Latest / The SME Stream / Shane Solly: Interest rates and your assets

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Shane Solly: Interest rates and your assets · The SME Stream

0:01
Speaker 1: Mind, Jennie.
0:22
Speaker 2: Jennie is love and we welcome back to the Weekend Collective.
0:26
Speaker 2: I'm Tim Beverage and this is Smart Money. By the way,
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0:54
Speaker 2: now it is time for smart Money and my guest
0:59
Speaker 2: is from Harbor Asset Management. He's a director and portfolio
1:01
Speaker 2: manager and research analyst and his name is Shane Solly.
1:05
Speaker 2: Good afternoon, Yeah, Hey, how are you going all right?
1:08
Speaker 2: How are you doing this weekend?
1:10
Speaker 1: Dad?
1:10
Speaker 2: Excellent? So yes, if you have any kind of if
1:13
Speaker 2: you're interested in money basically and understanding how the world
1:16
Speaker 2: works when it comes to money and assets and investments,
1:19
Speaker 2: we'd love to hear me. Just we'll stick with us
1:22
Speaker 2: because we're going to get into well, let's we'll get
1:24
Speaker 2: right into it, shall we shame. The first thing is
1:28
Speaker 2: central banks cutting official interest rates. And when we were
1:33
Speaker 2: in central banks, we're just talking in New Zealand context
1:36
Speaker 2: as well.
1:37
Speaker 1: Yeah, that's a really good question because I think you
1:39
Speaker 1: know central banks, that's people like the Reserve Bank in
1:41
Speaker 1: New Zealand, but it's also things like the US Schedule Reserve,
1:44
Speaker 1: the Bank of England, the European Central Bank. And look,
1:47
Speaker 1: it's really interesting. We've had central banks increasing interest rates.
1:51
Speaker 1: So the last few is post COVID to try and
1:54
Speaker 1: help get on top of inflation, and now they're going
1:57
Speaker 1: the other way. So we've seen central banks neutralizing official
2:01
Speaker 1: interest rates as this inflation falls and as economic lead
2:05
Speaker 1: indicators suggest that economic growth starting to slow and they're
2:08
Speaker 1: actually starting to worry about unemployment. So the risk has
2:10
Speaker 1: gone from inflation to growth. And we're expecting this week Wednesday,
2:16
Speaker 1: the US Federal Reserve is expected to join other central banks,
2:20
Speaker 1: including the Reserve Bank in New Zealand and actually cutting
2:23
Speaker 1: official rates. So yeah, it's an interesting time. You know,
2:27
Speaker 1: certainly this inflation, the mix between inflation interest rates, certainly
2:32
Speaker 1: the inflation sits the trajectory how fast or can the
2:36
Speaker 1: central banks cut? Well that economic growth that really sort
2:39
Speaker 1: of sits the pace and the magnitude. So inflation says
2:41
Speaker 1: yessues should be cutting, but growth is the key to
2:44
Speaker 1: how fast. And certainly we know in our economy here
2:47
Speaker 1: it's time, right, it's time for rate cuts here?
2:50
Speaker 2: How urgently would you be wanting to cut rates because
2:53
Speaker 2: we've gone from a few months ago where Adrian R's
2:56
Speaker 2: rhetoric even said I was thinking about maybe even putting
2:59
Speaker 2: them up, but I'm going to leave them the same.
3:01
Speaker 2: And finally there's a slight drop. I'm guessing from just
3:04
Speaker 2: the energy and your voice around that you'd like to
3:06
Speaker 2: say a bit more of a fall, a bit quicker.
3:09
Speaker 1: Well, I think we need consecutive rate cuts. I think
3:12
Speaker 1: there's the door has been open. They need to keep
3:15
Speaker 1: this momentum going or let the economists decide whether it
3:19
Speaker 1: was done early enough or not. But certainly from the
3:22
Speaker 1: real economy, you know, we know that unemployment is going
3:25
Speaker 1: to creep. But that's the thing I'm worried about. Tim,
3:26
Speaker 1: to be honest with you, there's a you know, we
3:28
Speaker 1: could come into this first quarter, second quarter here in
3:30
Speaker 1: New Zealand with unemployment up above five percent, maybe even
3:33
Speaker 1: hitting six six and a half, and that gets pretty painful.
3:36
Speaker 1: So fighting inflation lots of different tools. They used. A
3:41
Speaker 1: sledgehammer helped, There's lots of other things that helped as well.
3:46
Speaker 2: Actually, just understand context around the Reserve Bank's decisions, because
3:51
Speaker 2: my immediate question I wrote down is how much blame
3:53
Speaker 2: do they have for the inflation that they had to
3:54
Speaker 2: get under control? And one might suggest quite a substantial chunk.
4:00
Speaker 2: You can answer that now if you like.
4:02
Speaker 1: Yeah, Look, I think there's lots of different factors. I
4:04
Speaker 1: don't think the Reserve Bank was the sole determined there.
4:07
Speaker 1: In fact, they were quite a way down the list
4:10
Speaker 1: of things. And that's the same with all the central
4:12
Speaker 1: banks globally. But I think the thing we can look
4:14
Speaker 1: back with hindsight and say, during COVID, all the central
4:17
Speaker 1: banks globally, including the Reserve Bank, we're pretty keen to
4:20
Speaker 1: keep the economies afloat, and so we probably made it
4:23
Speaker 1: a bit easy. So we've gone from one side of
4:25
Speaker 1: the boat to the other and now we're getting back
4:27
Speaker 1: to this neutral level. And I think there's supply chains
4:30
Speaker 1: were a big part of this whole you know, where
4:32
Speaker 1: did the inflation come from? And so yeah, no it's
4:35
Speaker 1: not I don't think it's reserve banks that are They
4:38
Speaker 1: not the ones that they have been doing the right
4:40
Speaker 1: thing in terms of getting on top of it. So
4:42
Speaker 1: they've done the job. They have been the police person
4:45
Speaker 1: out there trying to control things.
4:47
Speaker 2: For context, our Reserve Bank did have a duel remit,
4:51
Speaker 2: which was heavily criticized at one stage, wasn't it They
4:54
Speaker 2: were put in charge of controlling inflation, but when they
4:57
Speaker 2: also it's changed now I think, hasn't it. But they
4:59
Speaker 2: were also tasked worth keeping on top of unemployment, and
5:03
Speaker 2: there was a lot of criticism around the time of
5:05
Speaker 2: FI record correctly that one wasn't really compatible with the
5:09
Speaker 2: core job of the bank. You know, the employment wasn't
5:12
Speaker 2: really compatible, was that right?
5:14
Speaker 1: I look at it like it's a bit like having
5:15
Speaker 1: your foot on the accelerator and the breaks at the
5:17
Speaker 1: same time.
5:17
Speaker 2: And that's the one.
5:19
Speaker 1: It's a tough point, and I think this is what
5:21
Speaker 1: we've got. The US figul Reserve has a jewelrymit. So
5:24
Speaker 1: this is the why, the many reasons why the US
5:27
Speaker 1: Figure Reserve is now looking to release the brakes in
5:31
Speaker 1: terms of reducing interest costs because they're seeing risk around
5:35
Speaker 1: and unemployment creeping up. But yeah, like I think it's
5:37
Speaker 1: it's time, and we're going to be a little bit
5:39
Speaker 1: careful about it. Right. Why we're gonna be careful about
5:44
Speaker 1: why central banks are actually cutting rates? You know, they're
5:47
Speaker 1: cutting rates because there's a reduction and economic activity, this
5:51
Speaker 1: lower growth, rising unemployment, you know, so that's got you know,
5:55
Speaker 1: that's a bit of a flag for some of the
5:57
Speaker 1: more economic sensitive parts of the cot of the country
6:00
Speaker 1: and the economy. It's a bit a guess.
6:02
Speaker 2: But would our reserve bank react, would be behaving slightly
6:05
Speaker 2: differently if it's still had that remit of having to
6:08
Speaker 2: keep and unemployment down, Because I mean there was a time,
6:12
Speaker 2: I mean Adriana has literally talked about there's going to
6:14
Speaker 2: be some pain. There's going to have to be some pain,
6:17
Speaker 2: and that pain as people losing their jobs among other things,
6:19
Speaker 2: wasn't it.
6:20
Speaker 1: Yeah? And I think you know, this is the lagged
6:23
Speaker 1: impact of policy changes. It takes time for policy to
6:26
Speaker 1: work its way through and now we're seeing it. There's
6:29
Speaker 1: a few other things that are certainly contributing to that.
6:33
Speaker 1: The pressure point we've had, and energy prices lately has
6:36
Speaker 1: perhaps accelerating some of the process. Seemingly a lot of
6:40
Speaker 1: businesses out there are facing some reset to try and
6:43
Speaker 1: improve profitability, and of course the government looking at being
6:47
Speaker 1: more efficient is always creating a bit of under certainty
6:51
Speaker 1: and employment of the look. I think, you know, the
6:55
Speaker 1: moves by the central Bank to increase rates have helped
6:58
Speaker 1: to get inflation down. Yeah, and now we've got the
7:01
Speaker 1: sort of trickle down by the.
7:02
Speaker 2: Parts in terms of their decisions on how much further
7:05
Speaker 2: they cut and how quickly. Of course they look at
7:10
Speaker 2: they look at the data, but the data sort of
7:12
Speaker 2: responds to their decisions. Is it a bit chicken and egg?
7:16
Speaker 1: Yeah. One of the one of the things about the
7:19
Speaker 1: data team is, as you know, you can get a
7:21
Speaker 1: lot of the readings can be in a very short term.
7:25
Speaker 1: They can be against each other, so you can get
7:27
Speaker 1: out a bad number one month and then a better
7:29
Speaker 1: number the next month. It's a matter of reading through
7:31
Speaker 1: the data and smoothing it out, and I think that's
7:34
Speaker 1: a tough job at the moment. You know, we are
7:36
Speaker 1: still seeing some unusual data coming through and the post
7:40
Speaker 1: COVID world doesn't help when we've got things like the
7:43
Speaker 1: Red Sea supply chain issues. You know, obviously that's creating
7:46
Speaker 1: problems as well. So there's some unusual stuff still washing through.
7:50
Speaker 1: But yeah, the data, they've got to think about it
7:52
Speaker 1: on a sort of a smooth basis and so certainly
7:55
Speaker 1: the evidence is there to support to the cuts and
7:59
Speaker 1: so that's very much where we in capital markets are thinking.
8:03
Speaker 2: The Red Sea supply shoes. Just remind me, there's that
8:05
Speaker 2: when his ballar, you know, there's some dangerous places and
8:08
Speaker 2: ship ships having to go the long way around, and
8:10
Speaker 2: where are we out actually actually out with that? You've
8:12
Speaker 2: been tracking that quite closely.
8:13
Speaker 1: Now now we're still got issues here. Yemen is obviously
8:16
Speaker 1: who the controlled, and that's meaning ships are at risk
8:20
Speaker 1: when they go through the Red Sea, and many shipping
8:23
Speaker 1: companies have taken the choice to go the long way around,
8:26
Speaker 1: and you know, the good users supply chains are in
8:30
Speaker 1: reasonable order that it's just taken a bit longer that
8:32
Speaker 1: we're actually not seeing huge supply problems. In fact, a
8:36
Speaker 1: lot of businesses got ahead of this, some of the
8:39
Speaker 1: news on businesses that we know and love, got plenty
8:42
Speaker 1: of inventory in early on and we haven't seen the
8:46
Speaker 1: issues that we might have otherwise, but there's been a
8:48
Speaker 1: cost and longer trips and a little bit more air freight.
8:53
Speaker 1: So as consumers and as businesses, we are incurring some
8:56
Speaker 1: of that cost. And that's some of the sticky stuff
8:58
Speaker 1: that is from a central band. Again, is this one
9:02
Speaker 1: off or is it going to keep going forever? Tough
9:05
Speaker 1: tough gig being a banker all the time, but he
9:07
Speaker 1: shouldn't tough at them in a moment.
9:09
Speaker 2: Ah, those poor bankers. No, I don't know if you're
9:13
Speaker 2: going to get to many people shedding tears with you
9:18
Speaker 2: on that one. Not that you are, of course, are
9:20
Speaker 2: you actually Just there's a because when we go through
9:24
Speaker 2: a list of things that we want to discuss this
9:26
Speaker 2: this afternoon, there's the thing about growth data, and there's
9:31
Speaker 2: how does it what does it look like? When we're
9:34
Speaker 2: getting back on an even keel, because at the moment,
9:36
Speaker 2: I guess, and I'm a complete lay person, so I
9:39
Speaker 2: feel free for me to I can, I feel free
9:41
Speaker 2: to ask the dumb questions. But it feels that there's
9:44
Speaker 2: still a lot of focus. Everyone's looking at what the
9:46
Speaker 2: Reserve Bank is doing, and it's almost like businesses holds
9:50
Speaker 2: its breath for those decisions. Is there a point where
9:53
Speaker 2: actually people become less fixated on that and we know
9:57
Speaker 2: things are getting healthier because we're actually starting to look
9:59
Speaker 2: at other factors like, oh, look this is doing really well,
10:02
Speaker 2: and we better get cranky again because everyone else is
10:06
Speaker 2: as opposed to keeping an eye on the Reserve Bank
10:08
Speaker 2: all the time.
10:09
Speaker 1: Yeah, look, we're at we're kind of at that point
10:12
Speaker 1: now that the capital markets where the fixed interest rates
10:16
Speaker 1: have moved are already it's already baking in a lot
10:19
Speaker 1: of the interest rate cuts from the Reserve Bank. So
10:22
Speaker 1: if I'm borrowing as a business or even as a
10:25
Speaker 1: potentially borrowing for a home, the interest rates that are
10:28
Speaker 1: being offered are already reflecting the potential for more cuts. Look,
10:32
Speaker 1: I think there's further further from them to fall. So
10:35
Speaker 1: some of that precious come out and then we go
10:37
Speaker 1: back to cost structures. And one of the things that
10:39
Speaker 1: businesses have been Batman, has been a sharp increase in costs.
10:43
Speaker 1: You know, eighteen months ago, two years ago, is labor costs,
10:45
Speaker 1: getting people, the cost of paying people to retain them.
10:49
Speaker 1: It's been interest costs. We've just talked about that sort
10:52
Speaker 1: of hitting a top on coming back down labor costs
10:55
Speaker 1: have hit the top and are started to stabilize, and
10:58
Speaker 1: things like insurance are even starting. This is stabilized, and
11:01
Speaker 1: it's sticky things like council rates. Those who have been
11:03
Speaker 1: stopping businesses from getting positive about where do we go
11:07
Speaker 1: from now? In the meantime, a bunch of them have
11:09
Speaker 1: put some pretty useful strategies in place they're implementing now
11:14
Speaker 1: to basically get their businesses more productive. So, yeah, eighteen
11:18
Speaker 1: months fort much more positive potential environment. So you know,
11:23
Speaker 1: we do have to look over the horizon. We're kind
11:25
Speaker 1: of in a dark, deep cabin at the moment, and
11:28
Speaker 1: there's some sunlight coming. We're just got to be it's timing.
11:33
Speaker 1: So New Zealand's actually in a different cycle from the
11:35
Speaker 1: rest of the world while other economies are slow and
11:38
Speaker 1: we're kind of basing out. Makes it pretty interesting.
11:42
Speaker 2: Okay, So are you a bit more optimistic for us
11:44
Speaker 2: ahead of some of the other big economies in the world,
11:47
Speaker 2: are you?
11:48
Speaker 1: Yeah? Look, I think when we look at the rate
11:50
Speaker 1: the change rate of change, it's the change and the change.
11:53
Speaker 1: New Zealand has been going down earlier and harder than
11:57
Speaker 1: many other economies. Now we're starting to be less negative.
12:01
Speaker 1: And I've got to be careful because you know, the
12:03
Speaker 1: lead indicators, things like the purchasing manager indicies, they get
12:06
Speaker 1: talked about a lot. Our pmis we're below fifty, and
12:10
Speaker 1: below fifty says you're still your economy is slowly but
12:16
Speaker 1: we're not as low as we were. We had a
12:17
Speaker 1: reading last week that was higher, was better, but it
12:20
Speaker 1: was still less than fifty, whereas others are above fifty,
12:23
Speaker 1: for example the US, and they're dropping and this is
12:26
Speaker 1: why their central bank are starting to respond. It's definitely
12:30
Speaker 1: I think you know, too early to talk about our
12:33
Speaker 1: economy on the way back up. But certainly we've taken
12:36
Speaker 1: the hard medicine. I think you talked about Governor raw
12:39
Speaker 1: talking about the hard medicine. While it's been pretty bitter medicine,
12:42
Speaker 1: and it's going to be a little bit more bitter
12:44
Speaker 1: like the course of you know, like all medicines, you've
12:46
Speaker 1: got to run the whole course of the medicine to
12:47
Speaker 1: make sure it works. We've got probably another six to
12:50
Speaker 1: twelve months of that medicine to wash through.
12:52
Speaker 2: You're talking about pms and other data. How good is
12:54
Speaker 2: our data when it comes to telling us where we're at.
12:57
Speaker 1: Yeah, look, I think you know PMI is Again, there
12:59
Speaker 1: are surveys, so what it is. It goes out to seros,
13:02
Speaker 1: a number of different businesses, so it's about you and I,
13:05
Speaker 1: for example, and how do we feel, how do we
13:06
Speaker 1: think about it? It's good indicative stuff, but it just
13:09
Speaker 1: gives us a very directional trend. And I think you
13:12
Speaker 1: know it is correlated, so there is some does have
13:15
Speaker 1: some relationship with activity, so it's not to be ignored.
13:19
Speaker 1: But I think you know, we can see a bounce
13:21
Speaker 1: around a bit, and certainly we have seen a bounce
13:23
Speaker 1: around it, but the bounce is more positive recently here
13:26
Speaker 1: and more negative and other economies. We just had some
13:29
Speaker 1: data out of China. Unfortunately that that economy that the
13:33
Speaker 1: data continues to look pretty soft, eye down. They're facing
13:37
Speaker 1: disinflation still, right, So everywhere else in the world we've
13:41
Speaker 1: been battling inflation. In China's disinflation. Unfortunately, that's a big
13:44
Speaker 1: trade partner for us. Still.
13:45
Speaker 2: Yeah, so interest rates falling. I was wondering how does
13:49
Speaker 2: that play out because obviously I guess your money's worth
13:53
Speaker 2: less and less when inflation's on the rampage. But we
13:56
Speaker 2: had a chat with it. I'm not sure if it
13:57
Speaker 2: was you or Chris we had a chat with about
13:59
Speaker 2: the bond markets.
14:00
Speaker 1: Yep, yep, how the where are we at with.
14:04
Speaker 2: What the bond markets was? Because it's one of those
14:08
Speaker 2: least sexy sort of investments, isn't it. But I got
14:10
Speaker 2: the feeling from you guys that there was a nice
14:13
Speaker 2: little window there where you're like, actually, you know what,
14:15
Speaker 2: bonds are not a bad thing to look at.
14:18
Speaker 1: Yeah, looks you know. Again, just to remind particularly government
14:21
Speaker 1: bonds of lend money to the government, they pay me interest,
14:26
Speaker 1: they pay me an income stream for that, and at
14:28
Speaker 1: the end of the period they pay the capital back.
14:30
Speaker 1: So it's return on that capital and return all of
14:33
Speaker 1: that capital. So we use it within capital markets. It's
14:36
Speaker 1: the we build up from from cash is the lowest risk,
14:40
Speaker 1: lowest return. Then we build up to turn deposits and bonds.
14:43
Speaker 1: And so at the moment we've seen bond year is
14:45
Speaker 1: full by more than one percent and the last a
14:47
Speaker 1: little while. So if you look at a government bond year,
14:49
Speaker 1: it's around high threes, low fours, and so you know,
14:53
Speaker 1: we're seeing those interest rates come along. That's been really profitable.
14:57
Speaker 1: When I measure the capital value. So if I go
15:00
Speaker 1: from five to four, then I actually collect a capital gain.
15:04
Speaker 1: There's more potential to come through. You know, we're certainly
15:08
Speaker 1: seeing that as a it's been a healthy place to
15:12
Speaker 1: MSS and as we see these official interest rates continue
15:15
Speaker 1: to fall, then we continue to see some capital gains there.
15:19
Speaker 1: You certainly a lot of people have quite right, they've
15:21
Speaker 1: been sitting in things like turn deposits. Unfortunately, when they
15:25
Speaker 1: go to roll those term deposits, because the problem with
15:28
Speaker 1: turn to posits is every three months, six months, twelve months,
15:31
Speaker 1: whatever the term is, you've got to reset them. The
15:34
Speaker 1: rates there you don't pity going to be lower.
15:37
Speaker 2: So where do you see New Zealanders putting their money?
15:40
Speaker 2: In terms of obviously when the when the economy starts
15:43
Speaker 2: to recover, the shear market probably looks a bit more
15:44
Speaker 2: appealing than the local share market. I mean, there's always
15:48
Speaker 2: we've seen some spectacular games in the tech tech market overseas,
15:52
Speaker 2: But where do you see New Zealanders putting their money?
15:55
Speaker 2: And I'll just make one other comment as part of
15:57
Speaker 2: the question. We had Ashley Church on yesterday talking about
16:00
Speaker 2: property and I was putting to him the idea that
16:03
Speaker 2: New Zealanders feel that the degree of difficulty in the
16:05
Speaker 2: property market is higher than it's been before. And I
16:09
Speaker 2: wonder where, you know, what do you see the flow
16:12
Speaker 2: of capital going when it comes to investment.
16:14
Speaker 1: Yeah, no, you great point. So the key thing is,
16:19
Speaker 1: as I say, we're going to be a little bit
16:20
Speaker 1: wary about you know, why are central banks cutting interest rates?
16:24
Speaker 1: It's because the economy is slowing, and so certainly that
16:29
Speaker 1: is there. That cut is there to kickstart, provide a cushion,
16:32
Speaker 1: and then drive growth in the medium term. So sheer
16:36
Speaker 1: markets tend to look forward. So we've been spending the
16:39
Speaker 1: last three years looking at GEZ. The economy is going
16:41
Speaker 1: to slow down, there's resk to earnings, and we just
16:44
Speaker 1: come to our earnings reporting season that actually confirmed that
16:47
Speaker 1: it was a tough earnings reporting season. Earning is generally
16:50
Speaker 1: missed versus expectations, and we saw more cuts to forecasts.
16:54
Speaker 1: So we're starting from a low base and now we're
16:57
Speaker 1: starting to think forward. You know what happens is those
16:59
Speaker 1: interest rates to wash through his economy. It starts to
17:02
Speaker 1: come off the ground. And what we did to see
17:04
Speaker 1: is shar markets act earlier than the rest of the
17:08
Speaker 1: capital market. So we can expect to see a recovery
17:12
Speaker 1: in our market. We've actually seen a pretty good rally.
17:14
Speaker 1: Even month today, New Zealand share markets up just under
17:17
Speaker 1: three percent, which is pretty helpful. But really time if
17:21
Speaker 1: we got back to the last time they said the
17:23
Speaker 1: last time we saw rates being cut by the Reserve
17:25
Speaker 1: Bank was back in twenty fifteen, back in May, and
17:28
Speaker 1: it doesn't seem like that long ago. But what we
17:29
Speaker 1: saw early on the shar market, New Zealand had had
17:33
Speaker 1: a good rally. It was up sort of fifteen sixteen
17:36
Speaker 1: percent in that first twelve months, but it wasn't until
17:40
Speaker 1: after that two or three years later on that it
17:43
Speaker 1: really kicked on. So from middle of twenty fifteen through
17:46
Speaker 1: the December between and nine, just before ning before COVID,
17:51
Speaker 1: the New Zealand shar market actually went up one hundred percent,
17:53
Speaker 1: it doubled.
17:54
Speaker 2: So how it went and what period from.
17:56
Speaker 1: Twenty fifteen May twenty fifteen to December twenty nine team double,
18:02
Speaker 1: I know, but it was slow to start with. So
18:04
Speaker 1: this is the purity we're in right now. We don't
18:06
Speaker 1: know if that's going to happen again. Right There's other
18:08
Speaker 1: conditions are quite different, but there's definitely so our little
18:13
Speaker 1: sleepy market has actually got some fantastic businesses. We don't
18:17
Speaker 1: have the tech semiconductor stocks that there are other economies,
18:22
Speaker 1: and that's why it's really helpful to lest in global
18:24
Speaker 1: shares as well to get exposure to these really big
18:27
Speaker 1: growth sectors. But we have got some fabulous businesses that
18:30
Speaker 1: actually are really great wealth creators. So we're an interesting point.
18:35
Speaker 1: We're at that time wherest we've taking another look. I
18:37
Speaker 1: think just picking up on real estate definitely again commercial property.
18:44
Speaker 1: This is things like office, industrial, retail, malls, even things
18:49
Speaker 1: like data see as they can also do quite well
18:52
Speaker 1: in this turning point, which it's a bit dependent on
18:55
Speaker 1: supply and demand, how much new building is coming through.
18:59
Speaker 1: Is the economy slowing down, So again interest rate cuts
19:02
Speaker 1: can be quite helpful for commercial and again residential interest
19:06
Speaker 1: rate helpful. That we're going to be mindful of unemployment
19:09
Speaker 1: as you are a bit worried about your job makes
19:12
Speaker 1: it tough to get the confidence to go and buy
19:15
Speaker 1: a house or even to get lending. So I think
19:18
Speaker 1: there is different assets work at different times. Bonds, as
19:21
Speaker 1: we started at the top of the discussion form pretty
19:23
Speaker 1: well got some more in it good place to be,
19:26
Speaker 1: but it certainly the other growth there is. It's look
19:28
Speaker 1: interesting here.
19:28
Speaker 2: Too, Gosh. I think there'll be a few people in
19:31
Speaker 2: your unassuming way. When you mentioned the one hundred percent
19:34
Speaker 2: growth in three years, there might have been a few
19:35
Speaker 2: people listening going, hang on, come again, what was that?
19:38
Speaker 2: So we might talk ait a touch more about that
19:41
Speaker 2: before we move on to other things like the effect
19:43
Speaker 2: on the US election and all that sort of thing.
19:45
Speaker 2: But we'll do that after the break. It's twenty six
19:48
Speaker 2: past five. But if you are listening and you'd like
19:50
Speaker 2: to pick Shane's brains, we won't give specific financial advice,
19:55
Speaker 2: but if you've got something you want to run, buy
19:56
Speaker 2: me might have he will have a well considered, measured
19:59
Speaker 2: response and comment for you which will add to your wisdom.
20:02
Speaker 2: Give us a call on eighty. This is News Talks.
20:05
Speaker 2: You'll be smart Money. Twenty seven past five. Let's welcome
20:23
Speaker 2: back to the weekend collective. This is smart Money. My
20:26
Speaker 2: guest is depict director, portfolio manager and research analyst at
20:29
Speaker 2: Harbor Asset Management. His name is Shane Sally. Let's let's
20:33
Speaker 2: take some calls. We're going to get on to by
20:35
Speaker 2: the way, looking ahead, to the US election and what
20:40
Speaker 2: either result might mean for us as well. And I'm
20:43
Speaker 2: sure there'll be plenty of people who be keen to
20:44
Speaker 2: know at Shane's take on that, right, Pauline, Hello.
20:48
Speaker 3: Yes, good afternoon, very interesting talk, Tim. And about the money, well,
20:55
Speaker 3: I'm just thinking, Shane, and if you are going to
20:59
Speaker 3: borrow money and ask yourself how you get I'll just
21:01
Speaker 3: turn the radio down.
21:02
Speaker 1: Hang on, there we go.
21:10
Speaker 2: Oh, she's she's going across the room to do that. Okay,
21:13
Speaker 2: she's coming back. Okay, let me tell you what might
21:19
Speaker 2: Just put put Napauline on hold there because she seems
21:21
Speaker 2: to be taking Tyra. I've just put Pauli and on.
21:24
Speaker 2: I'll just say, just talk to her so we can
21:27
Speaker 2: work out when she's ready if she's turned the radio down.
21:29
Speaker 2: Because Shane, just before we get back to Pauline, my
21:33
Speaker 2: ears did prack up. And I think it's dangerous to
21:36
Speaker 2: put too much on into this, but I was I
21:38
Speaker 2: didn't realize that there was such a dramatic growth in
21:40
Speaker 2: the n z ED Was it the top fifty for
21:43
Speaker 2: she is in the stock exchange. The abbreviation is the
21:48
Speaker 2: nz S fifty f G. What does that stand for?
21:51
Speaker 1: Oh it's Grays and Dick's s and p is the
21:56
Speaker 1: keeper of it. And so yeah, look, I think between
22:00
Speaker 1: that May twenty fifteen through the December twenty nineteen, and look,
22:04
Speaker 1: we've got to be really careful, right, there's just one
22:06
Speaker 1: data point. You can't use that as this is going
22:09
Speaker 1: to happen again. It's only indicative of what happens when
22:13
Speaker 1: the economy changes direction from going down to actually turning.
22:17
Speaker 1: And I think it's you know, we probably underestimate just
22:22
Speaker 1: the attraction and quality of some of our businesses to
22:25
Speaker 1: private wealth people Here in New Zealand attractive place. If
22:28
Speaker 1: I've had money sitting in turn deposit and that turn
22:31
Speaker 1: deposits falling, then maybe the income yield off New Zealand bonds,
22:35
Speaker 1: government bonds, who talk about it and shares starts to
22:37
Speaker 1: look interesting. But also it's lots to look interesting for
22:40
Speaker 1: global investors. We've at least a dozen really attractive global
22:44
Speaker 1: businesses that are based here in New Zealand, and when
22:46
Speaker 1: our economy turns, they start to spend time. And that's
22:49
Speaker 1: what we're seeing right now. And so we've had a
22:53
Speaker 1: bit of a recovery. Markets had a little bit of
22:56
Speaker 1: a bounce at the bottom. But Soaly, we've got a
22:58
Speaker 1: little bit of work to do, and it is about
23:00
Speaker 1: earnings that changing direction of profitability and the handbreak of
23:04
Speaker 1: interest rates not being on is helpful.
23:07
Speaker 2: Do you look at the visuals of graphs of what's
23:08
Speaker 2: happened in history and you see the line going up
23:10
Speaker 2: and down on a certain do you look on that
23:13
Speaker 2: basic level for patterns that you think, I might actually
23:16
Speaker 2: just have a look at this period and see if
23:18
Speaker 2: the data is supporting what I think might be happening.
23:21
Speaker 1: Look only to I understand historically, why did that happen
23:24
Speaker 1: their time? Why is there a blips through there? And
23:26
Speaker 1: I think history is a pretty good teacher for us
23:29
Speaker 1: and wider economies do what they did and wider markets
23:34
Speaker 1: to what they did.
23:35
Speaker 2: Past performance is no guarantee your future.
23:37
Speaker 1: It is not. And I think above it were doing homework.
23:41
Speaker 1: It's the hard yards. It's not a straight line.
23:45
Speaker 2: Out of curiosity. Back in that time when all those
23:47
Speaker 2: companies to do well. Were there particular industries that stood
23:51
Speaker 2: out that were part of the one hundred percent growth
23:53
Speaker 2: over the years.
23:54
Speaker 1: Yeah, Look, you know it's again we're going to be
23:56
Speaker 1: careful about using history as to what it was, but
23:58
Speaker 1: certainly we saw a and some of the things like
24:02
Speaker 1: tourism travel was quite helpful through that period of time.
24:06
Speaker 1: We definitely saw some of the smaller companies have a
24:08
Speaker 1: bit of a lift because in New Zealand a lot
24:10
Speaker 1: of those companies tend to be more sensitive to the economy.
24:14
Speaker 1: There was actually quite a broad range, you know. There
24:17
Speaker 1: was no one sector or no one grouping that really
24:21
Speaker 1: drove it, and so there was more about the individual
24:24
Speaker 1: businesses that were in there. So yeah, I think I've
24:28
Speaker 1: got to be careful about trying to draw more partially the.
24:30
Speaker 2: Way I dug into it actually because it got my
24:33
Speaker 2: attention when you talked about because it's a dramatic amount
24:36
Speaker 2: of growth. But I know people to be listening going,
24:38
Speaker 2: oh that's good. Maybe it's time to get stuck in,
24:39
Speaker 2: And I thought, well, we better dig into it a
24:41
Speaker 2: bit more to get that caveat from you about well
24:44
Speaker 2: hang on, you know, it's not a cycle where you
24:47
Speaker 2: used to be able to stay with property it doubles
24:49
Speaker 2: every eight years because that changes as well.
24:52
Speaker 1: Yeah, that's right. I think that's we're definitely in a
24:56
Speaker 1: point where it's worth people doing a bit of homework. Again,
24:59
Speaker 1: there is a different earnings of om but I think
25:01
Speaker 1: there's no doubt, you know, it is not as I say,
25:05
Speaker 1: the reference point there is to start with, early on
25:08
Speaker 1: the market had a bit of a bounce and then
25:11
Speaker 1: it went, oh, geez, we've got to get through this
25:13
Speaker 1: tough economic period. And it wasn't until later on that
25:16
Speaker 1: really took off. You know. One of the things that
25:18
Speaker 1: we know from history is that viatility is kind of normal.
25:22
Speaker 1: Markets and asset prices do go up and down, and
25:26
Speaker 1: the problem for investors is having the patients to look
25:30
Speaker 1: through that bailing out when things are tough. Unfortunately, as
25:34
Speaker 1: jinglely a pretty that's that destroys value in the middle.
25:37
Speaker 2: Lock on your loss basically, yeah.
25:39
Speaker 1: You bet. And so if you can have the time
25:41
Speaker 1: and the patients to let it roll, it's very clear that,
25:45
Speaker 1: you know, we see it time and time again to
25:48
Speaker 1: let the capital markets do the job. And the compound
25:51
Speaker 1: and you talked about you talked about for real estate eight.
25:53
Speaker 2: Years that's changed obviously, yeah, yeah, but you.
25:57
Speaker 1: Know, but this is the power of investing as compound,
26:00
Speaker 1: right that I'm getting five, six, seven, eight, nine, ten
26:03
Speaker 1: percent every year year and now. But the thing that
26:05
Speaker 1: people don't talk about some years it's twenty some years
26:08
Speaker 1: it's zero. So on average it might be ten it's
26:12
Speaker 1: and you've just got to ride the average game.
26:15
Speaker 2: I think the biggest, the biggest tragedy for any investor
26:17
Speaker 2: is when they can't afford to hang on to that loss,
26:21
Speaker 2: you know, because they're just in such straightened circumstances, Hence
26:23
Speaker 2: the mortgage sales that it's such you know, I mean,
26:26
Speaker 2: it gets lost over and sort of fairly euphemistic language
26:28
Speaker 2: by people where they talk about this little bit of
26:30
Speaker 2: pain in the market, but actually personally, for it's real
26:32
Speaker 2: digital it's agony. It's agony. Yeah. Look, I think Pauline
26:36
Speaker 2: has managed to make it across turning radio down with Pauline.
26:42
Speaker 3: Yeah, yeah, I am now a Shane and yourself are
26:45
Speaker 3: very interesting. Now. If a person borrows money, they've got
26:50
Speaker 3: to say to themselves, how am I going to pay
26:52
Speaker 3: that back? Well, I'm an old dog on eighty five
26:55
Speaker 3: and I always always learned that if you borrow, how
26:58
Speaker 3: are you going to pay it?
26:59
Speaker 1: Better?
27:00
Speaker 3: I started working in December nineteen fifty four and my
27:04
Speaker 3: wage was two pound ten. I put a pound away
27:07
Speaker 3: into the post office when the banks were open on
27:10
Speaker 3: Friday nights and I gave a pound board and I
27:13
Speaker 3: had ten shillings to spend, and I knew how to
27:17
Speaker 3: how many beans make five? And I know there's a recession.
27:20
Speaker 3: Mom and Dad talked about the recession in the thirties.
27:24
Speaker 3: That was before the World War Two. I was born
27:27
Speaker 3: in thirty nine and things were pretty tough even when
27:30
Speaker 3: I was a kid. There was coupons and rationing in that.
27:32
Speaker 3: But I think we're going through a bit of hard
27:36
Speaker 3: yards at the moment. But you have got to watch
27:39
Speaker 3: your spending, whichever age you are. I'm on the pension.
27:43
Speaker 2: Are are you calling with a little bit of advice
27:45
Speaker 2: for those who are listening from the years of your experience.
27:49
Speaker 3: Well, it's just what I've been through and I've just
27:51
Speaker 3: managed it. I mean, I've got my own home and
27:55
Speaker 3: you've just got to be very careful with money.
27:57
Speaker 2: What's the matter what age you are, that's the toughest
27:59
Speaker 2: time you have went through. Pauline, Well, I.
28:03
Speaker 3: Think when I was very young, during the war years.
28:06
Speaker 3: You know, Mum was hard up and she the oldest
28:09
Speaker 3: child was born in nineteen thirty. The second one was
28:12
Speaker 3: born thirty two, and then she had a gap, and
28:14
Speaker 3: I was born in thirty nine. The war was on,
28:16
Speaker 3: and you know, we just got what we were given
28:20
Speaker 3: and mom cooked good meals. But I managed to sell
28:23
Speaker 3: a few lemonade bottles on after school and got the
28:27
Speaker 3: old man's old beer bottles and sold them up at
28:30
Speaker 3: the milk bar. And then I there and you learned
28:33
Speaker 3: to it, You learned to save and be thrifty.
28:37
Speaker 2: Good on you. Hey, thanks for your court Pauline.
28:39
Speaker 1: Actually she's gold. Pauline. Thank you so much for sharing that.
28:42
Speaker 1: That is Yeah, that's so many people need to hear
28:45
Speaker 1: this stuff.
28:45
Speaker 2: Yeah, actually she would have been pretty young to be
28:49
Speaker 2: selling lemonader if she's born in thirty nine. Well, I
28:51
Speaker 2: guess your compassmentus by the time you're three or four.
28:54
Speaker 2: But it's amazing she remembers those times. Hey, look, it's
28:59
Speaker 2: time to just take a quick moment. We'll be back
29:01
Speaker 2: in just to tick because one of the other big
29:03
Speaker 2: questions we're going to have a chat with Shane about
29:05
Speaker 2: is what does the well, basically, why does the US
29:09
Speaker 2: election matter for New Zealand. And I don't mean in
29:11
Speaker 2: terms of well, maybe global security, but when it comes
29:14
Speaker 2: to money, money, money. We'll be back and just tick,
29:17
Speaker 2: it's twenty one minutes to sex News Talks. He'd be yes,
29:23
Speaker 2: welcome back. I've got bills. Well, we're not talking about
29:25
Speaker 2: bills so much. This is Smart Money on the Weekend,
29:27
Speaker 2: collecting my guest Shane Soley, who's the director and portfolio
29:29
Speaker 2: manager and research analyst at harbor Asset Management. By the way,
29:32
Speaker 2: if you want to check out harbor Asset and the
29:34
Speaker 2: work they do and the funds that they manage and
29:36
Speaker 2: the but there's a whole lot of stuff on their website,
29:38
Speaker 2: it's harbor Asset dot cod at enz, isn't it Shane.
29:42
Speaker 1: It's the one.
29:42
Speaker 2: Okay, let's talk about it. The US election. Look, it's
29:45
Speaker 2: great theater. I swore I wouldn't watch the debate, But
29:49
Speaker 2: let's talk about what the US election actually means for
29:52
Speaker 2: New Zealand when it comes to capital market and does
29:55
Speaker 2: one president mean different things? Does a Harris mean different
29:59
Speaker 2: things to a Try.
30:02
Speaker 1: Yeah, great question, Tim. We have got to sort of
30:05
Speaker 1: try and fight our way through the as you say,
30:06
Speaker 1: the entertainment theater. Really what we're looking for is policy
30:11
Speaker 1: change risk, you know, days impact economic activity, things like
30:15
Speaker 1: inflation and where the US government directs its vast resources
30:22
Speaker 1: has an impact on the rest of the world, including
30:25
Speaker 1: New Zealand. It influences things like interest rates, foreign exchange,
30:30
Speaker 1: you know, with how much the New Zealand dollars with
30:32
Speaker 1: the US order, share markets, even things like crypto. So look,
30:38
Speaker 1: the election still polling pretty closely, but you know there
30:42
Speaker 1: is a sort of range of different outcomes still potential.
30:45
Speaker 1: Well it seems like Harris is pulling a little bit
30:48
Speaker 1: better and we're still a long way out a couple
30:50
Speaker 1: of months. Yeah, and so you know, picking winners from losers.
30:55
Speaker 1: You know, there is definitely different outcomes for New Zealand
30:58
Speaker 1: and things like trade tariffs. You know, if there is
31:02
Speaker 1: a change in trade teriffs, particularly for example, against China,
31:05
Speaker 1: then that has implications for New Zealand in terms of supplying.
31:09
Speaker 2: Good or bad into China.
31:11
Speaker 1: Well, if the tariffs go up, then that may slow
31:14
Speaker 1: some of our activity down too, right, So but we're
31:17
Speaker 1: gonna be really careful with that. Some parts of our
31:19
Speaker 1: economy and might actually do okay and other parts will
31:22
Speaker 1: do badly. So uh, well, we're going to.
31:25
Speaker 2: Be just from a consumer level, what does it I mean,
31:28
Speaker 2: this is not quite what we're talking about. But if
31:29
Speaker 2: you if China can't sell it's goods or if it's
31:32
Speaker 2: getting whacked a huge tariff, then it might Does that
31:36
Speaker 2: mean it diverts goods to other parts of the world,
31:39
Speaker 2: It's right, and being a bargain for.
31:41
Speaker 1: Us, that's right. And I think you're being on there.
31:43
Speaker 1: But you know, one of the things that it's not
31:45
Speaker 1: just about China. Of course, the Republic and mister Trump
31:50
Speaker 1: is talking about putting tariffs, eveod on friends everyone. You know, yeah,
31:53
Speaker 1: we're all going to get a bit of a dose.
31:55
Speaker 1: And so you know that does change the value proposition
31:59
Speaker 1: of our products and services to American consumers, which are
32:03
Speaker 1: still really significant. But you're right, it those washed through
32:06
Speaker 1: and maybe we get a bit of a supply. There
32:08
Speaker 1: is some evidence that Chinese manufacturers in particular have already
32:12
Speaker 1: moved a lot of product to the US and advance
32:14
Speaker 1: of the risk, you know, where do we get a
32:17
Speaker 1: supply over supply? I'm not sure they might have already
32:19
Speaker 1: moved it to try and get ahead. So it's one thing.
32:22
Speaker 1: Environmental policies obviously quite different outcomes. Migration policies very different outcomes.
32:29
Speaker 1: Technology semiconductors who get access to technology and then we
32:33
Speaker 1: can go to really interesting things like you know, is
32:36
Speaker 1: Harris or Trump better for crypto? But you know, certainly
32:39
Speaker 1: what we've seen since the debate is the Harris beneficiaries,
32:43
Speaker 1: if you like, have seen a bit of a better outcome.
32:46
Speaker 1: So for example, some of the sustainable green energy companies,
32:52
Speaker 1: they've had a bit of a blip, they've gone up
32:53
Speaker 1: since the debate, and certainly, you know, we're seeing some
33:00
Speaker 1: of the Harris winners, if you like, to do better.
33:02
Speaker 1: But generally capital markets, whether it's bond markets, interest rates,
33:07
Speaker 1: effects forign exchange or sue markets don't really like elections.
33:11
Speaker 1: A pre election period quite volatile. So I think when
33:15
Speaker 1: for a bit of a bumpy couple of months going
33:17
Speaker 1: into election, what.
33:18
Speaker 2: Sort of what sort of industries or markets have a
33:21
Speaker 2: sort of subtle betting on the outcome, you see shifts
33:24
Speaker 2: because of what they're anticipating is going to happen. How
33:26
Speaker 2: much how much does that really happen?
33:29
Speaker 1: Well, it is certainly at the margin we're seeing, as
33:31
Speaker 1: I say, you know, one area is the sustainability industry
33:35
Speaker 1: where the Democrats have this thing called the Inflation Reduction
33:39
Speaker 1: Act the IRA, and it has actually really stimulated some
33:45
Speaker 1: amazing solar and wind development across the US. Interestingly, many
33:50
Speaker 1: of the Republican heavy states have actually benefited from this.
33:53
Speaker 1: So that's one of those ones where about getting energy independents,
33:57
Speaker 1: about getting or reducing inflationary impacts from energy. That what
34:02
Speaker 1: the Republicans, led by mister Trump have said is they're
34:04
Speaker 1: going to basically stop those policies that are supportive. The
34:09
Speaker 1: other one, of course is tax and mister Trump is
34:12
Speaker 1: looking to cut tax rates. Democrats are not. In fact,
34:15
Speaker 1: they're looking to increase some taxes. And one near term
34:18
Speaker 1: issue for sheer markets in the US is there's actually
34:21
Speaker 1: some tax reductions due to roll off that some of
34:25
Speaker 1: the tax policies. Mister Trump put it had a time period,
34:28
Speaker 1: and that time periods are that they come up. So
34:30
Speaker 1: Republicans don't get control. And of course, what does control
34:34
Speaker 1: mean in the US government. You can control the Senate,
34:36
Speaker 1: in the House, you can be you can be the president,
34:40
Speaker 1: but you don't control the government. It's a very it's
34:43
Speaker 1: a convoluted governmental structure, but it works for them.
34:46
Speaker 2: He actually in a way that sort of allays some
34:50
Speaker 2: of the femalngry people do because there is quite a
34:53
Speaker 2: tension and the balance of power between the Senate and
34:56
Speaker 2: Congress and Senate and the presidency. I mean how much Actually,
35:00
Speaker 2: this is a dumb question for me because actually I
35:02
Speaker 2: don't know the answer. I realized. In terms of setting
35:04
Speaker 2: tax rates and all that sort of stuff. How much
35:07
Speaker 2: power does the president have because they've got executive orders,
35:09
Speaker 2: but doesn't all that have to go through Senate and
35:11
Speaker 2: Congress or.
35:12
Speaker 1: Yeah, that's right. This is the thing about the US governments.
35:15
Speaker 1: There were checks and balances to actually make sure you
35:18
Speaker 1: don't end up with, particularly outcomes that are generally negative.
35:23
Speaker 1: It does make it look quite odd externally, but as
35:26
Speaker 1: I say, it does stop somewhere. So there are certain
35:28
Speaker 1: things that the president can push through, just like our
35:32
Speaker 1: parame minister can do, but generally it needs the support
35:34
Speaker 1: of the rest of government as well.
35:36
Speaker 2: Yeah, so I Paris says, Look, I'm going to give
35:38
Speaker 2: a tax break for businesses and stuff. I mean, unless
35:40
Speaker 2: she gets Congress and send it to agree to it,
35:43
Speaker 2: then it's not going to happen, is it.
35:44
Speaker 1: Well, there's a budget, right, I've got just giving the
35:46
Speaker 1: money away. Where am I going to fund that from?
35:49
Speaker 1: Where does that come from? And I think one of
35:51
Speaker 1: the things that when we look at it as an
35:54
Speaker 1: investment community is in. This is both governments. They're going
35:58
Speaker 1: to have big budgets there. It just depends on what
36:02
Speaker 1: they're going to do with it. Where is the money
36:03
Speaker 1: going to go? And so coming back to you know,
36:06
Speaker 1: is there winners or losers out of this? Yes, there
36:08
Speaker 1: will be, but really until we find out who their
36:10
Speaker 1: government is, it's hard to make a call.
36:13
Speaker 2: The gut reaction for me would say that the Trump
36:17
Speaker 2: tariff position is the one that's potentially the least desirable,
36:21
Speaker 2: simply because he wants to tax the hell out of
36:23
Speaker 2: our exporters and that is bad for New Zealand's economy.
36:26
Speaker 1: Yeah, it does create a head wind for parts of
36:28
Speaker 1: our economy. And I recently talked to one of the
36:32
Speaker 1: amazing people that produces some fabulous wine here in New Zealand,
36:35
Speaker 1: and they are exporting a lot of product into the US.
36:38
Speaker 1: They've worked really hard to get that product in there.
36:41
Speaker 1: This will be an issue for them, so quite rightly,
36:44
Speaker 1: they've gone, hey, we've got to develop other markets, but
36:47
Speaker 1: actually we've just got to absorb it. We're just going
36:49
Speaker 1: to have to absorb the cost through the supply chain
36:52
Speaker 1: and our profitability will be lower. But we've got to
36:54
Speaker 1: got to take take the hit. And I think you
36:56
Speaker 1: know is say that's when it gets real for and
37:01
Speaker 1: the US has actually been a very strong economy. It's
37:04
Speaker 1: been a good tail wind for a lot of our businesses,
37:07
Speaker 1: some of our you know, we are rock stars and
37:09
Speaker 1: is on sheer market. Things like fish and buckle, health care,
37:12
Speaker 1: main freight have quite large and growing businesses in the US,
37:17
Speaker 1: so that that economy isn't meaningful, and even things like
37:20
Speaker 1: traveling tourism. The US travelers have been taking advantage of
37:24
Speaker 1: your body to get down here and have a good time.
37:26
Speaker 1: So yep, it's worth watching, but we have to be
37:29
Speaker 1: get careful about getting too negative about it all. To
37:33
Speaker 1: your point, potential presidents can say lots of things, but
37:38
Speaker 1: whether they can do much is another story.
37:41
Speaker 2: That's the other one and the market. So the market's
37:43
Speaker 2: probably more aware of that than the average punter.
37:45
Speaker 1: I guess well, it can be a little bit concerning
37:48
Speaker 1: when you see these statements that are pretty brash and.
37:50
Speaker 2: You go, we could always go to we've always strike
37:53
Speaker 2: sporting cat meat to job joking. Sorry, just bad jokes,
37:57
Speaker 2: bad jokes. Hey, just quickly, this is a trick your question,
38:00
Speaker 2: But you know, the guy Allan you might have heard
38:02
Speaker 2: of Alan Lechtman, the guy who has the thirteen keys,
38:04
Speaker 2: and he's predicted every election for the past forty odd
38:07
Speaker 2: man a long time. When he comes out with the predictions,
38:10
Speaker 2: because he's now called the election for Harris. Do the
38:12
Speaker 2: markets have any little blip in them according to their behavior,
38:15
Speaker 2: because that's a that's a powerful little piece of information
38:18
Speaker 2: for many people.
38:19
Speaker 1: Markets will use any little nugget they can get hold
38:23
Speaker 1: off to drive directions, right, and we're looking for as
38:26
Speaker 1: many nuggets we can to make an ingot. So we'll
38:29
Speaker 1: take that and we'll take you every So it's the markets, Kevil.
38:33
Speaker 1: Markets are watching the swing states right, the battle states
38:37
Speaker 1: where it's in decisi that those are the ones that
38:39
Speaker 1: people are really focused on. But as we know here
38:42
Speaker 1: in New Zealand, you're going to be really careful about
38:44
Speaker 1: the polls. They can say one thing and do another. Look.
38:47
Speaker 1: I think, you know, if it's more of the same,
38:50
Speaker 1: then certainly that as you know, we've at a nine
38:54
Speaker 1: to none. I think a change to Republican would see
38:58
Speaker 1: more inward looking activity, which actually may be good for
39:02
Speaker 1: the UIs economy, less good for the rest of the world.
39:06
Speaker 2: Yeah, okay, right, let's take a moment. We'll be back
39:09
Speaker 2: and just tickets eight minutes to six news talks. It'd
39:12
Speaker 2: be yes, Welcome back to the weekend collective words welcome
39:15
Speaker 2: back to sort of say goodbye. But if you have
39:17
Speaker 2: missed any of the previous hours, you can go check
39:19
Speaker 2: out our podcast and Shane solely from harbor Asset Management.
39:22
Speaker 2: If people want to check you out, they can go
39:24
Speaker 2: to harbor Asset dot co dot z. And what have
39:27
Speaker 2: you got coming up this week, Shane? Anything interesting you're
39:30
Speaker 2: focusing on?
39:31
Speaker 1: Yeah, look, I think to the big watch for capital
39:33
Speaker 1: markets this week will be the best of the use
39:36
Speaker 1: Fital Reserve comments on Wednesday, and the key here is
39:39
Speaker 1: that the market has been expecting a zero point five
39:42
Speaker 1: percent quarter percent cut. Some have been talking about a
39:45
Speaker 1: half a percent. The data is really not there to
39:48
Speaker 1: support that. It'll be the tone. It'll bit about how
39:51
Speaker 1: many cuts and how fast. But then we get that
39:53
Speaker 1: book nded on Friday by the Bank of Japan who
39:57
Speaker 1: have been increasing rates and they shocked us all early
40:00
Speaker 1: last month increasing rates vire been expected in the market
40:04
Speaker 1: didn't like it. So it'll be part of the that'll
40:07
Speaker 1: be the big focus this week.
40:10
Speaker 2: When Adrian or opens his mouth, they have a chat
40:12
Speaker 2: about things. But the US Federal was there slightly a
40:14
Speaker 2: few more eyes on that one.
40:17
Speaker 1: Did excellent.
40:18
Speaker 2: Hey, thanks Shane, thanks so much for your time and
40:20
Speaker 2: JA enjoy the rest of the evening. That's that's. That's
40:23
Speaker 2: Shane Sally from Harbor Asset Management. Do check out their
40:25
Speaker 2: website Harbor accic dot cot in sad. Thank you to
40:29
Speaker 2: my producer tire Robberts looking after me again this weekend.
40:32
Speaker 2: We'll look forward to your company at the same time
40:33
Speaker 2: on Saturday and Sunday from three to six. Check out
40:36
Speaker 2: the podcast. Go to the Weekend Collective on iHeartRadio. Sunday
40:40
Speaker 2: at six is next and we'll look forward to your
40:43
Speaker 2: company again soon. Ketchup, catch up. Bye bye,