Latest / Best of Business / Sam Dickie: Fisher Funds expert on the ongoing economic costs of the Iran war

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Sam Dickie: Fisher Funds expert on the ongoing economic costs of the Iran war · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks B follow
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  Speaker 2: Now the Iran War five weeks on. That's where we're
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  Speaker 2: at right The real story is starting to show up
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  Speaker 2: where it matters most, which is in the company results,
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  Speaker 2: in the consumer confidence and the everyday costs outside of
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  Speaker 2: the petrol pump. Sam Dicky from Fisher Funds is with
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  Speaker 2: us on this high Sam.
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  Speaker 3: Good evening, Heather.
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  Speaker 2: So what are the companies actually saying right now?
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  Speaker 3: Yes, a few different buckets. So firstly, the obvious one
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  Speaker 3: being companies with fuel as a direct cost, and Scott Kirby,
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  Speaker 3: the CEO of United Airlines, is stress testing his fleet
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  Speaker 3: against oil hitting one hundred and seventy five dollars a barrel.
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  Speaker 3: Now that's not a worst case, it's more a planning assumption.
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  Speaker 3: Just for context. That adds a potential eleven billion dollar
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  Speaker 3: dollars to United Airlines costs, which is more than double
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  Speaker 3: their best ever profit year, and they're already cutting five
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  Speaker 3: percent of flights on the most marginal routes. The second
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  Speaker 3: bucket is Middle Eastern buyers been critical growth drivers for
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  Speaker 3: luxury demand and one hundred billion dollars have been wiped
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  Speaker 3: off luxury valuations in the last month, and I think
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  Speaker 3: Bentley's CEO and an investor call s at a best.
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  Speaker 3: People in the Middle East sadly have thoughts on their
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  Speaker 3: mind other than looking for a new Bentley right now.
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  Speaker 3: And Ferrari's actually suspended deliveries to the region entirely. And
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  Speaker 3: this is the hidden inflation story which we talked about before.
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  Speaker 3: UPS and FedEx both just announced emergency fuel charges on
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  Speaker 3: international freight. Container ships with goods on them are rerouting
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  Speaker 3: via Southern Africa, which adds up to forty days to
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  Speaker 3: transit time. So if you think about that, those additional
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  Speaker 3: costs land on shop shelves in the US and sixty days.
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  Speaker 3: And here's the least obvious one. So Samsung and ESK
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  Speaker 3: Heinez out of Korea make the chips that power AI
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  Speaker 3: and those chips run on helium. Helium cools the superconducting
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  Speaker 3: magnets to make semiconductors work, and Katar produces a third
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  Speaker 3: of the world's helium. And then all ships through hor
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  Speaker 3: moons of course, so we do think chip makers will
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  Speaker 3: be prioritized over party balloons. But I do think there's
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  Speaker 3: one to keep an eye on either.
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  Speaker 1: Yeah, totally.
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  Speaker 2: And what are the consumer data points telling us?
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  Speaker 3: Well? Consumer confidence measures, which is sort of like the
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  Speaker 3: crystal balls on future spending patterns for consumers, are under pressure.
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  Speaker 3: So the US University of Michigan sentiment fell to fifty three,
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  Speaker 3: which is lower than ninety eight percent of all months
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  Speaker 3: since the survey began in ninety seventy eight. Closer to home,
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  Speaker 3: Australian consumer confidence just had a record low ever in
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  Speaker 3: fifty years a couple of days ago. In Europe's the
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  Speaker 3: same story, So consumer confidence had one of the largest
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  Speaker 3: falls on record outside of the pandemic and the Ukraine conflict.
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  Speaker 3: And the important thing to remember is real consumer spending
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  Speaker 3: declines two to three months after an oil shock. That's
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  Speaker 3: what history tells us. So any spending cliff is likely
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  Speaker 3: to hit in June.
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  Speaker 2: And so what does this mean for investors?
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  Speaker 3: Do you think? I think we all know that the
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  Speaker 3: longer this goes on for that, the deeper the future
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  Speaker 3: consumer and business spending cuts will be. And the good
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  Speaker 3: news is, though, I think I think the US government
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  Speaker 3: knows this too, and it and there's Goldman Sachs reminds
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  Speaker 3: us in twenty one military conflicts over forty years, markets
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  Speaker 3: were higher in ninety percent of the time eight weeks later.
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  Speaker 3: So nobody knows when the straight upall moves opens, but
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  Speaker 3: when it does, the relief rally in stocks will be
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  Speaker 3: sharp and fast.
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  Speaker 2: Sam, thank you very much. It's a lot to consider there.
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  Speaker 2: Sam Dickey Fisher.
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