Latest / The Curve / TCW11: The economy might be up shit creek but it's not all bad...

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TCW11: The economy might be up shit creek but it's not all bad... · The Curve

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We're really excited to have partnered with Audi to bring you the Curve Weekly, a podcast
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that encourages women to work towards driving a more progressive future.
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Hi and welcome to the Curve Weekly, the podcast that keeps you up to date with all the
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money, business and stock market tea.
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And they're exactly what I needed to do, but it would take money to get there.
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Show me the money!
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For the record, feminism by definition is the belief that men and women should have equal rights and opportunities.
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Everyone should experience for us at least once in their lives, and Annie shouldn't miss out
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just because she can't afford it.
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Help me, I'm poor.
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I'm the most mumsy, mumsy, mumsy weekend.
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I did my washing and I went for walks and I made food for the week.
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Like I've got absolutely no exciting news for you.
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I'm kind of jealous.
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I had the complete opposite.
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I had a wild...
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That was an hour late for a podcast record.
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I've just been sitting in the house.
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I, yeah.
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Almost kind of...
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Tell me some highlights.
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Where did you go?
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It's just not podcast.
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Really?
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Friendly.
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Worthy.
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It's definitely podcast.
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Worthy.
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Just maybe not podcast friendly.
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No, yes.
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You just have to beep out the whole episode.
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Oh my god.
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Now I want to know.
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Tell me off like...
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Yep.
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Okay, great.
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Sorry, listeners.
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I think we're going to have to...
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Yeah.
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It's so awkward, isn't it?
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Oh, we're not on a date last weekend into the bush.
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Like full bush vibes.
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On to Great Barrier.
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And when I was there, the guy that I was there with was like,
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Oh, my brothers...
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Um, girlfriend listens to the podcast and I was like,
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Shit.
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Shit.
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Note to sound.
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And then she walked on and I was having sex.
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What?
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I don't get the joke.
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No, I just made up.
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Oh, okay.
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You know they didn't have it in time.
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Oh.
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Um, you've just...
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It's sort of a reminder that you sort of talk into these microphones
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thinking no one's listening.
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I know.
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And then someone's like, Hey.
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Oh my god.
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It's so great to learn about finance and your sex life.
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And you're like...
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Oh.
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And then I was at a party in the weekend and the boys were like,
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Oh my god, are we going to make it on the podcast?
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Are we going to be conning you going to say how much of a fun party you're here?
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Oh, I was like, Oh my god.
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I was like, Do you think people are going to start not wanting to hang out of us
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because they're worried that they're going to end up?
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I think we're going to be like, Oh my god, can we hang out with you
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so that we can be on the podcast?
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No, I was meaning like, people don't want their shit.
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Dirty laundry again.
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It on, you know, as I say, National Radio, which is absolutely...
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But do you know what I mean?
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Like, surely there's people that are really like, Oh, fuck, don't touch soap
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or the tin, but we'll be in there.
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It's like a Taylor Swift.
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Yeah.
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Oh my god.
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Do you know how the weed Taylor Swift?
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Oh my god.
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No wonder I'm not getting any action.
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Okay, so the S&P 500 was up, had a good week last week.
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Up 2.1%.
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So this is the top 500 companies in the US.
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Hey, don't talk to people like this silly.
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Sorry, no, I thought you were going to say it with me
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and we were going to say it in unison, but you didn't pick up on that.
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So...
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And the NASDAQ actually had a really fantastic week.
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It's up 6.5% for one week, which is quite amazing.
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6.5%?
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Yes.
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Yeah, it's going.
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Yeah, it's going to be something.
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Yeah.
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Sorry.
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The ASCX was down 2% and good old New Zealand was flat.
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That's all right.
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That's fine.
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We're fine.
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We're not dipping.
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That's the main thing.
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We're not going up and not going down.
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We're just flatlining.
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But the big news this week and kind of the end of last week as well
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was all around.
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Thanks.
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Yay.
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So you got this one so you got this one.
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Yeah, it's all about banks.
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We had SVB, which is Silicon Valley Bank, which you spoke about last week on the podcast.
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And that collapse of that bank to small regional US bank, then the bigger news that's come out this week is Credit Swiss, which is massive.
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It's three times the size of SVB.
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It's a Swiss bank.
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It's got about 800 billion dollars of assets.
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So it's like huge.
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And it's been in trouble for a while.
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It's had a lot of scandals.
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It's had a lot of issues.
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Fraud.
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Like it's kind of...
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Yeah, it's been in the toilet for a while.
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The share price has not done very well.
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But last week it came into kind of more serious issues.
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And it's share price fell 24%.
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Ooh.
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So last week it was down 18% in one week.
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This is quite major.
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And I think the issue with this is it's a big global bank.
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Whereas SVB was pretty...
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Oh, isolated.
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Yeah, it was the US, which still affects a whole lot of businesses and reverberates around the world.
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But Credit Swiss...
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It's been around forever.
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It's a 160-year-old company.
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So it's been around forever.
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Anyway, it's got into troubles and it got announced just recently, actually, that UBS, which is another global investment bank in Switzerland.
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I hate all the stupid fucking ABCs, ESP, MAJs.
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It's just like...
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It has debt.
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Yeah, there's a lot of acronyms.
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I don't know that one.
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So there are another Swiss bank.
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They're the biggest Swiss bank.
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It's kind of Credit Swiss in UBS, they're like the two.
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And they've announced that they're going to buy out Credit Swiss.
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Is that a good thing for $3 billion?
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Whoa.
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But it's share price.
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Sorry, it's the market cap of the company.
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So the size of the company is $7 billion.
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So investors are getting...
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Oh.
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Like they're getting a really, really shit deal.
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But it's kind of like when companies on its knees, it's like, well...
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What alternative do you have?
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And the Swiss banks also helping UBS by kind of funding it as well
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and giving it liquidity and helping out with the transactions.
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So this is another example, though, of business that's taking a lot of risk
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and then it just gets bailed out by the government.
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And it's like, but...
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I don't love it.
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No.
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But the government's got to balance, okay, do we let this bank fail?
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And the...
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You know, fly on a fix that's going to have.
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Or do we save it and save the entire financial ecosystem?
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So...
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But, yeah, I think this will be a really big wake up call.
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Credit Swiss, NSVB, all around regulation in the industry and more regulation.
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Which is good for investors and good for just confidence and stability.
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Because if you're banking with a bank, if you're a company, if you're an individual,
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if you're, you know, anything, you want to have confidence that you're investing in a not risky place,
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you know, you're investing in a safe place and you can get your money out.
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So...
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I mean, there were some messages we got, like, people joking, being like,
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I'm going to put all my money under the mattress.
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Oh, yeah.
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But actually, I think why people would be freaked out?
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Because there are so many companies, there are so many countries around the world
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where they just don't trust their banking system.
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No, exactly.
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And that's why Bitcoins become so popular in kind of developing countries
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because they don't trust the banking system.
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They put the money in the bank and it's got a really unstable economic environment as well
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in their countries, which then leads itself to super high inflation.
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Or, you know, like, it's just, so your money just gets whittled away.
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Now, I know we're all sick of hearing others.
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It's the I word, isn't it?
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It's the I word.
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No, you know what?
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It's not the I word, but God, the I word could fit in there as well.
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Yeah, it's an inflation.
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If an inflation...
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Yes, we've had some more inflation data come out last week.
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It's not good news.
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Okay.
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Sorry, grab your tissues.
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No, I'm not going to cry over it, but I'd like to understand why.
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Yes.
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Well, have I got news for you?
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No, so we had European data, inflation data is nearly 9%.
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So it's pretty, pretty stubborn over there.
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And in the US, it's at 6%.
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So it's not as bad.
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It's a European is the worst.
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Yep.
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Why on earth would we go over to London, babe?
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I know.
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So can I even think of doing a stint over there in like winter New Zealand?
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But, shit.
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I know.
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Does that mean life's going to be like outrageous expense for us?
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It's going to be 8% more expensive than last year.
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So when you were there last year, it's going to be 8%.
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Oh, I'm going to have serious budget because I was just...
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Oh, we've got one of those.
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Shit, that's actually quite scary to think about though.
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Yeah.
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And because the optimal inflation range is 2% to 3%.
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So that's kind of the sign of a healthy economy it's growing,
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but not too fast.
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Whereas 8%.
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8%, 10%.
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Because I remember reading in the Curve Weekly the email
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that you send out every Friday.
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If you're not getting it due, because it's so good.
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But you said basically the way to think about inflation
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is whatever it is to say, for example, it's 8% now in the UK.
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It means that this time last year everything is 8% more expensive now
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than it was a year ago.
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So if you've got money sitting in the bank,
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don't earning nothing, then you can now afford 8% less
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because your money is not growing.
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But the price of everything you're buying is...
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So if a healthy inflation rate is 2% to 3%,
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does that mean that everything is going to continue to grow
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in terms of it's going to be more expensive every year
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but just by small increments?
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Is that just the way that the economy works?
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It's not going to stay the same in terms of what money is worth now.
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It won't be the worth the same in 10 years.
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And because of that 2%, 3%, that helps people spend,
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but not too much.
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You're like, oh, well, everything's kind of increasing at inflation.
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So my salary is increasing therefore I can afford more things.
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Whereas if state inflation was going backwards,
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then people would be like, well, why would I buy it today?
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Because it's going to be cheaper.
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Next month or next year.
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So therefore nobody spends anything, nobody consumes anything,
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businesses don't grow, businesses aren't selling anything.
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So 2 to 3% is that kind of natural.
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You know, let's move forward, but let's not sprint.
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Let's keep chugging along, but let's not get out of control.
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Yeah, that makes sense.
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So it's kind of like if you haven't had a pay rise this year,
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then you've effectively kind of had,
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if you're in Europe, an 8% paid cut.
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So should you be basically asking,
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should you be going to your boss every year and saying,
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hey, inflation's at this.
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So I want to keep, I want my salary to increase to this
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just so it can stay in line with inflation.
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But then I also want to 5 grand pay rise because I'm a legend.
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Because of that, this is, you should be asking for pay rise
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or at least a pay review.
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You know, some people might be really shitter their jobs.
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That's not really really good.
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But you should be having a pay review.
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What?
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Just laughing at you saying people might really shitter their jobs.
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Do you think someone knows if they should at their job?
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Well, surely.
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Probably.
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What do you think, sir?
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But that's why it's good to have these yearly reviews
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or pay discussion at least so that your boss can be like,
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well, you're not doing this, this, this.
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So go and do that and then come back to me and we'll have a talk about it.
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Whereas if you go in and you're like, look,
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I've done this, this.
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And inflation is up 8%.
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Can I get a 10% pay rise?
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Please.
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You know, it's a much easier conversation than just going in there
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being a shit employee and saying, but my life's got way more expensive.
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So pay me more.
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The other thing with inflation is it's really important to realise
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and I don't think many people know this is what makes up inflation.
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So it is the increasing price of goods.
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But goods is everything from products and services.
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What we're seeing and why inflation isn't coming down,
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because the way that you reduce inflation is by increasing interest rates.
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But the reason it's not coming back down to that two to three percent
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is the services part of inflation.
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So it's basically what you're saying that inflation isn't just a whole number.
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It's not just inflation's at 10% and that's the money, the value of a dollar.
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It's actually, if you look at that inflation number,
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it's made up of many different aspects of the economy.
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Of products, sorry, of goods and services.
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So what do you spend your money on?
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Food, fuel.
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Right.
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So all that.
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Anything that people spend money on.
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Anything that be insurance, books, shows, food, candles, houses, condoms.
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Condoms.
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So all of that is what makes up the...
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So it's the demand and the...
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I can't remember that.
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Why is it getting...
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Why is all of those things what makes...
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Because there's more people purchasing those goods,
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therefore the price increases, but the supply is still the same.
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And so you're saying that some of the things that people are buying are in more demand.
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So some parts of what people are spending money on are being more stubborn
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when it comes to the inflation number.
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Yes, and that's why the services group is, which makes up,
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which is made up of travel, entertainment, hospitality, all that kind of stuff,
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is driving.
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That's the main driver of why inflation is staying at these higher levels
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because we've all been locked up for three years.
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We're all demanding activities or we want to go traveling.
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Dinner is all that.
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Yeah.
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They actually want to spend money on fun stuff.
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Yes, and there's still the same amount of fun stuff,
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there's lots more people wanting to do it, all of a sudden.
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And so that's what is being...
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That's what is keeping inflation at higher levels.
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So can we do anything as consumers to bring it down?
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Just stay home.
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Really?
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I go into a self-imposed lockdown.
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Yeah.
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Which is probably going to be good for you.
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I kind of do that as well.
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So it's just a case of that kind of stuff will eventually come down.
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Travel, for example, with more planes come online,
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more pilots get hired, people got the travel bug out of their system
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and might delay that holiday till next year, rather than this year.
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But then that will ease that portion of the services portion
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of the overall inflation.
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So you just want all things to come down a little bit
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and that services category,
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and then that will have a positive impact on the overall inflation.
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So stop eating out everybody, stop buying things you like.
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Sit home, sit on your F-post card.
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And have a really boring life.
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Yes.
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Just talk to your cat.
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Yes.
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Watch TV.
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Be Taylor Swift with her cats.
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Mm-hmm.
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Yeah.
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It would probably be what it's like to be famous, you know,
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because you probably couldn't leave your house and go to a restaurant
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and I can't tell you.
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And in the palava of going to...
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I think it's palava.
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If anyone knows it's palava or palava.
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You know when you say word to me at home,
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it just sounds really weird out there.
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Yeah.
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Sorry, I'll stop.
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So it's basically not been a particularly positive week.
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No, it hasn't.
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I mean the market is up.
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But overall news, it's been, you know,
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pretty choppy out there, pretty volatile.
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So if we were a sailboat, we may be sinking.
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We would be...
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We would have waves crashing over.
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Yep.
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I was in a boat in the weekend.
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And yes, there's lots of waves crashing over.
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Was it choppy?
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Very dreamt.
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Very windy.
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Yeah, very windy.
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Okay, so it's windy as hell and it's quite a little bit wet.
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Yeah, but the calm waters are on the horizon.
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Do we need to just all put some rain jackets on?
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Yes.
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And brave the elements.
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No, the storm will pass.
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Yes.
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Gosh, we're great.
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That was a such a good analogy.
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Oh, and on that note, we're going to wrap that up.
15:28
It's going to have a sleep recover from her 3-day vendor.
15:32
I did not have a 3-day vendor.
15:34
But we're really excited to have partnered with Audi
15:36
to bring you the Curve Weekly, a podcast that encourages women
15:39
to work towards driving a more progressive future.
15:42
And if you haven't already, check out our savings calculator
15:45
at thecurve.co.nz to help you reach your savings goals.