Latest / Best of Business / Shane Solly: Harbour Asset Management spokesperson on the US Federal Reserve's plan for rates after the US election

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Shane Solly: Harbour Asset Management spokesperson on the US Federal Reserve's plan for rates after the US election · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks. There'd be
• 0:12
  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Shane Sally Harbor Asset Management is with us now Hey Shane, Hey, Heather,
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  Speaker 2: So Shane. The US markets have given back some of
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  Speaker 2: the games since the election. Again, since the election, when
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  Speaker 2: you think it's going to continue to be choppy.
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  Speaker 3: Well, look we've seen last week the USC s and
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  Speaker 3: P five that's the board broad benchmark, we're down two percent.
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  Speaker 3: Tich stocks they were down three percent, and it's all
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  Speaker 3: about we're seeing an unwind of this Trump trade, this
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  Speaker 3: losing steam. Federal Reserve came out and said we're not
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  Speaker 3: going to cut quite as fast as we thought. So
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  Speaker 3: the odds of a cut from the US Fed back
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  Speaker 3: really back down before last week eighty percent of a cup.
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  Speaker 3: Now they're talking about fifty eight percent next month. So
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  Speaker 3: assuming let's taken some heat out and this initial you
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  Speaker 3: for around mister Trump's appointment, we've seen some people come
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  Speaker 3: to the terms that there's a cost, and that's possibly
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  Speaker 3: higher fiscal spending, higher budget divisits, but more inflation send bonds,
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  Speaker 3: particularly the US tenure bonds go right back up. To
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  Speaker 3: four point four percent, and we saw that back in April,
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  Speaker 3: so a lot of the team's coming out. Is it choppy? Well,
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  Speaker 3: the last few months of the month, sorry, last few
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  Speaker 3: months of the year, I should say, generally good for
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  Speaker 3: US markets. But what we're seeing is earnings start to
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  Speaker 3: get cut for the American market and the tech stocks,
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  Speaker 3: they're the ones that have been holding up. They were
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  Speaker 3: really weak late last week. But this is the broader market.
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  Speaker 3: Is this earnings momentum that's been driving the US market
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  Speaker 3: starting to fade some of the costs so they were
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  Speaker 3: associated with the provoking government come in. So yeah, there's
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  Speaker 3: a bit of risk, it could be a bit choppy.
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  Speaker 2: Yeah, what are you expecting? We've got our own Reserve
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  Speaker 2: Bank review of the OC this month. What are you
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  Speaker 2: expecting there?
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  Speaker 3: Well, market's telling me they're expecting half a percent, So
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  Speaker 3: I've got to go with what the market consensus are saying. So,
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  Speaker 3: you know, the lead indicators is just in confidence. Business
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  Speaker 3: confidence starting to come off a low base, but it
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  Speaker 3: is still really low. We are seeing inflation pressure continued
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  Speaker 3: to fall, so that the right backing is there for
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  Speaker 3: the RBS to continue to cut. Today, we've had some
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  Speaker 3: slow more positive data out of the b Z Business
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  Speaker 3: End z PSI, and that's a survey that says how
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  Speaker 3: are you feeling about what happens next? It was up
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  Speaker 3: from up to forty six, up points through of percent,
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  Speaker 3: so not a lot. Still below fifty and fifty years
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  Speaker 3: above fifty. That means that economy is going to grow.
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  Speaker 3: If it's below fifty, it's going to shrimp. So business
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  Speaker 3: is still saying, hey, we're dealing with a slowdown. And
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  Speaker 3: we also saw some inflation data out today, some producer
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  Speaker 3: price data. I won't go into the detail, but it
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  Speaker 3: basically said businesses are unable to pass through all the
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  Speaker 3: cost increases. So yeah, there's certainly a lead up for
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  Speaker 3: the RBUS of to continue to cut. The surprise would
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  Speaker 3: be if it was a quarter three quarters of a percent
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  Speaker 3: off it's point seventy five percent, that would be a surprise.
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  Speaker 3: But this is the last time before February next year
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  Speaker 3: the Reserve Bank can make a statement they've got a
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  Speaker 3: big break. So yeah, they passed the less regrets is
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  Speaker 3: what they're talking about. They want to keep some gas
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  Speaker 3: in the tank just in case they have to fight
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  Speaker 3: inflation more so, my guess is that'll be what they
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  Speaker 3: do half a percent, and we're going to keep someone
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  Speaker 3: in the back pocket just in case.
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  Speaker 2: Hey, by the way, anything come out of that. The
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  Speaker 2: Fonterra and your shareholders meeting today.
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  Speaker 3: Look, you know, Fontira, it's been a really good story.
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  Speaker 3: The company has done a great job of repositioning. They
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  Speaker 3: reaffirmed the earnings for Coast gave similar guidance between forty
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  Speaker 3: to sixty cents, but she that's for the Fontier shield
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  Speaker 3: its foundations, and that compares to the market expectation of
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  Speaker 3: fifty three cents. Stock was flat on the day, not bad.
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  Speaker 3: The board was just saying, hey, look we're seeing another
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  Speaker 3: year of stable performance. We're focused on keeping the return
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  Speaker 3: on capital up. There have been battling to get the
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  Speaker 3: return on capital back up to ten to twelve percent
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  Speaker 3: from nine to ten, and they're saying, hey, we're going
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  Speaker 3: to keep on focusing on investing for the future. And
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  Speaker 3: one of the things that people were watching for is
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  Speaker 3: if there's any update on the sale of the global
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  Speaker 3: consumer business, and there it was none other than to
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  Speaker 3: say the board was saying, it's the right strategy, We're
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  Speaker 3: on track, we're doing the process, we're underway. Just be patient,
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  Speaker 3: so not new, but the confirmation unless was pretty important
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  Speaker 3: for the broad and New Zealand economy.
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  Speaker 2: Yeah, brilliance. So as always, thank you so much for
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  Speaker 2: talk to you in a week that Shane Soley of
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  Speaker 2: Harbor Asset Management.
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