Latest / Best of Business / Michael Luke: Milford Asset Management expert on what the new US inflation data means for the economy

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Michael Luke: Milford Asset Management expert on what the new US inflation data means for the economy · Best of Business

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  Speaker 1: Heather Duplessy Ala.
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  Speaker 2: It's all on. The nurses have just announced they're going
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  Speaker 2: to strike as well. They're going to be striking on
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  Speaker 2: involve fourteen thousand nurses. Don't tell me this isn't coordinated.
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  Speaker 2: Do not tell me this isn't coordinated. Sixteen pass six Michael, Look,
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  Speaker 2: Milford Acid Management is with us A Michael hey Ever,
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  Speaker 2: I guess we've got the US inflation data for July
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  Speaker 2: out last night. Good news or bad news for the
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  Speaker 2: economy over there?
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  Speaker 3: Well, we would call that inflation data mixed, but it
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  Speaker 3: was better than some had fared given tariffs, and we
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  Speaker 3: did see the US shere market rually on the back
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  Speaker 3: of it last night. Now look at the numbers. Overall
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  Speaker 3: inflation stayed steady at two point seven percent. However, core inflation,
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  Speaker 3: which strips out wildtail items like energy, now that was
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  Speaker 3: high and expected up zero point three percent in July
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  Speaker 3: and up three point one percent compared to last year.
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  Speaker 3: So while reported inflation data was steady, underlying inflation pressures
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  Speaker 3: in the US are growing with businesses done to pass
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  Speaker 3: on tarifflated costs, and we have to remember a large
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  Speaker 3: proportion of those tariffs only came into effect this month,
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  Speaker 3: so there still is a risk that core inflation continues
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  Speaker 3: to build throughout the year in the US as businesses
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  Speaker 3: increase prices on tariff goods.
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  Speaker 2: So with inflation looking I suppose we could say relatively tame,
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  Speaker 2: are we going to start to see cuts in the
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  Speaker 2: rates there?
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  Speaker 3: Well? After the data markets are now seeing a ninety
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  Speaker 3: five percent chance of a FED rate cut next month,
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  Speaker 3: up from eighty five percent the day before, So investors
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  Speaker 3: think it's pretty certain that they'll cut rates next month.
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  Speaker 3: With July inflation relatively steady and a weekening job market,
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  Speaker 3: so there are now two to three FED rate cuts
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  Speaker 3: expected this year, which requires tariffs to not have a
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  Speaker 3: large impact on inflation or for the FED to cut anyway.
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  Speaker 2: Now we've got the reporting season kicking off here tomorrow.
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  Speaker 2: What should we be watching.
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  Speaker 3: Well, while the US earning season is winding down here
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  Speaker 3: in New Zealand, we're just about to start when New
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  Speaker 3: Zealand companies are going to report their results for the
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  Speaker 3: past six months as well as given outlook on the future,
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  Speaker 3: and generally we expect results are going to be pretty
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  Speaker 3: soft given the tough economic environment. However, the real focus
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  Speaker 3: for investors will be on whether company outlooks show signs
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  Speaker 3: of improvement or not. Now, first up tomorrow as Vista Group.
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  Speaker 3: They sell cinema software all around the world, and we
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  Speaker 3: think they could post a bit of a mixed result
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  Speaker 3: if the cinema is still under a bit of pressure
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  Speaker 3: and a weaker US dollar impacting their revenue. By the
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  Speaker 3: main focus for them will all be about whether they've
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  Speaker 3: got strong customer demand or not for their new cloud products.
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  Speaker 2: Yeah, brilliant and which earnings of the market going to
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  Speaker 2: be watching well.
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  Speaker 3: Next week starts with a two milk on Monday, which
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  Speaker 3: is always an interesting result with their share price known
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  Speaker 3: to move sharply up or down. Now they sell infant
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  Speaker 3: into China, which can be a difficult market to follow
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  Speaker 3: and always creates a bit of uncertainty going to results.
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  Speaker 3: And then the other one i'd call out is just Spark,
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  Speaker 3: which we'll report next Wednesday. Now that will be an
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  Speaker 3: interesting result after them selling their data center business yesterday,
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  Speaker 3: and I think the real focus for investors will be
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  Speaker 3: on whether their earnings and their core business have stabilized
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  Speaker 3: or not, as well as what they do with the
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  Speaker 3: dividend and whether they cuss it and by how much
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  Speaker 3: good stuff.
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  Speaker 2: Michael, thanks for running us through at Michael Luke Milford
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  Speaker 2: Asset Management.
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