Boomtown! 10 Reasons the economy is going to boom.

HOSTS Adam & Thomas|24 February, 2021

Meet your hosts

  • Adam

    Adam is the funniest and most successful comedian in his family. He broke onto the comedy scene as a RAW comedy national finalist before selling out solo shows at two Adelaide Fringe festivals. He’s performed stand-up to crowds all over Australia as well as enjoying stints on radio with SAFM and most recently as a host of the Ice Bath on Triple M. Father of two and owner of pets, he may finally be an adult… almost.
  • Thomas

    Thomas, the economist, is the brains of the outfit. He studied economics and game-theory at the University of Queensland and cut his teeth as an economist at the Reserve Bank of Australia. He now runs his own economics consultancy, with a particular focus on the property market. He lives with his wife and two kids in the hills outside Byron Bay.

Thomas lays out 10 reasons why he (and pretty much every economist in the country right now!) thinks the Australian economy is set to boom. Adam is alarmed to learn that there’s perma-bears in these woods. What’s their trip?


If you’ve got a question for Thomas… or Adam… then go ahead and send them to

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Adam Keily: [00:00:52] Hello and welcome to comedian versus economist. We demystify the world of money and help you get a handle on the bigger picture. My name's Adam and I'm joined, as always by my little older brother and real life economist, Thomas. Welcome, Thomas. [00:01:06][13.9]

Thomas Keily: [00:01:07] Adam, how are you doing? [00:01:08][0.4]

Adam Keily: [00:01:08] Yeah, good. Thank you. I'm really looking forward to this episode, actually, because you've just come to me and gone here. Adam, here's all of the prep for this week's episode, which I love really fits with my work ethic and my ethos around show preparation. [00:01:28][19.3]

Thomas Keily: [00:01:29] Yeah, well, I mean, I feel like I've been carrying the show since the beginning. [00:01:32][2.4]

Thomas Keily: [00:01:32] It's business as usual. [00:01:34][2.0]

Adam Keily: [00:01:38] I don't know. I think the latest feedback we had if I can just find it here, the latest feedback was from Chris, who said comedy gold was one of his comments. So I don't know unless you've dropped some comedy gold that I haven't noticed but have dropped comedy. [00:01:52][14.3]

Thomas Keily: [00:01:53] Bitcoin is the new gold. [00:01:54][1.2]

Adam Keily: [00:01:56] There it is. There's that kind of us humor we've come to know and love Zynga. Yeah, yeah. Uh, folks in the Economic Club with killing it around the weekly [00:02:09][13.3]

Adam Keily: [00:02:10] gathering to listen to comedian versus the economist at the Economic Club is just it's just reached fever pitch. Now, we have got a big episode today and I did mention an email there from Chris. You can always email us CB at Equity Mates dot com. You can email us direct or find us on the website at equity markets, dot com forward slash KVIA. If you do want to get in touch, we'd love to hear from you. So make sure you do that if you're that way inclined. But today, Thomas, the economy, you tell me, is on the cusp of a boom as it started booming it or it's about to boom. What's going on? [00:02:47][36.8]

Thomas Keily: [00:02:47] I think I think it's happening. It's yeah. I think you look at the fourth quarter of twenty first quarter of twenty, twenty one as the beginning of the boom. [00:02:55][7.5]

Adam Keily: [00:02:56] Right. The beginning of the boom. When was the last boom. [00:02:58][2.6]

Thomas Keily: [00:03:02] Probably the mining boom around 2013 14. That's probably the last time we'd be talking about a boom. [00:03:07][5.3]

Adam Keily: [00:03:08] Yeah. I didn't, I wasn't really investing much back then so I'm much keener for this boom. [00:03:15][6.7]

Adam Keily: [00:03:16] Get a little bit of staying in the game. I did actually. [00:03:20][4.4]

Adam Keily: [00:03:22] We were recording you on the 22nd of February today and I did actually just I thought I'd talk to my wife about it. We decided to put a little bit of money into stocks. I mean, listening to Equity Makes Investing podcast. We thought we just going to buy some ETFs, just stick it in there and hold. And so I bought a bunch kind of a bunch of ETFs on that on Friday and the ASX dropped two percent. [00:03:46][24.3]

Adam Keily: [00:03:49] So I bought on Thursday and Friday it dropped two percent. [00:03:51][2.3]

Adam Keily: [00:03:51] So, um, you know, I'm staying the course. I'm trying to set and forget like I've been taught, but [00:03:58][6.1]

Thomas Keily: [00:03:59] sleeping on the couch. [00:03:59][0.4]

Adam Keily: [00:03:59] I haven't thought out of that. We've dropped two percent this year. [00:04:06][6.8]

Adam Keily: [00:04:06] Oh, oh. Wait for this boom to kick off and really get up and running. And then I'll say just look at how much we've made so far. Uh, we might be back to even though. [00:04:17][11.0]

Thomas Keily: [00:04:17] Yeah, yeah. [00:04:18][0.5]

Thomas Keily: [00:04:18] I look to be honest, I'm, I'm a little bit surprised that those things aren't running on as much as they potentially could be. I would have expected things to be a bit stronger at this stage of the game. But yeah, we'll see. I mean, we still may we're still gearing up, still bouncing back from the coverage, you know, from the covid downturn. I haven't fully made our way back. So but I think yeah, the point is that the outlook is pretty strong and the like. I mean, the interesting thing right now is so, look, I'm calling a boom. I think the activity is going to be strong. It's a great environment for revenue and for-profits for companies. The outlook's looking great in general. What's interesting is like I'm you know, I'm a hack, so you shouldn't listen to me. But everyone everyone in the space right now is saying that the outlook looks really strong. And that's that's so are we. I read pretty widely. Um, and it's an unusual time in that sense, is that you don't there are no dissenting voices. You don't hear any bears right now. Even the bears that I read, you know, Perma bears, they call them, they're all that they're always bearish. They believe lives forever. Bears permanent. [00:05:25][66.4]

Adam Keily: [00:05:26] Yeah, right. Even then, they might be hibernating. [00:05:28][2.7]

Thomas Keily: [00:05:29] They're not even they're saying. Yeah, not outlook for the sort of liner's year. Structurally, the Australian economy still starved, but next eighteen months to two years are going to be strong. [00:05:39][9.3]

Adam Keily: [00:05:40] What do you mean? Well, before we get started with all these points you've outlined for me, what do you mean structurally we're still stuffed? That sounds that's concerning to me. Is that where and what does that where about two percent drop came from. [00:05:51][11.3]

Thomas Keily: [00:05:52] No, that's not that's not the structural decline of the Australian economy. Uh, no. I mean, look at the sort of the the structure of the Australian economy. Like, every perma bear has got a different view of things. You know, some might say, you know, we've hollowed out the manufacturing industry. We've become overly reliant on the Chinese economy. Um, we've leveraged to the gills on the cheap credit that the mining boom has created. And all of that's got to unwind at some point. We've you know, that's a view like I'm just giving you an example there. Um, yeah. But there's always you can always tell these stories. And the thing is, you look into the long run and often the long run never actually arrives. It gets overtaken by other short term trends that emerge and take things in different directions. So, yeah, you can always find that story if you want [00:06:46][53.4]

Adam Keily: [00:06:46] more from the perma base. [00:06:48][1.2]

Thomas Keily: [00:06:48] From the perma bears. Yeah. [00:06:49][0.9]

Adam Keily: [00:06:50] Are there perma bulls? [00:06:51][1.0]

Thomas Keily: [00:06:53] Oh, I guess they wouldn't. Yeah, there are. Those people are always upbeat about the outlook for the share market. They tend to not be people who are like bullish, tend to be bullish around sectors or particular companies. But it's not often you wouldn't really there's no one in the markets who just like it's always a great time to buy stocks. Always. And yeah, you don't really know you don't really hear about perma bulls like perma bears and perma bulls is a bit of a pejorative that comes from people who aren't perma bears or perma bulls. You know, ones like me. I'm a perma bear, you know, like. Right. Would like saying I'm totally rational and I have a clear eyed view about the outlook for the Australian economy. I'd say, yeah. Nirupama Bear. [00:07:38][45.0]

Adam Keily: [00:07:38] Yeah, I like. Okay. [00:07:39][1.2]

Thomas Keily: [00:07:39] Boomer Bilad. Yep. Yeah. [00:07:42][2.2]

Adam Keily: [00:07:44] All right. Well let's get started. So we're just getting cover off. We're going to cover of ten reasons why we think the economy is set to boom or is going to boom in the next. What are we saying the next year or two? [00:07:56][11.8]

Thomas Keily: [00:07:57] Uh, yeah, I think the outlook for the next 18 months, two years is is strong is boom boom ish. [00:08:02][5.3]

Adam Keily: [00:08:04] Like I like your level of commitment. [00:08:05][1.6]

Adam Keily: [00:08:09] all right. Number one is the recovery is V shaped. What do we mean by the recovery? Is V shaped? [00:08:14][5.6]

Thomas Keily: [00:08:15] Uh, yeah. So this is we're talking specifically about GDP here. Maybe go back to the introductory series we did to full the description on GDP. But yeah. So GDP tanked in the March and June quarters of twenty twenty on the back of covered the lockdown's but then came back strongly in the September quarter. And we haven't got December yet, but it came back very strongly. And now all the forward looking indicators are suggesting that it's going to keep on bouncing back very quickly and getting back to trend. Yeah. In the in the in the foreseeable future. So yeah. So it's a V shaped to coming back very quickly, um, putting the the covid lock down in the downturn associated with that behind us. Yeah. And to be much more quickly than then literally everyone was expecting, we're [00:09:02][46.8]

Adam Keily: [00:09:02] still talking that it's coming back or it's back like because if we look at the if you look at the the chart, maybe we could share this chart somewhere. Social media, it looks like it's back on the trajectory that it was pretty covid. So are we back to where we were or are we still getting back? [00:09:19][17.5]

Thomas Keily: [00:09:20] We're still getting back. We're still not like GDP in a level sense. So GDP is the amount of stuff we produced in a given quarter that's still less than where it was pre covid at the last count that in the September quarter count. Um, but it's on its way back quickly. So that chart you're looking that day includes forecasts from CBA and has that coming back to trend, which is forecast eventually come back to trend. But the point is income is coming back very quickly. So we're partially you know, we're not we're not we haven't completed the V shape yet, but we're definitely we're halfway up the the uptick. That's how we can think about it. And that's that September quarter, December quarter. We probably get pretty close to all the way back. And then March, June, September this year, then we're going to be sort of onwards and upwards from there. It's looking like pretty much everyone is thinking that. Now, there's that's the consensus view. [00:10:13][52.8]

Adam Keily: [00:10:15] Some W fans come along and they want to see it that way. That'll be a problem. Those those those perma bulls that are coming in talking about a W shaped recession, they were in trouble again. Hmm. All right. Number two is you saying unemployment is contained. [00:10:33][18.3]

Thomas Keily: [00:10:34] So, yes. So unemployment was expected to spike and get pretty high and ugly. Um, but it didn't. So, yes. So looking like it's going to peak out around seven and a half percent back in August, August in 2020. Looks like the peak, you know, before that on the RBA forecasts. And the RBA tends to be a little optimistic in what they present to the public. But they had a peaking at just under 10 per cent, um, in sort of like the March, March, June this year. But now that we've we've front loaded, we've brought that forward that people thought. It looks like it's peaked in August and it's on its way down and it's already at six point four percent and heading lower. So unemployment is much better than, uh, yeah. Is much better than people thought. And that's and that's good for companies because it means people still have their jobs and they still have their incomes and they still have their spending power. So that's that's bullish for the for the corporate outlook. [00:11:32][58.3]

Adam Keily: [00:11:33] Hmm. Bullish for people to who what who like having jobs. [00:11:35][2.6]

Thomas Keily: [00:11:37] Yeah. Yeah. We don't economists don't really care about that so much. [00:11:40][3.5]

Adam Keily: [00:11:42] I just like to bring it back to, you know, people rather than thinking purely about the economy and big business. [00:11:48][5.8]

Adam Keily: [00:11:49] Sometimes it's nice to think about that. People might like to have jobs to [00:11:52][2.8]

Adam Keily: [00:11:59] all right. So. Well, I guess to go along with the unemployment rate dropping, number three is the jobs market is heating up, which is to be expected, I guess. So as unemployment is dropping, there are more people going back to back to work back into the market. Therefore, there's more competition for jobs. Is that a fair assessment? [00:12:17][18.0]

Thomas Keily: [00:12:18] Yeah, that's right. So the job market is looking reasonably tight. The forward looking indicators looking pretty good. So the number of people on job keepa has already fallen by seven percent and trending lower. So that's pretty decent. The number of people unemployed. You know, if there's a huge if there's a huge pool of unemployed out there, um, that, you know, that's not a great look for the labor market that suggests things are going to remain subdued. You're not going to see any wage pressures coming through, but unemployment in a pool of unemployed is getting smaller and it never got that big to begin with. On top of that, you look at the job ads, um, indeed, job ads. One of the best indicators we've got that's now well above where it was pretty covid, um, and trending higher. So the labor market looks pretty tight. There was a pivot from full time to part time employment through 2020, but that seems to be unwinding now to. Yeah. So going forward is a good outlook for the jobs market. [00:13:11][53.5]

Adam Keily: [00:13:12] Yeah. Where did indeed come from, by the way? I always thought it was what was on C, C was the big one and then all of a sudden indeed was here [00:13:20][8.1]

Thomas Keily: [00:13:23] I did, I did. Yonks ago. Yeah. [00:13:25][1.9]

Thomas Keily: [00:13:25] Well for a bit. Yeah. It's like a [00:13:28][2.8]

Adam Keily: [00:13:28] Google search of jobs or something. [00:13:29][1.2]

Thomas Keily: [00:13:30] Yeah. I think it's, I think it's an aggregator but. Right. I don't know. [00:13:33][3.1]

Adam Keily: [00:13:33] Yeah that's amazing isn't it. I can just go from you can aggregate everything that's already out there. I'm going to happens all the time. I guess you see it with all these hotel booking sites and stuff. Um eventually it's got to end like at what point if you know one aggregator comes out and then a few other aggregators come out grabbing some different sources and then you need an aggregator for all the aggregators. And it's just like some sort of inception situation. Yeah, right. So the jobs market, jobs market is heating up and therefore number four is household income is up. So everyone's back in back at work. We've got jobs stands to reason now that household income is going up. Is that. Oh, hang on. Are we saying we're getting paid more now? [00:14:20][47.1]

Thomas Keily: [00:14:21] We're not seeing any wage pressures. But what we saw when we talk about household income here, what we're talking about is the Australian households as a collective, as a group. When you look at those, when you look at the income of Australian households all altogether, it's it grew strongly through 2020. And that was for two reasons. First, the wages income didn't fall as much as we were expecting it to. So wages, income held up pretty solidly. Partly that was just a stronger jobs market than expected. So wages, income held up at the same time. We had a lot of government benefits flowing into, um, household bank accounts. Um, and so you've got to. Yeah, you put those together with a stronger than expected wages outlook. Plus all the government supports coming into the into bank accounts. And you had a boom in household incomes. Sebas measure, they you can look at some of their data on their internal customer accounts, and they're saying that it was up when you put those two together, household income at the end of 2020 was growing at 14 percent, which is which is huge. It's massive. [00:15:27][66.2]

Adam Keily: [00:15:27] Yeah, I was going to say that's not just me reading that as big. That's a big number. [00:15:31][3.6]

Thomas Keily: [00:15:32] It is a big number. Yeah, yeah. Yeah, yeah. It's it's yeah. It's much it's one of the surprise stories to come out of covid. But your household incomes. Yeah. Households had an income boom through the second half of twenty. Twenty. [00:15:43][11.6]

Adam Keily: [00:15:45] Yeah, right. [00:15:45][0.3]

Adam Keily: [00:15:45] So is it just that it didn't drop as much as expected and then there was a lot of kind of compensation for. We were we compensating for a bigger drop? [00:15:58][12.2]

Thomas Keily: [00:15:58] Yeah, yeah, yeah. So the government, the government support packages through job keep of the job, job seeker supplement. They were there to backfill the economy, to backfill the hole that they were expecting to happen. But the hole was much shallower than they were expecting. And so imagine you dump a whole bunch of sand in a relatively shallow hole. You end up like with a little little hill. And that's what we've got. [00:16:21][22.6]

Adam Keily: [00:16:22] Thank you. Thank you for putting in those terms. I completely understand that you've used the little Hill analogy. [00:16:31][8.6]

Adam Keily: [00:16:32] No, I mean, you know, I just I was just going straight to a big pile of cash that I could jump into when, you know, you put a hole and you fill it with cash, then it's good for the company at 14 percent. It's amazing. So not only that. Okay, so we've got people going back back to work. We've got household income is up by 14 per cent. And then the kicker, No. Five expenses are down, which that's just that's a perfect storm of of being flush, isn't it? [00:17:03][31.5]

Thomas Keily: [00:17:04] It is. It is. That's right. Yes. A number five, the fifth point in their ten here is that. Yeah. That with with the interest rate cuts that we saw, um, which was substantial, when you include the pivot to fix rates, just freed up a lot of cash flow for household. So their expenses are down and as a result their household disposable income is booming. It's you know, it's growing at something like, I don't know, like five percent or something. It's strong and well above wages. Yes, yes. Yeah, about six percent. So it's yeah, it's very strong. [00:17:35][31.0]

Adam Keily: [00:17:35] So expenses are down. Does that is that because during covid and during that, you know, a lot of the lockdown, people couldn't buy stuff, they couldn't get out, they couldn't spend. Is, is that are we counting that as expenses being down or are we just saying that people like I don't know what their utility bills down what was down? [00:17:54][18.9]

Thomas Keily: [00:17:55] Um, there were a number of expenses. They got cut, like a lot of you know, I'm in New South Wales and, um, you know, the carajo costs were halved and things like that. So there were that kind of. Yeah, there was a few things like that. But this particular measure here, we're talking about household disposable income. And we look we interested in household disposable income because that's sort of the measure of free cash flow that consumers can spend on discretionary items or whatever they want. [00:18:22][27.6]

Adam Keily: [00:18:24] But again, if you can't go out, if you can't you know, we talk about discretionary spending. If you can go out and do things that you do, you want to do just for fun, then. [00:18:32][7.9]

Thomas Keily: [00:18:33] Yeah, yeah. That's sort of a separate measure. But the boom, the boom in household disposable disposable income is largely driven by the fall interest rates and the reduction in mortgage expenses. [00:18:44][11.0]

Adam Keily: [00:18:45] Right. [00:18:45][0.0]

Thomas Keily: [00:18:46] Okay, so that's that's sort of what's freed up a lot of the the cash flow for households in aggregate. In aggregate, [00:18:51][5.4]

Adam Keily: [00:18:52] yeah. All right. Let's let's pause there. We'll take a quick break and word from our sponsor, hopefully, if we've got one. And we'll be right back after this with the other five reasons the economy's going to be booming. [00:19:02][10.4]

Thomas Keily: [00:19:04] Banking with virgin money has never been more rewarding. Earn rewards on your everyday spending and pay zero monthly fees with the Virgin Money Go transaction account. And with point perks and epic experiences tailored to you, you can manage your money easily on the go smash the savings goals, get money for it and be rewarded for it. Thanks to your own beat Virgin Money terms and conditions and monthly criteria apply. Now let's get into the show. [00:19:30][25.8]

Adam Keily: [00:19:32] Welcome back here on comedian versus economist, and we're talking about the Australian economy booming in the next 18 months to two years, going through the top 10 reasons why that's going to happen. And we're up to number six, Thomas, and number six is that households are flush this case. This sounds a lot like number five, to be honest. Well, a combination of five and four and three. [00:19:52][19.7]

Thomas Keily: [00:19:52] Yeah, yeah. I can see why you're confused about that. But, you know, this pulls together everything you've been talking about, everything I've been talking about with your incomes up, expenses down, disposable income up. Plus consumers haven't been out there spending because I just haven't been able to. And as a result of that, they've they've got a stack of cash sitting at the bank. So the savings ratio in the economy has boomed and households sitting on a substantial amount of money look quite a lot more than they were recovered in aggregate. Like I know some households are going to like, hang on, that's not not me. But, you know, in aggregate, households built up quite a strong savings buffer. The question is, what do they do with that? Like, do they go out and just go like it's going to blow it on a bunch of discretionary retail items? Or am I going to you know, is it going to be some advice on how to buy stocks? [00:20:45][53.1]

Adam Keily: [00:20:46] Yeah. [00:20:46][0.0]

Thomas Keily: [00:20:47] Game stocks. Do you do for another run by the dip. [00:20:51][3.7]

Adam Keily: [00:20:52] Yes. [00:20:52][0.0]

Thomas Keily: [00:20:53] Yeah. I mean, yeah, maybe they'll go out and buy Bitcoin. Who knows. So yeah, it's a really interesting question. What are what are households going to do with that, with that money. But yeah but right now they're flush. [00:21:02][8.8]

Adam Keily: [00:21:02] Flush and I mean, it's interesting, I mentioned that we just, you know, put some money into the share market. That presumably does that help things like as opposed to putting it into Bitcoin? You mentioned Bitcoin, I just thinking that is it is there any negative to the economy if you put money into Bitcoin as opposed to buying stocks? Because it's not really a thing? [00:21:26][23.8]

Adam Keily: [00:21:30] Um, like [00:21:31][1.1]

Adam Keily: [00:21:31] like companies benefit if you buy stocks, right? [00:21:33][2.0]

Thomas Keily: [00:21:34] Yeah, yeah. Yeah. Like, yeah, potentially it makes makes it gives them access to more, more capital means it makes it easier for them to invest. That increases the productive capacity. [00:21:44][10.0]

Adam Keily: [00:21:45] Yeah. If you put it all into Bitcoin you're just taking money out of the economy. [00:21:48][2.4]

Thomas Keily: [00:21:49] Yeah. Yeah that's true. It's yeah. I mean it's there's not a like a lot of not an economic benefit there until you get to the point of overthrowing the old capitalist system with something better. Which and then then it's a productive use of your money. But all [00:22:03][14.8]

Adam Keily: [00:22:04] right. [00:22:04][0.0]

Thomas Keily: [00:22:04] But yeah. In terms of the next 18 months, probably not so much. [00:22:07][2.5]

Adam Keily: [00:22:07] Probably not. All right. I'm I'm Houghtaling anyway. All right. [00:22:10][3.0]

Adam Keily: [00:22:11] Um, so number seven is consumer confidence is high. [00:22:14][3.5]

Thomas Keily: [00:22:16] Yes. Coming coming out. Coming out of all of that. Consumers are feeling, you know, they're pumped. They're doing that would be. Yeah, yeah, yeah. They're they're they're buoyant. The mood mood is buoyant. Um, there's a couple of there's a few consumer sentiment survey measures. Westpac is booming. It's the it's the strongest it's been since, you know, the mining boom back in 2013. Um, some of the others aren't quite so, you know, jubilant. But yeah. But the point is consumer sentiment is way up on where it was pretty covid. And, you know, at the very least, it's back to pre covered levels on some measures, much stronger. [00:22:50][34.3]

Adam Keily: [00:22:51] Yeah, well, I still haven't been surveyed. I still have no confidence that these surveys are actually a real thing. I want to I just for just once I want to be surveyed for the Consumer Confidence Index. [00:23:02][11.2]

Thomas Keily: [00:23:03] Yeah, it's a pain. It's like takes you two hours and you get like a five dollar voucher. What the end of it. [00:23:08][4.4]

Adam Keily: [00:23:08] Well is. Yeah. Well it aspo yeah. It was it feeling confident. [00:23:13][5.0]

Adam Keily: [00:23:14] You got tired. You go time is money to burn. [00:23:18][4.3]

Adam Keily: [00:23:19] If you could spend two hours doing a consumer [00:23:20][1.9]

Adam Keily: [00:23:21] confidence survey from Westpac. Yeah. [00:23:23][2.0]

Thomas Keily: [00:23:24] Yeah I had to do what I did a Roy Morgan one because it, because they bundle up a whole bunch of questions about because it's like are you feeling confident, are you planning to buy any cars in the near future? Are you planning to buy any large, you know, household white goods? Are you going to how do you think how's your cash flow position? There's a whole bunch of questions. It goes on and on. Yeah, well, [00:23:42][18.2]

Adam Keily: [00:23:43] we're on board already. All right. No, I the RBA will run the printing press hot. We've talked a lot about quantitative easing and money printing. So you reckon this is what this is all set to continue? [00:23:52][9.8]

Thomas Keily: [00:23:54] Yeah. Yeah, it's going to keep on going. I mean, the interesting thing is that, um, we're we're running the printing press pretty hot. We've never done this before. We've committed to another five billion a week up until September. Well, the RBA has most people seem to think that'll keep rolling on even though the economy's doing pretty well. But they're kind of forced to because, you know, as RBA assets, their balance sheet as a percentage of GDP is around 15 per cent right now when for the rest of the world, it's more like 55, 60 percent. Um, and so where our quantitative easing program is lagging the world substantially. And that's because we've had a much better covid experience. Um, but it means unless we sort of start running our printing presses, well, that's that's going to start seeing our currency appreciate, which creates a whole bunch of other problems. And the RBA saying that they're going to keep doing it, you know, happy to keep conditions loose until they get unemployment with a four with a four in front of it. So four point something. And that's, you know, at the best case scenario, that sort of two to three years away. So, yeah, lots of money. Yes. Slated to come into the system and keep on coming. [00:24:59][65.5]

Adam Keily: [00:25:00] Um, let's hope is not 40 percent, then I'd never be too happy for it. [00:25:05][4.8]

Adam Keily: [00:25:08] I don't think I don't think the numbers starting with four should be the criteria that the the RBI work from or 400 percent. What everyone's lost for jobs, uh, with a good um [00:25:26][18.5]

Adam Keily: [00:25:27] the the Australian dollar is is running up at the moment isn't it. Like where it's pretty, it's increasing in value against the US dollar from what I'm saying. [00:25:36][8.5]

Thomas Keily: [00:25:37] Yeah, yeah. It's because we're doing well and there's also a mining boom actually didn't put this in the um in the things but we've got another mining boom happening. Really we're. Yeah. Yeah. Iron ore revenues are through the roof. Yeah. I mean. [00:25:51][14.0]

Adam Keily: [00:25:51] Yeah well no it's good. So are you planning on building your aluminum smelter or something. Well, I'm going to save that from my consumer confidence survey. Are you planning on building an aluminum smelter? Yes, not [00:26:16][24.8]

Adam Keily: [00:26:16] good. I was just thinking it is thinking back to some of the investment decisions I made in the previous week or two. Uh, right, right. Thinking maybe I was maybe I didn't put enough into the mining sector. [00:26:28][12.2]

Thomas Keily: [00:26:32] I think we've we've slowed this look at next week. So next week let's the people are talking about a resources super cycle, Brian. So let's let's take a look at that next week. Let's look at that supercycle and bit of an outlook for the resources sector. Don't don't hold us to that. That's a plan. But I will do that next week. Yeah. [00:26:49][17.2]

Adam Keily: [00:26:50] All right. So number eight is business as a flush as well. So we're not just talking about your everyday moms and dads. And, you know, Joe, on the street, businesses are flush as well as consumers. [00:27:03][12.6]

Thomas Keily: [00:27:04] Yeah. So, yeah, business conditions are holding up. This is comes from the NAB business survey. But they have a question on how is your cash flow? Um, and that measures that's best it's been in five, six years or something. So, you know, it's peaking out on the chart. So, um, yeah. Retail spending, consumer spending has held up better than expected. Um, you know, the interest costs have come down as well because there's a bunch of cheap money for business loans as well. So they're flush that they're doing pretty well. So that'll either go into investments or maybe come out as dividends for investors. Maybe it's a good news story, right? [00:27:40][36.5]

Adam Keily: [00:27:41] This is cheap money everywhere, then, isn't it? Like I mean, the interest rates being so low, everyone has more money, it seems. [00:27:47][5.6]

Thomas Keily: [00:27:48] Yeah, yeah, yeah. [00:27:49][0.7]

Adam Keily: [00:27:49] The general reaction to the interest rates. [00:27:51][1.3]

Thomas Keily: [00:27:51] Biegler Yeah. Yeah. Which is the exact point like that. Yeah. [00:27:55][3.8]

Adam Keily: [00:27:55] Yeah, yeah. So businesses are flush and number nine is, they're also bullish. They're right. [00:28:00][5.2]

Thomas Keily: [00:28:01] Yeah. So if you're looking to step back from the cash flow measure and look at their general outlook, you know how confident they are about the outlook and business conditions. It's, you know, bounce right back from the low drop. Right. Hit the floor with covid, but has bounced right back and is now higher than it was, you know, for the last five, six years. So businesses are generally pretty bullish about the outlook for the next 18 months. [00:28:25][23.8]

Adam Keily: [00:28:26] And is does that result in them adding more staff? Does that is that a contributing factor to those points you were talking about earlier around employment and all that sort of stuff? So when businesses are confident, they're like, yeah, we've got money coming in. We can borrow money cheaply, we can put on more people. We can create more jobs or that sort of stuff. [00:28:44][18.0]

Thomas Keily: [00:28:44] Yeah, yeah, yeah, yeah. Expand production, invest in new factories or whatever you like. Yeah. [00:28:50][5.8]

Adam Keily: [00:28:51] All right. The last one, number ten. Are you talking about rebounding trading partners. [00:28:55][4.5]

Thomas Keily: [00:28:56] Yeah. So particularly the US here, but also, you know, so China's sort of come down pretty well, bouncing back out of covered. But you know, we're sort of repositioning our trading stance with China. We're in the middle of a bit of a transition there. You look at our other major trading partners. It's sort of the US and the UK. They're the next biggest. And those economies have really been held down by covid. Um, and the US is only really just now looking like it's getting a good handle on covid. Um, yeah. And there, you know, their vaccine, they're rolling out of vaccine. They've got about 20 percent of the population fully vaccinated. They expect to have population fully vaccinated by Independence Day by July. Yeah. So you think about just in that sense, our second and third biggest trading partners have been, you know, struggling with covid. So if they start to come out of that, that's a good news story for us. And look, it looks like they will and the US economy, all the same factors. They're in play here in play in the US as well. Um, you know, cheap money and potentially the overcooking things a bit. Um, right. [00:30:01][64.5]

Adam Keily: [00:30:01] So this is not just a this is not just necessarily an Australian boom. This is you're talking it's a kind of a can we say it's a global boom is that is like everything kind of covid recovery at whatever point different countries reach that sort of recovery point at there's a boom for everyone. [00:30:18][16.7]

Thomas Keily: [00:30:18] Uh, yeah. I mean, I don't know, like I don't watch I don't follow too many closely economies all that closely. I you know, obviously the Australian and pretty active interest in the US economy. So I don't know about the rest of the world. But yeah, certainly in the US, people are you know, there's a lot of people saying that the outlook for the US is really strong as well on similar reasons, super cheap money, large stimulus payments, expansion in the money money supply. [00:30:45][26.5]

Adam Keily: [00:30:45] I I'm interested if we can talk about this next week when we're doing this supercycle about the resources sector. Um, because I was I was a bit surprised to hear talk about iron ore booming. Haven't China said we're not buying iron ore anymore? Mm hmm. Maybe we'll park that and we can pick that up next week because that's that's something that's got. [00:31:05][20.1]

Thomas Keily: [00:31:06] Yeah, yeah. Let's put the handbrake on that one. [00:31:08][2.2]

Adam Keily: [00:31:09] I'm not sure about your career in scientific. But vocalized sound effects, I think we I think there's maybe some maybe with all this flush cash that we've all got these days, maybe we could invest in some actual production sound effects rather than you just voicing [00:31:25][16.4]

Adam Keily: [00:31:27] after last week's top five opener. That was just horrendous. And we thought it was going to be top five. Ended up being a sloppy 15. Yeah, well, you know, you've got to try these things. This is the beauty [00:31:44][16.6]

Adam Keily: [00:31:44] of the beauty of the podcast medium is you can try these things out, you know, and sometimes [00:31:47][3.6]

Adam Keily: [00:31:48] they work and sometimes they don't. [00:31:49][1.0]

Adam Keily: [00:31:50] Um, all right. So that's it. So that's the top ten top ten reasons. But overall, we're where things are looking pretty rosy. [00:31:57][6.7]

Thomas Keily: [00:31:57] Yeah, I think that I think that's the view. That's my view. I think it's that's sort of the view that everyone seems to be taking. It's yeah. It's a unique period in time in the fact that everyone's pretty upbeat about every economist in the market. It's pretty upbeat about the outlook for the next 18 months or so. [00:32:11][14.1]

Adam Keily: [00:32:12] So it's a question without notice then. I needed a lot of prep for this. This is my one bit of prep. How can I make money out of it? So I just do I just buy buy everything. [00:32:21][9.2]

Thomas Keily: [00:32:21] I think I think what you what you would the way you would read this is that it's a tailwind for four companies. So the outlook for profits in general is improving and getting strong and then within that. So that sort of creates a bit of a tailwind as an investor. And sort of like the most basic thing is just by ASX 200 ETF or or something like that. [00:32:44][22.3]

Adam Keily: [00:32:44] So what I did it went down to is that [00:32:46][1.6]

Thomas Keily: [00:32:48] those structural headwinds. [00:32:48][0.8]

Adam Keily: [00:32:51] Tell me about the structural headwinds. I believe we're going to get it. And I said, come with me over my shoulder. I'll carry you. Uh, yeah. Yeah. [00:33:07][15.9]

Thomas Keily: [00:33:07] So people would say, yeah, it's a it's yeah, it's a tailwind for companies in general. And then within that there are going to be sectors and companies that are going to outperform based on, you know, sector and company specific factors. [00:33:21][14.1]

Adam Keily: [00:33:22] Um, all right. Do your own research. I think the key message there, but certainly sounds good. So. All right, let's leave it there. That does it for another another week. Thank you very much for tuning out there. We genuinely, really do appreciate your support and appreciate you tuning in to the show. Don't forget, you can always send us a message if you want to get in Or head over to the Once again, a big thanks to the equity markets guys, Bryce and Alec for their support. If you're not listening to their podcast, that really is excellent. Equity Markets Investing podcast. They also do a beginner series for anyone who's just getting started investing. In fact, I think it is called Getting Started Get Started Investing and Equity Mates Media, which we are part of here. I'm comedian investors economist have also launched a brand new show as well called Meet Pay Love, which is a really fun listen. So go and check that out as well. Thanks again for tuning in. We will be back next week. [00:33:22][0.0]


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