a second? People are so dramatic pulling money out every five seconds. And this was, this is the
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  thing why we say like invest for the long term, because like people do get so irrational and so
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  dramatic. That's right. That's why I mean, I think people pull their money out for a week and then
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  all of a sudden it's sweet again. But then we could be the stupid ones that are sitting here
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  in the, you know, the market tanks and we go into a massive recession and we're like,
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  oh, we've got to get over it. Yeah. So yeah, you do kind of have to weigh up the, you know,
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  the probabilities of what's going to happen. What do you think? Are you worried about it?
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  Not at the stage. Every day, it's like more and more news coming out about it in terms of,
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  you know, I mean, it's not a good thing if you lift the debt ceiling also, because it just means
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  the country's going into more and more debt. The country really just needs to figure out a way
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  to pay off that debt. And how would they even do that? Through like increased taxes and stuff like
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  that, which at this point in time is not very good. And no government wants to have their campaign
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  being like, hey, we're getting increased taxes. I was like, I'm not voting for you. But speaking of
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  that, also, we have the New Zealand budget. A lot of economic news lately, which has really moved
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  New Zealand dollar, the US dollar. Yeah. So I was away this weekend. And one of the guys was
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  reading online. He was reading about the budget. We were cooking dinner on Saturday night.
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  And I was like, what are you reading? And he was like, oh, I'm reading about the budget. I was like,
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  all right, we'll tell me about it. And he tried to. And I was like, don't worry, actually, I'm going
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  to go back to my personal tutor. I got a text from sophone Sunday night. She's like, we're talking
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  about New Zealand budget tomorrow. She isn't even giving me any. I was like, yes, yes, yes, yes,
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  shit, shit, shit. No, but there was actually something that was really, really good to see in the
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  budget that came out on Thursday last week. And I think it's the kind of best news out of the
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  budget. And it's all around parental leave. And the government is topping up your Kiwi Sava
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  contributions if you're on parental leave. So there, and it's all around the fact that they're
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  acknowledged that, you know, there's a gender, there's a gender pay gap. There is a much bigger
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  discrepancy between retirement savings for women and men. And so they've realised they did
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  do something about it. And one of those things is if you take paternity leave, therefore you're
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  on a reduced salary, or then, sorry, then the government will top up 3%. So you've got your
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  contributions at 3%, your employers, but the government is also contributing, which doesn't
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  happen in a normal Kiwi Sava scenario. And so hopefully fingers crossed that will make a bit of
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  difference in terms of the difference in retirement balances between women and men. Because what is it
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  at the moment? It's 20%. Yeah, that's huge. Yeah. And there was a number of other really cool
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  initiatives as well, like they're scrapping fees on prescriptions. So in New Zealand, we get
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  charged $5 for get a prescription. So for a lot of people, if you're, you know, if you've got
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  some kind of illness or sickness that you need to constantly get drugs for, that can add up.
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  And so that's good. And an increased funding for childcare, which also helps the whole
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  gender discrepancy and, you know, encourages people to have families. So lots of things.
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  Oh, thank God there's been some positive stuff. Yes, I know. Yeah, great, great stuff.
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  So when you say the budget, who puts that together? So the government, so the Labour Party.
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  So who's in government right now? Yes, yeah, yeah, yeah, yeah. And it comes out every year in May.
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  And the thing to realise with the budget in any country is that it really can impact stocks.
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  You know, if there's a huge increase in health care spending, that's great for health care stocks.
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  If there's a huge increase in education spending, that's great for schools and kindergartens
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  and that kind of thing. So there can be reflection of the country's budget and the way that
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  they're stocks. Yes, yeah. And vice versa, you know, if there could be huge cuts in, you know,
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  retirement funding, which means that a lot of the retirement villages, share prices will be
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  impacted. So, you know, there is a lot of focus and attention on budgets when they come out because
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  they can move, move markets. And then back to the US, just jumping all over the world here.
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  We had some news out of the retailers. So this gave us a really good indication of what the
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  consumer environment over there is looking like, which is not too good. But we had Walmart who had
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  a really good result. They're actually benefiting from people moving down the spending spectrum
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  of that makes sense. Like instead of spending money on high end items, they're kind of now a lot
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  more people are shopping at the likes of Walmart because it's more of a discount retailer.
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  We did an episode on Costco. Same thing, yeah. Which would be a really good one to listen to if you
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  want to learn more about consumer behavior because that basically explained why companies like Costco
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  have the low price point of essentials and real sort of basic products do super well in a potential
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  recession. Do you remember what episode that was? And they take market share off the, you know,
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  the more high end ones because people are trading down. That's what we call it. I've been doing that
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  with supermarkets. I used to spend at Huckleberries and like boutique organic supermarkets because
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  that's how I love to spend my money and I just absolutely can't afford it now. Oh, same. Yeah,
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  so it's episode 37 and it's called a deep dive into the fifth biggest retailer in the world,
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  Costco. But this is a really key thing is to think about your own spending habits because we can
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  see this. That's like you said, I've been trading down. I've been shopping at places where things
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  are a bit cheaper. It's happening all over the world. So it's taking a step back and going,
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  okay, so what retailers will benefit if this is happening on a global level? And so it's kind of
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  having that investing mindset and then investing mentality. Lastly, you know, we spoke about how China,
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  the citizens of China are coming back. They're spending again. They're out of lockdown and we've
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  seen this here. Oh my god. It's LVMH showing well again. So LVMH is still doing well. Yes. Yep,
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  so they're benefiting from that. But we also had Burberry report as result in there listed on the London
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  Stock Exchange. The FTSE. Oh no, I got it wrong last time. I'm sorry. I love it. I love the enthusiasm.
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  Close. Yes. No, they listed on the London Stock Exchange. FTSE is the index. But the issue
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  price fell. So they're seeing a slowdown in America. It's like they're saying rebound in China.
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  But it wasn't really enough to offset the slowdown in America. So you've kind of got this balancing
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  effect that's playing out. But yes, LVMH is about 26% this year and Burberry is only about 12. So
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  not seeing that huge benefit like LVMH, but still again, a similar trend of this increasing
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  spread from China as they haven't been able to spend for nearly three years. Can they buy Burberry online
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  or, you know, a Louis Vuitton model here to see sort of products online? I guess when you're buying
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  big ticket items like that. Oh, that's true. I mean, I don't want to buy a handbag online.
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  You know, you want to go in, you want to have a full experience, you want to buy your business
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  classified online though. And then I have the full experience. Oh, I've seen me photos, will you?
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  Yeah. And that's a wrap for this week. That's a wrap. And next week will be our last week.
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  Oh my god, true. Yeah, I had a big old cry yesterday. Did you? I was just feeling really like
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  emotional. Oh, not just, but it's just anxious. Just lots to sort out. Just kind of,
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  my parents were at me about stuff. And I was like, not right now, you know, just coming at all
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  angles. I was like, just, I don't even know a period either. I was like, wow, this is like a true cry.
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  We'll take this offline. I think we'll take this offline. Everyone have a great week on it.
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  Keep smiling.
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  Thank you so much for listening to The Curve Weekly. Make sure you hit the subscribe button to stay
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  because it really helps other people find our cute little podcast. And we hope you have a good week
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  and see you next Monday. Bye. Bye. See you next Tuesday. Wow.
• 17:55
  See you next Tuesday. I mean Monday.