Latest / Best of Business / Matt Goodson: Salt Funds Management managing director on the markets fluctuating amid Middle East conflict

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Matt Goodson: Salt Funds Management managing director on the markets fluctuating amid Middle East conflict · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks. They'd be
• 0:12
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  Speaker 2: Now. Stock markets have rebounded again today, the ore prices
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  Speaker 2: back down below one hundred US dollars a barrel. It
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  Speaker 2: seems to be a response to Donald Trump earlier today
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  Speaker 2: saying the war would be over soon. Matt Goodson AsSalt
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  Speaker 2: Funds Management Managing Director and with US now home, Matt,
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  Speaker 2: how are we sitting compared to yesterday?
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  Speaker 3: Well, New Zealand market did rally today, but weekened off
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  Speaker 3: over the course of the afternoon and actually closed flat,
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  Speaker 3: which was a little bit disappointing after yesterday's three percent.
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  Speaker 3: Full as Australia was up around one and a half
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  Speaker 3: two percent and it's only up about point hay at
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  Speaker 3: the moment as we're coming into their clothes.
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  Speaker 2: Okay, Now, what does this mean that the that people
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  Speaker 2: have had a look at what Donald Trump's had to say,
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  Speaker 2: Investors have looked at and not put too much stock
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  Speaker 2: in it.
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  Speaker 3: Well, unusually for Trumps, made conflicting statements as to what
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  Speaker 3: he's actually going to do. And then the other question
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  Speaker 3: is can the US actually just walk away do their
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  Speaker 3: war goals coincide with those of Israel, and what does
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  Speaker 3: that leave a run doing. Have a key question here
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  Speaker 3: really for the world, is devastrates of Hormuz reopen. At
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  Speaker 3: the moment, you have about six and a half million
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  Speaker 3: barrels of oil production shut in, and that's really a
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  Speaker 3: key crunch point for the global economy.
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  Speaker 2: I mean, I take it from the fact that the
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  Speaker 2: markets haven't rebounded to yesterday's levels that we are not
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  Speaker 2: believing him, right, We're not buying his argument that it's
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  Speaker 2: going to be over soon. And that is probably wise
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  Speaker 2: on our part, isn't it, Matt, Because that's the most
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  Speaker 2: likely outcome, is that this goes on for a bit longer.
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  Speaker 3: Quite possibly. The point here is just the sheer level
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  Speaker 3: of uncertainty. So now we saw oil peak one hundred
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  Speaker 3: and fifteen, a couple of days ago, got down to
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  Speaker 3: the mid eighties this afternoon, it's now back up around
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  Speaker 3: ninety ninety one dollars a barrel of WTI and US
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  Speaker 3: futures are just down a touch. So the market is
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  Speaker 3: going to be very volatile and reactive. Latest unpredictable headline here.
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  Speaker 2: Now, what are you packing for Air New Zealand? How
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  Speaker 2: is it looking for them.
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  Speaker 3: It's tough. It's really tough. It's not just the oil price,
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  Speaker 3: which they are largely hedged too, it's the refining margin.
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  Speaker 3: And those margins have gone through the roof. And what
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  Speaker 3: will happen as oil gets harder to get is you'll
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  Speaker 3: see more and more refineries go offline and resource most
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  Speaker 3: of our oil from Singapore and facing a very difficult
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  Speaker 3: situation unless the straits of well Mows open up in
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  Speaker 3: the near future. So refining margins could go very high
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  Speaker 3: indeed until those straights open up, and then if refineries
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  Speaker 3: do close down, there are quite long legs and bringing
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  Speaker 3: them back up again and getting a stable and getting
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  Speaker 3: a stable run through them. So I think people should
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  Speaker 3: expect materially higher airline prices for a period of time
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  Speaker 3: until this is resolved.
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  Speaker 2: From an investment perspective, would the wise thing to do
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  Speaker 2: just be to be a cool head in sit tight.
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  Speaker 2: To have a cool head in sit tight.
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  Speaker 3: I think. So this action in itself is stagflationary, lower growth,
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  Speaker 3: higher inflation, and it comes actually following data from the
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  Speaker 3: US on Friday night, which had pretty weak jobs and
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  Speaker 3: quite high wage inflation. So for New Zealand, it's quite
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  Speaker 3: it's just painful. We were just starting to climb out
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  Speaker 3: of what had been a pretty tough period for the
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  Speaker 3: economy and this shock comes along. So look, I think
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  Speaker 3: the best thing to do for most investors is really
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  Speaker 3: to stay put rather than run away at the lies.
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  Speaker 2: Matt, I see that there are some who are privately
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  Speaker 2: saying we should brace ourselves for another recession in this country.
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  Speaker 2: Is that premature?
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  Speaker 3: If this lasts a considerable period of time, that's certainly possible.
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  Speaker 3: But we've been polish on the outlock for our economy.
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  Speaker 3: This year. We're having in terms of trade boom if
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  Speaker 3: you look at dairy prices, red meat prices, horticultural prices,
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  Speaker 3: and the lagged impact of the sharp harbing and zed
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  Speaker 3: rate cuts last year are finally starting to come through.
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  Speaker 3: So I do think it's premature to call a recession
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  Speaker 3: at this stage. If we're still talking about the straits
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  Speaker 3: of well Move has been closed in six months, maybe
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  Speaker 3: that's a different matter.
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  Speaker 2: Yeah, brilliant, Hey, thank you very much. Matter as always,
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  Speaker 2: Matt Goodson, Salt Funds Management, Managing Directory.
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