Latest / Best of Business / Sam Dickie: Fisher Funds expert on how investors can respond to the ongoing global uncertainty

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Sam Dickie: Fisher Funds expert on how investors can respond to the ongoing global uncertainty · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks'd be follow
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• 0:17
  Speaker 1: Heller dupic Alen.
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  Speaker 2: We are living through one of the most challenging periods
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  Speaker 2: for economic forecasting in decades. Traditional indicators are pretty much
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  Speaker 2: contradictory at the minute. Sam Dickey from Fisher Funds is
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  Speaker 2: with me on this, Hey, Sam, Hey, EIM I mean
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  Speaker 2: it is confusing and contradictory at the minute, isn't it.
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  Speaker 3: It is very confusing in contradictory. A good example of
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  Speaker 3: that actually is if you dive beneath the headline growth
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  Speaker 3: numbers to the real time data. So two arms of
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  Speaker 3: the Federal Reserve in the US, the New York Federal
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  Speaker 3: Reserve and the Atlanta Fed, calculate essentially a daily GDP number,
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  Speaker 3: and they have slightly different calculation methods. But before COVID,
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  Speaker 3: those differences were sort of plus or minus one percent apart,
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  Speaker 3: and since COVID they're more like plus or minus three
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  Speaker 3: percent apart. So forecasting era has tripled. And those are
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  Speaker 3: essentially insiders versus the average punter on the street, and
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  Speaker 3: they're both arms of the Federal Reserve with a similar
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  Speaker 3: four techniques, and if you listen to people like Capital Economics,
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  Speaker 3: the IMF, the World Bank all are complaining that forecasts
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  Speaker 3: are as fragile as they've seen in decades. And you
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  Speaker 3: and I have spoken about the reasons why. The primary
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  Speaker 3: reason is global economic policy uncertainty indexes. Well, they have
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  Speaker 3: eased a little bit, are still near fifty year high,
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  Speaker 3: so that policy whiplash continues.
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  Speaker 2: Yeah, so where are we at do you think in
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  Speaker 2: the global and local economic cycle.
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  Speaker 3: Critical juncture? I think in tons of dispersion. So the
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  Speaker 3: US growth has generally been pretty robust, it's held the
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  Speaker 3: world up, still growing around three percent. That we're sort
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  Speaker 3: of multi speed over there. So the consumers still in
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  Speaker 3: the game. Thankfully, seventy two percent of GDP is the consumer,
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  Speaker 3: and so MasterCard gives us that sort of wonderful bird's
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  Speaker 3: eye view of the global consumer, and they just said
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  Speaker 3: last week consumer spending remains healthy, supported by wage growth
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  Speaker 3: that continues to outpace inflation. Of course, anything related to
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  Speaker 3: tech and AI is booming, but the manufacturing sector is
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  Speaker 3: in contraction. Europe is kind of limping along at about
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  Speaker 3: half percent growth despite the rising spinning that's going into
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  Speaker 3: defense and infrastructure. Over there. China threw a ton of
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  Speaker 3: stimulus at its economy as it slowed last year, and
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  Speaker 3: I spoke about this and we saw a bit of
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  Speaker 3: a pickup. So that's grown about five percent, and back
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  Speaker 3: here in New Zealand we sort of hunting for those
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  Speaker 3: green shoots. So in short, US robust but slowing, Europe
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  Speaker 3: and New Zealand limping along the bottom, and China's still
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  Speaker 3: healthy at five percent.
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  Speaker 2: And where to from here?
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  Speaker 3: The US is creaking. It's been underpinned by a really
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  Speaker 3: strong labor market for years. And I'm sure your listeners
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  Speaker 3: are aware. Last week we saw not only the current
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  Speaker 3: month jobs number hit recessionary type territory, but they revised
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  Speaker 3: down the previous two months to recession type levels as well,
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  Speaker 3: so only adding fifty thousand jobs a month. And we're
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  Speaker 3: hearing that from companies too. But Jamie Diamond, the CEO
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  Speaker 3: of JP Morgan, reminded us that as employment falls, obviously
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  Speaker 3: you see more stress on the consumer in the second half.
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  Speaker 3: And China growth is still pretty robust and they definitely
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  Speaker 3: stand ready to throw more stimulus additive things slow and
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  Speaker 3: Europe and New Zealand they'll find it hard to grow
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  Speaker 3: rapidly if the US slows. But they are at very
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  Speaker 3: very different points in the cycle, bouncing along the bottom,
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  Speaker 3: and there are green shoots and things like tourism and
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  Speaker 3: agricultural exports.
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  Speaker 2: Yeah, which is good news, I suppose. So what should
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  Speaker 2: investors take from all this? What should they make of it?
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  Speaker 3: Well, given how bullish sentiment is in how hard the
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  Speaker 3: stock markets are bounced in the last few months, the
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  Speaker 3: next few months could be trickier, as markets will be
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  Speaker 3: much more sensitive to any deterioration in the macroeconomic picture.
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  Speaker 3: But they're really really good news is either the Federal Reserve,
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  Speaker 3: the US Central Bank has tons of room to cut
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  Speaker 3: rates in the US so the amount that inflation is moderated,
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  Speaker 3: the feed could probably cut rates by another one hundred
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  Speaker 3: to one hundred and fifty basis points, but it's been
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  Speaker 3: stubbornly on hold, worried about Tariff's reigniting price pressures. But
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  Speaker 3: they are kind of running out of reasons not to
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  Speaker 3: cut rates. Last Friday, after that week's jobs number, the
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  Speaker 3: market kind of did the job for them and priced
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  Speaker 3: at another two rate cuts. So there is some cushion
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  Speaker 3: there if things do slow on the second half. As
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  Speaker 3: you should probably expect. Sam.
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  Speaker 2: Thanks so much, mate, I enjoy your evening. Sam Dickey Official.
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