Latest / Best of Business / Brad Olsen: Infometrics Principal Economist on the US jobs report, the Prime Ministers trip to the UAE and oil prices rising 3% over the weekend.

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Brad Olsen: Infometrics Principal Economist on the US jobs report, the Prime Ministers trip to the UAE and oil prices rising 3% over the weekend. · Best of Business

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  Speaker 2: Brad Austin, Good morning, Happy new year.
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  Speaker 3: Good morning. It's a happy new year to you too, Tim.
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  Speaker 2: Excellent strong US jobs report hits the markets.
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  Speaker 3: Yes, we saw a bit of a blockbuster you come
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  Speaker 3: out of the US over the weekend. Just over a
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  Speaker 3: quarter of a million jobs, two hundred and fifty six
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  Speaker 3: thousand new jobs springing up in December. That was far
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  Speaker 3: better than forecasters had expected. Now, although that sounds like
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  Speaker 3: pretty good economic news, and it certainly is, it's also
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  Speaker 3: sort of changed the gamer bit when it's come to
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  Speaker 3: further expectations for interest rate cuts. You saw the likes
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  Speaker 3: of the Dow Jones Industrial average down something like one
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  Speaker 3: point six percent of nearly seven hundred points. And that's
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  Speaker 3: because everyone's been looking at this job's report and been
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  Speaker 3: going what is the US Federal Reserve going to take
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  Speaker 3: from this? And in fact, a lot of forecast is
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  Speaker 3: now have pushed out their expectations for a further cut
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  Speaker 3: in the Fed funds rate out until June. In fact,
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  Speaker 3: Bank of America came out and said, look, actually we
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  Speaker 3: think that the Fed's done with interest rate cuts. There
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  Speaker 3: are no more, and actually there could be interest rate
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  Speaker 3: rises before the end of the year. So good short
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  Speaker 3: term measure, but it does highlight that for the US,
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  Speaker 3: the economy is sort of so strong that maybe there
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  Speaker 3: are still some inflationary pressures and maybe there's not quite
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  Speaker 3: as much need to actually cut interest rates anymore.
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  Speaker 2: What does that mean for us in New Zealand.
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  Speaker 3: Well, and this is the tricky thing for our reserve
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  Speaker 3: bank that are still looking to cut through this year.
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  Speaker 3: But if the US Federal Reserve isn't, that's going to
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  Speaker 3: keep international borrowing costs a bit higher. So the Reserve
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  Speaker 3: Bank really does have to potentially temper how much they
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  Speaker 3: cut this year if no one else is cutting quite
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  Speaker 3: as much. So still expectations locally that will have interest
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  Speaker 3: rates go down, But again that sort of caution that
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  Speaker 3: maybe we're a lot closer to the end of that
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  Speaker 3: cutting cycle than expected, so maybe there's not quite as
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  Speaker 3: much extra omphs that's put in the economy to try
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  Speaker 3: and jazz it up and make us spend more this year.
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  Speaker 2: If that won't thrill property investors or bars, will it?
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  Speaker 2: Never mind, Oil prices rose three percent over the weekend.
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  Speaker 3: Yes, a large to the highest level when I think
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  Speaker 3: about three months with the likes of the Brent crude
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  Speaker 3: oil futures having nearly eighty dollars for the first time
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  Speaker 3: in a while, and that's because we've seen new sanctions
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  Speaker 3: levied by the US on Russian oil production and the
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  Speaker 3: sort of entire distribution network looks like US President Joe
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  Speaker 3: Biden trying to get in a few more restrictions before
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  Speaker 3: the end of his term and almost leaving a bit
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  Speaker 3: of a bartering chip there for incoming President Donald Trump
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  Speaker 3: and some of those conversations around the Russian invasion into Ukraine.
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  Speaker 3: But long story short, what you've then seen is that
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  Speaker 3: everyone's going, well, it's going to be either a lot
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  Speaker 3: more difficult or a lot more expensive to try and
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  Speaker 3: find oil. And for some of the major takers of
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  Speaker 3: Russian oil, being China and India, are going, well, I've
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  Speaker 3: got to find my oil from somewhere else now, which
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  Speaker 3: is putting further squeeze on supplies that everyone else was buying.
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  Speaker 3: So all of a sudden, you've got more expensive oil
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  Speaker 3: in the market. Some of the big players now trying
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  Speaker 3: to find a bit more globally, that's pushing prices up.
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  Speaker 3: Now that comes after a pretty subdued last couple of months.
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  Speaker 3: Certainly December oil prices seemed pretty flat, but a bit
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  Speaker 3: more push of a push up at the start of
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  Speaker 3: this year does mean that motorists might be having to
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  Speaker 3: watch those fuel pump numbers just a little bit more
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  Speaker 3: closely in the next couple of weeks.
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  Speaker 2: Okay, and the pme's after the UAE for a trade
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  Speaker 2: deal signing a few other things.
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  Speaker 3: Yes, the flying visit. It seems the Prime Minis has
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  Speaker 3: got to be back for the funeral of the Nelson
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  Speaker 3: police officer are killed on New Year's on Thursday, and
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  Speaker 3: so it is a brief trip. But going for the
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  Speaker 3: signing of the new trade agreement, we've got two way
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  Speaker 3: trade of I think one point three billion with the
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  Speaker 3: United Ara Emirates at the moment, and on day one
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  Speaker 3: when this deal is signed, ninety eight point five percent
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  Speaker 3: of all of those that goods trade that New Zealand
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  Speaker 3: has with the UAE becomes TARA free. So we know
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  Speaker 3: the big winners at the moment are around the likes
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  Speaker 3: of dairy being the biggest export into the market, but
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  Speaker 3: some real opportunities as well as we go forward for
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  Speaker 3: some of our advanced manufacturing, but also the likes of
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  Speaker 3: horticulture and meat over time as well. So definitely a
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  Speaker 3: strong option given we know there is a lot of
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  Speaker 3: money coming through in the Middle East, certainly through the UAE.
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  Speaker 3: We've got a pretty quick deal with them. So this
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  Speaker 3: is encouraging news to start the year at a time when,
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  Speaker 3: let's be clear, to trade is not particularly upbeat at
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  Speaker 3: the moment. There's still a lot of questions and concerns
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  Speaker 3: around tariffs and everything else. So the fact that we're
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  Speaker 3: getting a bit more of an easier ride going forward
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  Speaker 3: in the UAE better news to start the year.
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  Speaker 2: Do you expect it's to make a big difference to
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  Speaker 2: the exports that we're having to the UAE.
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  Speaker 3: I don't know if it's sort of going to mean
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  Speaker 3: that we're going to double or triple trade into the
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  Speaker 3: UAE within a couple of weeks. It's not sort of
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  Speaker 3: that jump start. But I think what it does do
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  Speaker 3: is it probably provides a bit of a new area
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  Speaker 3: of focus for a lot of exporters. Because we've now
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  Speaker 3: got this agreement with the UAE, We've worked up more stuff,
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  Speaker 3: more widely in the Middle East as well with the
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  Speaker 3: Golf Cooperation Council. There's a lot of money in the
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  Speaker 3: region at the moment that we can look to have
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  Speaker 3: better export opportunities from. So I think it probably more
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  Speaker 3: starts to put that spotlight a bit clearer on the area,
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  Speaker 3: which means that over time, as everyone starts to get
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  Speaker 3: a bit more involved, gets a little bit more trade growth,
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  Speaker 3: you might well see that snowball from there.
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  Speaker 2: Good on you, Hey, thanks very much, Brad. That's Brad
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  Speaker 2: Olson and Metrics, Chief executive.
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