Dr Doom Says Buy Commodities

Adam Keily: [00:00:51] Hello, 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. Hi, Thomas. How's it going? Yeah, good. [00:01:05][13.9]

Thomas Keily: [00:01:06] Hey Adam. How are we? [00:01:06][0.3]

Adam Keily: [00:01:07] Yeah. Going very well, thank you. Uh, look, as always, we love getting your questions and comments. You can email us cve@equitymates.com or head up the website equitymates.com/cve. And Thomas, today you're telling me, Dr. Doom says, to buy commodities? Well, firstly, I'm not taking any buyer recommendations from someone called Dr. Doom. Secondly, who is he? Is he, by any chance, one half of the mid 2000s collaboration between danger, doom called danger, doom, sorry, between M.S., MF Doom and producer Danger Mouse, the mouse and the mask, you might remember, uh, [00:01:44][37.2]

Thomas Keily: [00:01:45] no, I don't know that it was at a rock band, was it? [00:01:48][2.8]

Adam Keily: [00:01:48] No, it was like a electronic sort of was very good. The message, if you haven't heard it, can do self a favor for the mouse and the mask. MF Doom, Danger Mouse went on to to do stuff with, uh, Seelow, uh, with, uh, called Gnarls Barkley. And then they had some massive songs. Oh yeah, yeah, yeah, yeah. I won't sing them anyway, but, uh, I'm really hoping it's not that guy, MF Doom, because he had some had some good raps. [00:02:14][25.6]

Thomas Keily: [00:02:14] Yeah. [00:02:14][0.0]

Adam Keily: [00:02:15] So if it's if he's telling me to buy commodities and I'm just not sure what to [00:02:20][5.5]

Thomas Keily: [00:02:20] make of it, I don't know what to do with the world. That's, that's, that's what happens as you get older. Your heroes start telling you to buy stuff. They go from being countercultural levels to product placement specialist. Um, Mick Jagger's just a share broker, so he's selling some stocks. Spoking is working as a mortgage broker, I think, in Sussex. Yeah. [00:02:47][27.0]

Adam Keily: [00:02:50] Uh, well, who's Dr. Doom and why is he telling me to buy commodities? [00:02:53][2.9]

Thomas Keily: [00:02:53] Yeah, not to Dr. Doom is Nouriel Roubini. Uh oh yeah. That is. Oh, he's back again. Oh, Roubini. He's up to his old tricks again. He's actually out to his old tricks. This is this is classic Roubini. Uh, yeah. That is Dr. Doom. He's called Dr. Doom one because he's pretty bearish by nature and he doesn't mind, uh, throwing out a few bad punches right in the woods. And he predicted the global financial crisis. [00:03:26][32.8]

Adam Keily: [00:03:28] they one of these guys you predict one global financial crisis and then everyone comes back to you for every economic insight ever. Like the the guy's a guy who predicted, uh, what was it, the housing thing in the US? The subprime crisis. Subprime crisis. Yeah, it gets dragged out all the time. Yeah. [00:03:48][19.6]

Thomas Keily: [00:03:48] Yeah. Well, you know, yeah. You pick these turning points, you do pretty good. I mean, he's got runs on the board as an economist. He's got runs on the board. He's pretty widely respected. [00:03:55][7.0]

Adam Keily: [00:03:56] I haven't heard of him. [00:03:57][0.7]

Thomas Keily: [00:03:57] He's working on some side projects, chasing, still chasing those, uh, dizzying heights again. Uh, that's a yeah, that's Dr. Doom. So he's a bit of a bear, but so he's, uh, he's out this time, basically. Basically, he's saying we should be worried about stagflation, that stagflation. [00:04:20][22.3]

Adam Keily: [00:04:21] Deflation. That's not a word. Yeah, it is. Yeah. Stagflation. Yeah. Like a really bad Bucksnort. Yeah. Not having fun on the uh what is stagflation. [00:04:32][11.2]

Thomas Keily: [00:04:33] So it's the stagflation is an economic term and it's talking about when you get rising inflation at the same time as a recession or is as falling economic growth. So, so typically, normally we think about inflation as being a byproduct of economic growth. So when the economy's running hot, um, you get inflation as one of the consequences. Is all this money chasing goods and things heat up and prices start to rise. But it's not always the case. And there are these periods in history every now and again where you get rising prices at the same time as you get a shock to a hit, to output and to demand and demand and aggregate production that they start falling as well. So you can get a recession and high inflation. Right. The famous cases we get with this is the oil shocks in the nineteen seventies, nineteen seventy three and seventy nine, where like one with a couple of wars sort of really shook the oil markets are all oil prices spiked that spike fed through into inflation because everything uses oil and energy to produce stuff so that fed through into the prices. So prices started to rise but it happened at a time where the economy was stalling and doing badly. And that said, we got we've got to. Period of stagflation in the in the late 70s. Haven't really had one since. [00:05:55][81.7]

Adam Keily: [00:05:56] Now all we do is where will the stagflation predictors come out? Like, far off. [00:06:02][6.2]

Thomas Keily: [00:06:02] Yeah, any day now, right? Yeah. [00:06:07][4.6]

Thomas Keily: [00:06:08] Then I think it speaks up for we had a listener question on this a little while that we haven't got to, but yeah. So in economics we talk about two types of inflation. There's demand pull and cost push. So demand pull was when the economy is heating up and everyone's getting excited and they're spending more on things and that's and they're beating the price of things up. That's demand pull because it's just the activity that creates that cost push is when something happens on the supply side, it's like an oil shock. And then that feeds through through your supply chains into the broader economy and creates inflation from a localized area into into everywhere. And that's cost push. [00:06:45][37.1]

Thomas Keily: [00:06:46] Right. [00:06:46][0.0]

Adam Keily: [00:06:47] Hmm. OK. That was Mark who wrote in with that last question, by the way, constantly annoyed by the confusion surrounding the forces in our economy that create inflation and what forces actually lead to hyper inflation goes on. Could you explain demand, pull and supply push inflation? Yeah. [00:07:01][14.4]

Thomas Keily: [00:07:02] Hmm. Tick left to give. [00:07:08][5.7]

Adam Keily: [00:07:09] All right. So Dr. Doom is talking stagflation. So why why now? Why does he think that's coming? [00:07:14][5.1]

Thomas Keily: [00:07:15] So this is coming from an article in Project Syndicate, which is an interesting online resource if people want to know data and economics and market. Um, but yeah, he wrote an article for those guys and saying, in today's context, we need to worry about a number of potential negative supply shocks, both as threats to potential growth and as possible factors driving up production costs. These include trade hurdles such as globalization and rising protectionism, post pandemic supply bottlenecks, the deepening Sino-American Cold War and the ensuing Balkanization of global supply chains, and reassuring FDI flows from Low-Cost China to higher cost locations. [00:07:51][36.1]

Adam Keily: [00:07:53] I understood some of those words. [00:07:54][1.5]

Thomas Keily: [00:07:56] Yeah, he's. [00:07:57][0.8]

Thomas Keily: [00:07:57] Yeah, he's yeah. Probably does need to work on his writing. They're reading them. This is a bit. [00:08:01][4.3]

Adam Keily: [00:08:03] Yeah. If he wants to tap into that younger market, into that younger demographic kind of this is not [00:08:07][4.7]

Thomas Keily: [00:08:07] enough to give yourself a [00:08:08][0.9]

Thomas Keily: [00:08:08] moniker like Dr. Doom. You're really going to get out of the way of Dr. Doom. Does he call himself doctor, [00:08:14][5.7]

Adam Keily: [00:08:14] do what you call him? [00:08:16][1.2]

Thomas Keily: [00:08:16] I don't think it's just me who gets that. He gets that term a bit, but [00:08:19][3.3]

Adam Keily: [00:08:20] it's a kind of a cool nickname. Yeah. And you need to be pumping out some better some more engaging content than that. [00:08:25][5.5]

Thomas Keily: [00:08:26] Uh mm. [00:08:27][1.0]

Thomas Keily: [00:08:28] Yeah. [00:08:28][0.0]

Adam Keily: [00:08:28] Well I mean, maybe not. I'm just not buying. [00:08:30][1.9]

Thomas Keily: [00:08:31] Yeah. Well I'll send him that feedback [00:08:32][1.3]

Thomas Keily: [00:08:34] place to uh but there's [00:08:37][3.4]

Thomas Keily: [00:08:38] this stuff that we're already seeing. So post pandemic supply bottlenecks, we're seeing some of that like say, computer chips. At the moment, computer chips are hard to get for love or money right now that's pushing up the prices. Computer chips feed into everything. And so that's feeding through into into the price levels. And we are seeing some inflation coming out of these supply bottlenecks. So that's one part of it, the globalization and rising protectionism. So I think, yeah, there's really a feeling that, you know, particularly with America, that they let too much of their industry offshore to China and destinations like that. And so they're trying to bring that back. But in bringing that back, that means that they went there because they were lower cost destinations. They could access cheap labor. So if they come back, that means that there is a sacrifice that has to be made probably through higher labor costs that then feeds into into your price levels. [00:09:31][53.2]

Adam Keily: [00:09:32] So, I mean, obviously, that the motivation for bringing that back is that strengthens your economy. You've got you start paying local people to do the work that then they start spending that money in the economy. Um, but were they not sort of tuned in to that when they shipped it off to begin with? Was it all just about getting the cheap labor to produce things cheaper? [00:09:50][18.4]

Thomas Keily: [00:09:51] I think yeah. I think it was definitely all about that. I think companies tend to take a very company specific view of things. They're not thinking about the the big picture like that in the sense it's not really about where can I work, how can we get costs down. But I think I think and I think the move to China, you know, in the 2000s, up until, you know, up until relatively recently, it was seen as a relatively low risk proposition. China was joining the global economy. Why not want to access the cheap labor now? It's it's a much it's a very different political landscape in a very different political calculation, because if you got operations based in China, maybe they're going to get shut down. Maybe your IP is going to get stolen by China, or maybe there's more disruptions to the global trade network. So this is what Coronavirus has given us. I think a lot of companies are looking like we were actually a bit exposed here. We don't have control over our supply chains, which which leaves us a bit vulnerable. So I think there are there's a few factors that are sort of. Causing a reassessment of how spread out the supply networks are, [00:10:54][62.6]

Adam Keily: [00:10:54] Miia, as a side note, my father in law tried to buy a secondhand car at the moment and prices are through the roof. Yeah, I buy a second hand car like he's going to pay more. He's looking at the same model car that I've got, which is like a just a mid-sized SUV thing, um, samey and everything. Twenty, seventeen. And he's looking at paying like five grand more than I paid a year ago. Yeah. Wow. Wow. I mean, obviously, you know, he hasn't he's not going into it with the nassan and [00:11:21][27.0]

Thomas Keily: [00:11:22] negotiating expertize that I have. [00:11:23][1.7]

Thomas Keily: [00:11:24] But, you know, cars that him that [00:11:27][3.2]

Thomas Keily: [00:11:28] I know cause I got a free turbo. Oh. [00:11:31][3.8]

Adam Keily: [00:11:34] Like I did actually get some money off my car because it was turns out at the last minute they mentioned it right at the end. By the way, when the car was being shipped out here, there was some acid rain and we can't give you a warranty [00:11:47][12.4]

Thomas Keily: [00:11:47] on the video. Wow. So I said that's why I said Ren said it's totally fine. It's claim it's OK. It's good to go. But there was no acid right on the ship on the way over. Oh my God. [00:12:04][17.3]

Adam Keily: [00:12:05] So therefore, we just can't give you the warranty that goes with it. But take our word, it's you where you won't have any trouble. [00:12:10][5.0]

Thomas Keily: [00:12:10] Well, I said, well, you're worth good enough for me, buddy. If they use gladiolus. He seemed very trustworthy. So we went with it. [00:12:19][8.9]

Adam Keily: [00:12:20] But yeah, but that's what I mean. [00:12:21][1.0]

Thomas Keily: [00:12:22] Like, no, I mean there's pockets of um, you know, price prices exploding. I mean, trying to trade you right now and a lot of places it's just impossible. [00:12:30][8.5]

Adam Keily: [00:12:31] I need to I need a I need a plumber the other day. I need an electrician. Mhm. [00:12:34][3.5]

Thomas Keily: [00:12:36] Yeah. It's hard, [00:12:37][0.5]

Thomas Keily: [00:12:37] it's. Yeah. It's, you know, it's definitely true. The supply chains have been disrupted. But the question is how long lasting are these, these factors. And I think you look at all of these factors, they're not going to stick around that long or they they feed through and then then we're kind of done, you know, like I said, imagine all the firms decide to that are basing their operations in China, decide to relocate. OK, so that happens. It pushes the cost up. But once it's done, then you kind of it's done. [00:13:05][27.8]

Adam Keily: [00:13:05] We talked about this a little bit like when the when the ship got stuck in the Suez Canal and prices went up. But there's no way you're like, well, I'll never [00:13:14][8.9]

Thomas Keily: [00:13:14] get that ship out. I guess this is just the new normal big old ship stuck in the Suez Canal. I guess we can't use it anymore. [00:13:24][9.9]

Adam Keily: [00:13:25] You know, like, that's not it's not a this is not a permanent change. This is just a just a blip. [00:13:29][4.5]

Thomas Keily: [00:13:30] But I think I think what Dr. Doom is worrying about is saying, look at on one hand, you have massive demand, pull things going on because we got so much money printing, super cheap money's everywhere. Uh, you know, there's a tsunami of cash unleashed on the world that's happening at the same time as we have all these supply side disruptions. So that's potentially going to push prices up. But that's also not stagflation because you've got an economy running super hot then as well. Yeah, I'm not. I'm not this is not Roubini is most convincing article to my mind, but it's a heck. [00:14:05][34.6]

Thomas Keily: [00:14:05] Yeah, yeah, yeah. Where'd he get his doctorate from the back of a Wheaties box. Yeah. Anyone to talk to these days. [00:14:17][11.6]

Thomas Keily: [00:14:18] I guess it's worth talking about. Well it's interesting to know because the inflation conversation is taking another level. So there's people people are talking about inflation is recognize it's on people's radar. Central banks are talking about it. If you look at the RBA, Jerome Powell at the Fed, they're noting that there's inflation in the system. They expect it to come. They expect it to be short lived, but they don't know for sure that it's going to be short lived. It may it may spiral around. And this is what can sort of happen. You get a spiral that happens. They call it a wage price spiral is different spiral. So the prices start rising and then workers go, hey, I need more money because everything costs more now. So then they they they increase their wages, which then pushes the prices up. And so prices rise further and then workers go, hang on, I need more money again because I'm not getting enough. And then you get a spiral. So it can kind of can create these reinforcing dynamics that can push that can create inflation in your economy. And that can in the worst case scenario, inflation gets away from you and gets out of control. And then, yeah, then you can sort of get into the end of the spectrum. You get into hyper inflation. [00:15:24][66.3]

Adam Keily: [00:15:25] Yeah, I've never really thought about that. I never really thought about that whole. And this is why I'm not in charge of the economy, obviously, but trying to balance out, you know, you pay the workers more and then the cost of things go up. And so the cost of things is kind of catch 22, really. [00:15:40][14.3]

Thomas Keily: [00:15:40] Mm. [00:15:40][0.0]

Thomas Keily: [00:15:41] Yeah. Yeah. It goes round and round and that's the sort of the danger and that so we talk about like anchoring inflation expectations. And this is one thing that. A lot of intense attention to it's like where do people think prices are going to be? Because what people expect is often what happens and it kind of through a self-fulfilling prophecies, like if you're if you're working on you say, I think prices are going to go up 10 percent. If I think that, then I need to my wages need to go up 10 percent. Otherwise, I'm losing ground. And so those then wages go up 10 percent. And then that then creates the 10 percent increase in prices that you were expecting. So a lot of it swings on on what people think is going to happen. [00:16:21][40.0]

Adam Keily: [00:16:23] Yeah, interesting. All right, let's take a short break here. We'll grab a quick word from our sponsor this week. We'll be right back with more comedian versus economists just after this. [00:16:33][10.4]

Thomas Keily: [00:16:35] 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 points, perks and epic experiences tailored to you, you can manage your money easily on the go smash your savings goals, get money for it and be rewarded for it. Bank to your own beat virgin money terms and conditions and monthly criteria apply. Now let's get into the show. [00:17:01][25.8]

Adam Keily: [00:17:02] Welcome back here on comedian versus economist and Thomas, we were talking about Dr. Doom and he said to buy commodities and then we didn't mention at all why he was talking about buying commodities. Why is he saying we should buy commodities? [00:17:13][10.5]

Thomas Keily: [00:17:13] Well, he's not he never said that. [00:17:14][1.1]

Thomas Keily: [00:17:15] I know. [00:17:17][1.7]

Thomas Keily: [00:17:18] You know, he's saying inflation's coming. I inferred that as an inflation hedge, you want to buy commodities, commodities, [00:17:24][6.2]

Thomas Keily: [00:17:25] typically what your doctors do. It was me all alone. Oh, what a waste. [00:17:34][8.7]

Adam Keily: [00:17:36] I did not see that coming. Well, spoiler alert, right? He's not really saying buy commodities. That's just that's that's what people would be buying if you if you believe what he's saying. And that is what would [00:17:47][11.5]

Thomas Keily: [00:17:48] one of the things I'd be buying, you'd be looking to hedge a hedge against inflation. [00:17:52][3.9]

Adam Keily: [00:17:54] And we did do an episode a few weeks ago on the commodity super cycle. So maybe not a bad time. And everything is everything to me. Thomas, all the indicators, all the flags are showing by commodities. Hmm. Um, all of my my two my two indicators, which are Dr. Doom and fancy name called a supercycle, that's that's that's enough for me to get greenlights by bisimwa commodities. Yeah. [00:18:20][26.2]

Thomas Keily: [00:18:20] You got a memory like a goldfish though. [00:18:22][1.4]

Thomas Keily: [00:18:22] Like we debunked the super cycle. That was the whole point of that show that it was super hype. Remember that? That was their conclusion. All I remember is it had a cool name and was something I could buy. This is how I got into crypto in the first place. [00:18:37][15.3]

Adam Keily: [00:18:41] Um, we do have a couple of questions that I want to get to this week. You can, of course, send us your email, questions, comments, feedback, anything you like, KVA at equity meit's dot com or over on the website, equity markets, dot com, forward slash CBG and Seimas written in sign says, Hey guys, enjoying the show? My landlord is starting to make noises about putting the rent up. I know prices are rising, house prices particularly, but our rents rising to Thomas. I like to have first crack. [00:19:11][29.8]

Thomas Keily: [00:19:11] Oh yes, that's right. Yeah. So if you wouldn't mind just Woolworths. [00:19:14][3.3]

Adam Keily: [00:19:16] Um, Simon, no, rents aren't rising, especially in the city. Occupancy rates are well down is my information. So, uh, tell him to stick his rate increase in your leaking tablet. He won't fix is what I say. [00:19:30][13.6]

Thomas Keily: [00:19:30] Sorry, but uh uh yes. [00:19:34][4.0]

Thomas Keily: [00:19:35] Is some this some and have a commercial tenancy in an [00:19:38][3.2]

Thomas Keily: [00:19:38] office building in the CBD. Uh, details. Details. Oh no. We don't ask these questions. Well that's that's the only context in which your comment is anyway. Really I thought oh no. [00:19:49][11.3]

Adam Keily: [00:19:50] I thought rents were well down. I thought apartments especially. So yeah. I think it depends doesn't it. Like his apartment. Uh, there's an oversupply of apartments isn't there at the moment or oversupply. [00:19:59][8.9]

Thomas Keily: [00:19:59] Yeah, definitely. In terms of. Yeah, it's inner city apartments in Sydney and Melbourne. Rents are falling. Uh yeah. [00:20:07][7.3]

Thomas Keily: [00:20:07] But I'm proven right. No. Well yeah. You know, it's impossible. We can edit the structure. [00:20:14][6.7]

Adam Keily: [00:20:14] That's so producer Sasha does a wonderful job for us. I think there's nothing more we need to say about it. Yeah, I was saying [00:20:24][9.5]

Thomas Keily: [00:20:25] that I'm wrong. [00:20:25][0.3]

Thomas Keily: [00:20:25] No, no. That's the unit market in detached housing or in overall. We're actually price rents are growing three point nine per cent in total national. Um, we're in the capital city. So that's after you include the the falling unit markets in Sydney and Melbourne prices, rental prices across the country going four per cent, which is the strongest probably probably in a decade, I reckon. Yes, a growing quite strongly, and if you go out to the rent to the regional areas, rents are growing eight point six per cent a year. Oh, yeah, they're gone. That's gone through the roof. Yeah. Yeah. So so that's definitely going on. The rent the rental market is getting more expensive. That's that's definitely seems to be happening apart from high rise apartments, which had largely been built to cater to to immigrants. And since immigration dried up, they've they've really struggled. [00:21:21][55.8]

Adam Keily: [00:21:22] Maybe talk to some of the High-Rise owners and see if you could just rent a floor in the small, unused office space. [00:21:28][6.1]

Thomas Keily: [00:21:29] Yeah. Yeah, in the office. So, yeah, if you if you're up for living in a high rise apartment in the CBD, now's a good time to get a deal. [00:21:36][6.5]

Adam Keily: [00:21:37] Yeah, well, [00:21:37][0.6]

Thomas Keily: [00:21:38] yeah, but I mean, yeah, [00:21:39][1.0]

Adam Keily: [00:21:39] they're talking, but generally speaking, they're going up. Rents are going up, [00:21:42][2.8]

Thomas Keily: [00:21:42] rents are going up. And the thing to remember is that rents rising house prices don't have any impact on rents. [00:21:49][6.2]

Adam Keily: [00:21:49] Really. Mhm. Yeah. I would have thought they did [00:21:52][3.0]

Thomas Keily: [00:21:54] not a common, it's a common misconception but that it's not, is not true. It's the reverse is true though. So rising rents do affect house prices. Rents are set in the rental market. And so that depends on it's a question of how much money due to the tenants have and how much rental stocks available. That's the only thing that determines rental prices. Yeah, but if if rents are rising, then that's increasing the return on the property asset. And since the price of an asset is determined by its return, then rising rents means rising house prices. So this is another factor that's going to be driving house prices higher in the short term. [00:22:34][40.1]

Adam Keily: [00:22:35] Yeah, interesting. All right, another question here from Megan, Megan, Megan. Hi, guys. I heard something about carbon leakage the other day, but now I can't find what is carbon leakage. Is it a problem for Australia? Who you've got me here, Megan? Carbon leakage. I'm not across this, Thomas. I can only assume that I don't know as we try and lock away carbon somehow in Inwood, which is where I've heard that a lot of carbon stored inside wood, [00:23:12][36.6]

Thomas Keily: [00:23:13] maybe it's [00:23:13][0.4]

Adam Keily: [00:23:14] leaking from furniture. So check your dining table. [00:23:16][2.8]

Thomas Keily: [00:23:20] Here we go. Yeah. The coffee. Yeah. Check your dining table. Yes. Might be leaking carbon. Yeah. Now that's that's obviously about that. What is it? No. [00:23:32][12.3]

Thomas Keily: [00:23:33] Carbon leakage refers to this idea that if you're going to introduce a carbon policy in domestically within a country's borders, like a carbon tax, for example, you need to do something to influence the goods that are coming into your country to make sure that the carbon reduction mechanisms you've got in place don't just push your carbon intensive industries offshore. You know, if you imagine in Australia, we say we had a carbon tax and our energy producers had to pay a carbon tax, which then feeds through into energy prices, into the broader economy. That's so great. So but that means our producers have have higher energy costs. They can then go to a country that doesn't have a carbon tax and have a competitive advantage because they're not having to pay a carbon tax to produce. Right. So what you've got to do is somehow prevent this carbon leakage, which is what they call it. And typically the way that the mechanism is that you have a tariff on that. So if you were importing from a country that doesn't have a carbon tax or any carbon measures in place, then you can slap a tariff on their goods and say, like, well, your producers are ducking the carbon tax and we all need to deal with this carbon story. So you're going to have to pay you enough to pay money to get your get your goods into the country just to just to even out the playing field. [00:24:55][82.5]

Adam Keily: [00:24:56] Make sense that people opposed to this plan, is it a plan yet or is it just people talking about. [00:25:01][5.1]

Thomas Keily: [00:25:01] Yeah, the Australians, Australian government, [00:25:03][1.9]

Thomas Keily: [00:25:05] a lot of a lot of I'm not a fan of this plan. Really? Why not? Well, yeah, uh, [00:25:10][5.6]

Thomas Keily: [00:25:11] because we're we're in that story of the country that's not doing anything about carbon. [00:25:15][4.2]

Thomas Keily: [00:25:16] That's just. Well, so we were going, ah, I thought that we'd taken in a canter doing it. It occurred to. Yeah, no, no apparently not. In other words, not really that impressed with our [00:25:29][13.1]

Thomas Keily: [00:25:29] record on [00:25:30][0.5]

Adam Keily: [00:25:30] this one. Did we mention we've done really well with the pandemic though. [00:25:32][2.3]

Thomas Keily: [00:25:33] So that's good. Good for us. [00:25:37][4.3]

Thomas Keily: [00:25:38] No, I mean it's a [00:25:39][1.2]

Thomas Keily: [00:25:39] it's not a good, [00:25:40][1.0]

Thomas Keily: [00:25:41] uh, the Australian government in its policy position on climate, which is a bit like rubbish in my personal opinion. Um, yeah. It's it it means that Australian exporters are going to be slapped with a tariff if they're going to try to export into the EU, into Europe and the US, which is sort of where this conversation is happening at the moment. So Australia is pushing back and the trade minister, Dan Tehan, is saying, um, a better way is to what do you say? Something crazy is like full liberalization of trade in environmental goods and services. And so I think this is sort of I guess this is like clean coal and things like these things are like, really, you don't want to be taxing your carbon emitters and your polluters. What you want to be doing is funding technological solutions to to draw down carbon, for example, and then exporting those around the world. That's that's the Australian government's preferred position because they don't want the mining industry and so on paying lots of money. We can't do a carbon tax or whatever. So Australia is a bit on the outer with that one. And in these sort of measures to fight carbon leakage, which the EU is considering and America's now considering to, [00:26:54][73.1]

Adam Keily: [00:26:54] is this coming out of we talked last week about Janet Yellen and some of the changes that they're making. Is this kind of part of that same story with them? Sort of. You know, it was we talked about a global corporate tax rate and this kind of evening of, you know, this notion that the kind of the whole world has to come together to tackle some of these challenges that can be circumvented by, you know, by dodging to a different country or, you know. [00:27:21][26.5]

Thomas Keily: [00:27:21] Yeah, definitely. Definitely. I mean, there's there's there's two big shifts in in America through with the Biden administration. The first is that there's a recognition of the climate crisis and that we all we've got to do something about it and I'm going to take that seriously. So that's a. That's a change. Definite change in tone, and the second thing is that America is going to reengage with global institutions and try and take a leadership role in all of this. Yeah, so that's that's coming out of that. And that's why I've read a father talking about more masker frosty reception in Washington, because he was seen as sort of a bit of a Trump lite kind of character, both in sort of like style and and policy mix. And that's that's now out of favor in Washington. So it's a challenging time for America, for Australia. This does seem we've sort of been not as a surprise to people like we talking about, like lagging the world. And this change was coming. We knew that the writing was on the wall with the global economy needed to decarbonize. And that was always going to happen at some point and rightly so. [00:28:23][61.4]

Thomas Keily: [00:28:23] So the writing's been on the wall for about 25 years. Yeah. Yeah. Well, there's a lot [00:28:31][8.2]

Thomas Keily: [00:28:31] of debate about what the words actually meant. [00:28:33][1.9]

Adam Keily: [00:28:35] Like, I remember when, you know, we started talking about in my lifetime at least anyway, you know, we start I remember hearing about the ozone layer in primary school and the effects, you know, what we could do to reduce our impact on climate change and stuff that's been going on for years and years and years. It's not like, you know, I think it's a bit of a cop out now for the government to be like, oh, we've been in court [00:28:56][20.8]

Thomas Keily: [00:28:56] on behalf of we didn't see that coming. [00:29:00][4.0]

Adam Keily: [00:29:00] You really thought this would turn out to not be a thing? [00:29:03][2.5]

Thomas Keily: [00:29:03] I really did. Uh. All right. [00:29:06][2.6]

Adam Keily: [00:29:07] Let's leave it there. You can, of course, email us any time, and really appreciate your questions. And we have Simon and Megan this week. Thanks, guys. Email us at cve@equitymates.com Or on the website equitymates.com/cve. We also love it. If you could go and give us a rating and a review on iTunes that it really helps a lot. Don't forget, you can check out lots of other great podcasts from equity markets. Media Get Started Investing, Equity mates Investing Podcast, Meet Pay Love, You're in good company and Thomas, thank you for your company again this week. [00:29:39][32.5]

Thomas Keily: [00:29:40] Oh, thank you. Pleasure. [00:29:41][0.8]

Adam Keily: [00:29:41] And we'll talk to you again next time. [00:29:41][0.0]

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