Latest / Best of Business / Andrew Curtayne: Milford Asset Management expert on the market reactions to the Federal Reserve changes

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Andrew Curtayne: Milford Asset Management expert on the market reactions to the Federal Reserve changes · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk zed B.
• 0:12
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• 0:16
  Speaker 2: Andrew Curtain Milford Acid Management is with us.
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  Speaker 3: Hey, Andrew Hidden, Heather, how are you.
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  Speaker 2: I'm very well, thank you. I'd imagine that the global
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  Speaker 2: markets are pretty focused on what's happening with the Fed
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  Speaker 2: Reserve this week. Yeah.
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  Speaker 3: Yeah, lots going on because we had Jackson Hole, which
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  Speaker 3: was HOWLD Friday and over the weekend, and key message
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  Speaker 3: coming out of that was that power was getting more
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  Speaker 3: inclined to cut interest rates in the US next month.
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  Speaker 3: So Marc's been racking a little bit to that. We
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  Speaker 3: saw an inequity rally of a couple I was at
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  Speaker 3: of one and a half percent on Friday night from that.
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  Speaker 3: But the big news really on Monday was Trump came
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  Speaker 3: out with quite a big surprise when he said he
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  Speaker 3: was going to fire the Federal Reserve board member Lisa Cook.
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  Speaker 3: So this is really created a lot of noise about
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  Speaker 3: the independence of the Federal Reserve, which is meant to
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  Speaker 3: be separate from the Trump administration and the US government. Yes,
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  Speaker 3: so we'll see how that plays out over the rest
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  Speaker 3: of the week.
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  Speaker 2: Now, Trump has been very vocal and wanting to lower
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  Speaker 2: the interest rates. Does getting rid of Lisa Cook actually
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  Speaker 2: achieve this?
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  Speaker 3: It does move things in his favor. So the Fed
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  Speaker 3: works by a vote by twelve board members, and if
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  Speaker 3: twelve board members vote to cut interest rates, then they
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  Speaker 3: cut interest rates. Now, Lisa Cook has been against cutting
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  Speaker 3: interest rates, so she's not aligned with what Trump wants.
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  Speaker 3: If he removes her, he will likely appoint someone who
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  Speaker 3: would be favorable to him and will be aligned with
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  Speaker 3: cutting interest rates. Now he can propose someone and then
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  Speaker 3: it gets voted through by the Senate, which he has
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  Speaker 3: essential de facto control over, so he can push things
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  Speaker 3: through in his favor.
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  Speaker 2: And does he actually have the power to fire her.
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  Speaker 3: Yeah, this is where it gets tricky. So the Federal
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  Speaker 3: Reserve is independent from the government, so Lisa Cook does
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  Speaker 3: not report or work for Donald Trump. What he is
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  Speaker 3: trying to do is he's found an angle whereby they
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  Speaker 3: are leaching that Lisa Cook's essentially conducted mortgage fraud back
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  Speaker 3: in nowther it was twenty one to twenty two before
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  Speaker 3: she was a Fed governor. If they can make a
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  Speaker 3: case whereby this means she's not fit for the job.
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  Speaker 3: Essentially if you've done mortgage fraud and you're in the
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  Speaker 3: job which is sort of controlling your influencing interest rates,
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  Speaker 3: it's not a great look. Then he may have a
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  Speaker 3: case to remove it. However, this is likely going to
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  Speaker 3: have to go to the courts. Both Trump and lis
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  Speaker 3: Cook has said they were waiting to see what courts
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  Speaker 3: will say, and the feed have said they were also
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  Speaker 3: appined by whatever the courts say. So, look, it feels
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  Speaker 3: like a little bit of a long shot at the moment,
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  Speaker 3: but then he may have a potential avenue here.
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  Speaker 2: Interesting. Okay, now listen, we've got the Nvidia results tomorrow.
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  Speaker 2: What are we expecting.
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  Speaker 3: Well, it's going to have to be a strong result
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  Speaker 3: because nobody has rallied about one hundred and ten percent
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  Speaker 3: since the recent loads of its share price in April,
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  Speaker 3: so the market's clearly expecting some big numbers. What the
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  Speaker 3: sort of the consensus out there is for revenue and
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  Speaker 3: earnings to grow around about fifty percent year on year,
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  Speaker 3: So that reflects incredibly strong demand for Navidia's AI chips.
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  Speaker 3: It looks like they're going to have you know, they
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  Speaker 3: should have decent numbers. The problem when you have such
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  Speaker 3: a strong share price move over the last few months,
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  Speaker 3: is that a little miss on these expectations can send
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  Speaker 3: the share price down. However, our sort of base cases
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  Speaker 3: that should should have decent numbers. I mean, if you
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  Speaker 3: look at what's been going on in the AI space
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  Speaker 3: over the last few months, it's all about more and
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  Speaker 3: more spending. All the largest companies in the world, such
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  Speaker 3: as Microsoft and Amazon, Meta Google, have been spending more
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  Speaker 3: and more money on AI, which essentially means they're spending
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  Speaker 3: more money on N video chips. So we expect the
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  Speaker 3: demand Drake backdrop to be favorable enough that we shouldn't
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  Speaker 3: see too many surprises coming to other results. However, it
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  Speaker 3: is nvideo and the share price tends to be quite volatile,
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  Speaker 3: so we'll see there it goes.
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  Speaker 2: Thanks for talking us, so I appreciate it, Andrew, Andrew Curtain,
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  Speaker 2: Milford Asset Management.
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