What’s left of ‘The Chalmers Doctrine’ if you take out the boring bits?

Adam: [00:00:30] 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 we're joined, as always, by my little older brother and real life economist, Thomas. Hi, Thomas. 

Thomas: [00:00:44] Yeah. Good. Adam, How are we going? 

Adam: [00:00:46] Doing pretty good. I don't know if nobody wants a hat or if maybe we didn't really sell the hat well enough. But we mentioned on the show last week that if people could guess all of the voices in the new intro, that there would be a hat on the line. Well, I can provide an update. I've found a hat because it is a form of a test. I thought that the most suitable hat would be a baggy green test cricket hat. This is an official baggy green copy I sent off through Weetabix many years ago. So it's going to wait because it has a logo on it. But if you can guess all the voices in the intro, you could be the recipient of a baggy green. So if that doesn't get you going, get you excited, then I don't know what will. I think. 

Thomas: [00:01:40] I might end up myself. 

Adam: [00:01:41] Not eligible. 

Thomas: [00:01:42] All right. 

Adam: [00:01:44] I budget's out tomorrow. By the time you hear this, it will have been yesterday. Thomas, what's your prediction? 

Thomas: [00:01:50] Budget or interest rate announcement? 

Adam: [00:01:52] How? Interest rate announcement. Sorry. Right. 

Thomas: [00:01:54] Yeah, Same time. 

Adam: [00:01:55] Same time. They made the RBA's meeting.

Thomas: [00:01:57] Obvious, but. 

Adam: [00:01:58] 25 stuff. Yeah. 

Thomas: [00:02:01] 25 basis points and some more funding for aged care. 

Adam: [00:02:05] Right. Yeah. That business. Good. At 24 I think we get 25 basis points, 25 basis points. All right. We'll find out by the time you're listening to this, where the time was right on, you might want to go Google it just in case before you make any before you take out of the home loan. Yeah. Remortgage the house. Just check that Thomas was, in fact, correct with 25 basis points. Guess what? Massive show coming up, Thomas. The Treasurer, Jim Chalmers, has caused a stir with an essay he wrote over the holidays. As a result, some sections of the Australian media have given him a D-minus and said he could do better if he just applied himself. We'll take a look at a story of scandal and corruption so big that a don even know where to start. That terrible ban will make more sense later. Hopefully you get to write these exciting news. We've got a brand new $5 note design just in time for the end of cash. But not everyone's happy. Sorry, not everyone is happy except one guy. Peter Dutton's not happy. We'll find out why a bit later on. But first time, as everyone knows, you don't fight the Fed. So why are markets fighting the Fed? 

Thomas: [00:03:22] Well, no, they don't. They. They. They think that. They think the Fed's rolling over and playing possum, letting them letting the markets run. That was that was the vibe. Yeah. So we got we got 25 basis points out of the Fed last week that was down from 50 bips in December. So slower that was largely expected. But definitely the rate hike pace is slowing. And then Jerome Powell came out in his press conference and was just a lot more bullish than people were expecting, really. And yeah, right markets pumped as a result. The yeah. 

Adam: [00:03:56] What did he. 

Thomas: [00:03:57] Say The stock was up a full 2% on the just on the day but we had a few a few things I mean basically you know he said previously he's been saying, you know, inflation is going to stick around longer. Markets are, you know, getting ahead of themselves. But this time is like. 

Adam: [00:04:10] Well. 

Thomas: [00:04:11] Maybe we were all good, came out. 

Adam: [00:04:12] And said you should buy stocks. Buy yeah get on pretty much. Yeah, very easy, obviously. But that's what I've been following for more volatility. It's much that like button. Yeah that's a little.

Thomas: [00:04:27] Four five key things saying that inflation's one first is inflation is kind of a buffer. We can now say for the first time that the disinflationary process has started, so inflation's going to come down. Okay. Number two, there's no recession. I, I continue to think that there's a path to getting inflation back down to 2% without a really significant economic decline. 

Adam: [00:04:45] Okay. 

Thomas: [00:04:46] Now that's. 

Adam: [00:04:47] Positive. 

Thomas: [00:04:48] Yeah. Now, that soft landing we've been talking about also saying the labour market remains very, very strong and there is strong job creation. 

Adam: [00:04:57] Yeah, so I heard that this morning, like unemployment's still at like record lows in the US. So isn't that a bad thing for inflation? Like if everyone's got a job and earning lots of money. I thought, I thought the road out of this was like getting people to lose their jobs. 

Thomas: [00:05:13] Yeah, well, no, it was if you thought that there was going to be a wage price spiral, which is what everyone was afraid of, and people started like trying to, you know, squash the labour market in anticipation of a wage price spiral. We just haven't seen that. And the. This inflationary process has started because the supply bottlenecks economy moving through the system. 

Adam: [00:05:35] This is great news then. So inflation is coming down and we get to keep our jobs. Yeah, yeah, yeah. But that seems to be the Saudis saying, take its word, your own number.

Thomas: [00:05:45] For saying that the state and local governments are really flush these days with money and many of them considering tax cuts or even spending checks going out. So that's good news. 

Adam: [00:05:56] That's inflationary, isn't it? Well, yeah, but spending checks. 

Thomas: [00:06:00] Yeah, it is. But inflation's coming down and so and it's probably going to come down quite quickly so you can lean into that to protect yourself on the downside, I think. I think that's what he's saying. Like when you look at the positioning, the disinflation has already started. You've got, you know, without unemployment ticking up. So we've got we've got a lot of headroom to lean into inflation if it does stick around longer. 

Adam: [00:06:23] I don't know, because all I've heard for the last year and a half is been like, we need to fight inflation and stop inflation getting out of control. Let's turn very quickly to let's start giving people checks. Did I miss a period where we were just going to roll along on a stable platform for a while and just kind of there was a there was going to be some plateau or something, wasn't there? At the top of the inflation mountain where we were just going to run at a steady state. When did we get to free money for everybody? Yeah, it was a two weeks over Christmas, you know. Right. Yeah, it did turn quickly. Yeah, right. And how did the markets react to that. And had a field day. 

Thomas: [00:07:04] They pumped. Yeah.

Adam: [00:07:06] Yeah, yeah, yeah.

Thomas: [00:07:07] Nasdaq was up, said the S&P was up more than 1%. Nasdaq up to 2%. So yeah, pumping along there was what some people were calling a dash for trash. I say it like that the trades that were sort of the big speculative bubbly kind of trades of Covid that they were risk on again. So Tesla shares jumped 6% on the day just in the second half of the day. Their year to date gains are now 68%. Wow. Yeah, it's crazy. Cathie Wood's ARK Invest Index ETF is up 6% as well on.

Adam: [00:07:42] The day. 

Thomas: [00:07:43] Peloton and CARVANA were up 27% and 32% respectively. 

Adam: [00:07:48] So it's 2021 all over again. Here we go with Peloton. Peloton Peloton's.

Thomas: [00:07:52] Up 100%. 

Adam: [00:07:53] Yeah, good bikes good. But yeah, bike through the laptop was really not bad. Really. Right. Well I guess if you need any sign that speculations back on this Bitcoin's up 40% or something too, isn't it. 

Thomas: [00:08:06] That's true. That's true. Yeah. Yeah. And that store of value bitcoin. 

Adam: [00:08:10] So the markets that I like got it right. Oh, what's the downside risks to. 

Thomas: [00:08:14] This day as well. I think the downside from here is that the earnings we see earnings come in softer than people expect. I think that's what would need that's what you'd need to see for the market to turn. So you need to see some even if we avoid a recession. I mean, and, you know, the Fed governor is very unlikely to come out and say we're headed for recession because he's going to say, well, cut rates then. So he's saying like, say, even if we are headed for recession, even if you think so, he's probably not likely to say it. But it does seem to be the general consensus that the US should avoid recession and Australia as well. So if it does that, then the real downside for markets I think is downgrades to earnings of earnings come in a lot softer than people expect. That could be enough to sort of take the wind out of the current bull market. 

Adam: [00:09:03] And that's happened a little bit already, hasn't it? Like I think Google's advertising revenue was way down and Amazon weren't honest, weren't doing as well as hoped and don't have any data, which is what I heard on Triple M this morning. 

Thomas: [00:09:20] The general vibe around. 

Adam: [00:09:21] It is a bit. Yeah. They'll go on the wazoo and the morning show was a lot. So Amazon. Yeah, but yeah, but I think that that's. 

Thomas: [00:09:36] Probably if we see that more in the retail sector, I guess if you see that sort of like Texas sort of own base, if you see that getting to you like you know you Wesfarmers or Woolworths or something like that, that might start to freak people out. But for now things are looking pretty good. 

Adam: [00:09:50] Happy days. Alright Thomas, the Treasurer, Jim Chalmers, he wrote an essay. What did he write about? Anything on anything I'd like. 

Thomas: [00:10:01] Well you know, to be greater. So I'm not going to. 

Adam: [00:10:04] Bore me with the words of the essay. 

Thomas: [00:10:08] Some pictures that were called Capitalism After the Crises. And basically I think he's out to define his approach as treasurer to let people know what he's about. And I also think it's kind of a bit of branding because, you know, look, I follow politics reasonably closely and before he came Treasurer, I didn't really know much.

Adam: [00:10:29] About him is it might be him in a rush to write his own book or write a memoir, but he just didn't have enough content to go off. So he just said, All right, I'll just make it an essay for now and publish my memoirs after I've had a career. 

Thomas: [00:10:43] Yeah. Kevin Rudd did a similar thing when he took office and basically said like, it's just a big picture. This is my approach. This is what you can expect from me. Just kind of sort of lay the philosophy I'm going to do. That's part of it. But there's also a lot of like, like talking to the his the political base of the Labour Party says a lot of messaging for that. And then I think there's also a lot of justifications and explanations for the current intervention and the current sort of agenda that the Albanese Government is bringing. 

Adam: [00:11:13] So is he writing it as Jim Chalmers or is he writing it as the Treasurer? Or is it sort of both like it representing the Labour Party and what and what their policies are, or is it more just like this is just some the stuff I had in my head, I want to get down on paper, I'm just sort of spitballing some ideas. 

Thomas: [00:11:31] No, I think he's speaking for the Labour Party and as Treasurer here for himself. But also. Yeah, as, as Treasurer. Look, this is, this is the official narrative. Now this defines the way we talk about Labour's economic policy going forward and how we understand it. Yeah, so that's where it's coming from. Is it He's calling for values based capitalism. So idea that sort of free market fundamentalist capitalism has lost its way, has just given us crises after crises, has created a bunch of vulnerabilities and inequality. And we need to not we don't need to sort of overthrow capitalism. We like capitalism or he likes capitalism, but we need to bring we need to have values based capitalism. So we need to bring make sure capitalism is working and delivering on the social values that we like. Sounds like a reasonable idea. Yeah, pretty reasonable. I mean, the conservative press hated it. Part of it was like it was worded in a way that however you wanted to read it, you could read it that way. So if you were progressive, looking for like a really firm government intervention going forward, you could take that out of it. If you were pro-business and looking for the government to enable business and not get in the way of business. You could take that spin on it too. It was sort of like it was enough sort of big picture, hand-waving kind of stuff that you could read it any way you want. And so the conservative press really read it as This is communism by stealth. Yeah, and we're going back to the bad old days of government intervention. And yeah, so the AFA, which, you know, is typically isn't really you wouldn't really place it as conservative or progressive normally, but they've been a bit useless when it comes to the gas cartel. But so they ran a full two page article attacking it, an editorial attacking it, saying it harks back to an essentially old model of more government intervention and higher taxes. Camouflaged in the contemporary language of social. Social inclusion. Yeah. Hardly mentions the incentives, enterprise, entrepreneurialism and rewards needed to drive the productivity rebound that's needed to pay for Labour's big spending programs. Yeah. So they said, yeah, it's an attack on capitalism and an attack on neoliberalism. Right. 

Adam: [00:13:45] What's neoliberalism?

Thomas: [00:13:46] This is sort of like, I guess you could call it free market fundamentalism. And it's and it's sort of like. 

Adam: [00:13:52] Oh, that clears it up. You are free market fundamentalism. So why didn't you just say so? 

Thomas: [00:14:03] No, it's a particularly Australian thing and it's sort of like it's a term that critics use. Like no one really says I'm a neo liberal. It's more like critics have accused people of being neo liberals. Right. And sort of the basic idea is that less government intervention is always better. You want almost governments to get completely out of the way of markets. The market solution is always the best solution for any social problem. And more markets are always better. That's sort of like, you know, that's the caricature of that. But that's what neo liberalism is. And Chalmers himself said that neo liberalism has failed. 

Adam: [00:14:38] So from his point of view, it's not neo liberalism, but from the critics point of view, it is.

Thomas: [00:14:44] What he's he's attacking it and he would call it neo liberalism. Right. Yeah, yeah, yeah. 

Adam: [00:14:50] He's actually I feel like we're discussing an article that was written by Openai in response to the question, Please write me an article about economic futures without providing any data. You know, what's that? What's this? Wandering around on the internet somewhere where it's like, write me a job description about this without actually ever saying what the job does. And Openai argues, like, these are really quite good. All right. So in a nutshell, what's his vision for how the economy should work? 

Thomas: [00:15:22] So basically, he's saying that markets aren't the problem. He likes markets. And, you know, as the leader of an Australian of Australia. You need to be saying that. Yeah, but some markets are better than others. And he distinguishes between well-designed markets and poorly designed markets. Hmm. And saying that markets, when they're carefully curated and tended to will produce good outcomes, but if they're just given free reign and ignored, then they can create really bad outcomes. And the bad outcomes we've seen have been a result of that neglect. 

Adam: [00:15:52] That happened with the local bric a brac. Markets down here actually just just ignored and lost their structure, but feel that the things that you can turn around. 

Thomas: [00:16:01] Yeah, well, get Jim onto it. 

Adam: [00:16:05] Jim markets like markets. I love a good market. 

Thomas: [00:16:10] Right. The four interesting things that I pulled out, one that to make well-being a focus. So the Labour's now going to include measures of wellbeing in their budget. So alongside GDP, in forecasting GDP, they're going to include data on climate and the energy transition, economic resiliency and the sort of strengths of supply chains and quality metrics. So saying like, we've got it, we're going to be measuring those things if we're going to really make good progress, that's good. 

Adam: [00:16:35] I think we touched on that last year. Did me a brief. 

Thomas: [00:16:37] Yeah, yeah, yeah. I mean, this has been a long criticism of GDP as a measure that it's just about how much stuff we produce and doesn't actually get to the quality of living. Hmm. Yeah. Yeah. So that's, that's I think that's, that's a positive to these things. We need stronger institutions. So markets don't exist in a vacuum. They exist in a social within social infrastructure. So the how strong and integral, though, that social infrastructure is, will determine how well the markets work. And you see things like the Integrity Commission and stuff like that's going to feed into that. There'll be a big theme for him is coordination and co-investment. So like co-investment, he cites a clean energy finance corporation where the government gets in and invests in enterprises that deliver social goods and social needs. And rather than providing it themselves, it's more like we're going to coordinate other entities to do that or we're going to co-invest and get that happening. So we sort of support still supporting the market to do its thing, but we can we're going to be active in sort of the Chalmers Doctrine. And you're saying. 

Adam: [00:17:41] I was at the end.

Thomas: [00:17:43] Yes. That's all I'm summarising here. Yes. GDP, GDP, to give me a 200 word. 

Adam: [00:17:51] Summary of really didn't really reach a climax. It was very the middle of the road the whole way through. So it all sounds pretty positive. I mean, I guess it depends again, on your perspective, but it sounds like there's nothing in there that I'm like, what. It is take about jobs? 

Thomas: [00:18:09] You know, it's not it's I mean, it's it's an essay for everyone is not designed to freak people out. I mean, there's still some big problems there within like there's still a focus on growth and productivity. I think there's a really valid questions about do we need more growth? Growth seems to be one of the key contributors to the climate crisis and our fixation with growth. We only need growth to keep people employed. Maybe we start need to having a conversation about how do we keep people employed or keep people in their livelihoods without continually, endlessly expanding the amount of stuff we're producing. I think that's that's so that's that's missing the no questions about like, you know, like with the Clean Energy Finance Corporation and the energy transition, that's great. If the problem is a technical, technological hesitate on a technological solution so you can get in and fund the new technology and the distribution of the new technology. But a lot of the big social problems we have aren't crying out for a technological solution. You know, like the protection of koala habitats, for example. That's not a problem because we don't have the technology. That's because of other factors. And we need to like, you know, slow down the consumption of old growth forests and things like that. 

Adam: [00:19:18] Not if you go to Bribie Island. They have applied a technological solution to koalas habitats. They built they built a rope bridge across the main road so that koalas can cross the road safely. So yeah, I don't I could have disobeyed one of those great initiatives that they had to do because I don't know. I think I think the project probably lacks funding like the education of koalas component around use, utilising the new rope bridge. Using the koala crossing to cross safely all those kinds of just basic basic education tools for koalas in the area to let them know that I am right bridge is now in place. But how they can use it because I put like a it's quite comical and I've put like a must be like 20 metres of fence along the ground. So just to encourage animals to use the rope bridge that goes across above. But yeah, it obviously assumes that the animals are already within that 20 metre zone. 

Thomas: [00:20:22] No, they go, they go, they go hand in hand with the long, long fences. Right.

Adam: [00:20:27] Yeah, but not, not on Bribie. This is so just a boy maybe went to visit his mum. Yeah, I. So your face. The fence is 20 metres long. I think some government department got a ticket in a green box somewhere for a great it was a great infrastructure project. Alright, alright. So koalas aside I one of the market implications for this paper or anything.

Thomas: [00:20:51] Well I think I mean I think I'm kind of hopeful that we'll see more intervention in the gas market. There's a lot here that would just justify what the, what the Government has announced so far, and I think that's good news for the Aussie economy. It's good news for Aussie businesses for every other business other than the gas producers, given that how much that feeds into the overall economy. So I think that's that's a potentially good thing. One analyst said it might mean more regulation for the banks. They're often a sort of a popular target for this kind of thing. So that might be, you know, banks might see some more regulation down the track. But apart from that, I don't think there's any like it's a lot of a lot of sort of hand waving stuff. And the really the devil's going to be in the detail. 

Adam: [00:21:33] And I got to admit, like calling it an essay. You lost me already, Jim. Sorry. Sorry. That's too much. Let's Google again. All right. Hey, before we get to the break, I just want to get to a listener email that we got or Jordan actually sent us a message via Instagram at the podcast time. He called you out on the I think our last episode. You said that inflation has become an excuse to justify price gouging on rents or landlords price gouging on rents. And he's just wondering why it's any different. Like presumably landlords have taken a hit in terms of how much it costs with inflation and all their costs are going up. So isn't it justified for them to raise to raise rents in the same way that someone who's I think he used the example of selling, you know, if beef goes up in price and you need to raise the price of of the steak that you're serving at the business. So care to comment. 

Thomas: [00:22:24] Yeah, yeah, yeah. I mean, that's broadly true. The thinking is broadly true, but it's just more complex than that. And probably like the counterexample to understand is why rents didn't go down when mortgage rates went down, right? You know, so mortgage rates went down. That should have pushed down the landlords. Course, but they didn't pass that on through lower rents. Rents actually went up through Covid. So yeah, so it's just not that simple. The way I think about it is that production costs set the lower bound of a price and demand sets the upper bound. So if costs rise, you know, if a beef or whatever rises too much and you can't supply it at a certain price, you know, below which you just out of business and so you just exit the market. So that creates a lower bound. But then once that's once you sort of pass that, then it's really about how much people are willing to pay. And if there's a sudden trendy surge in demand and people are really wanting your product, then you and you can get away with charging more prices, then higher prices, then you will in end prices go up. And I think that's what we're seeing here is that we're well above landlord costs. You know, most landlords in the market as a total stock would have purchased their property well before rates went down and then back up again. Like we're only still we're still not even normalising like visual cache rates, you know, in the threes through it's still very low. So most landlords in the stock of the market won't, shouldn't be out of pocket just based on that. They've got rates are gone down and then back up again. They should be about where they were. Rents are going up because they can get away with it because there's that much demand in the market. And so it's that demand that's setting the upper bound for prices and that's where we're at. And you know, landlords can get away with it. So they they do. 

Adam: [00:24:09] Have that answer to your question. Jordan. We're going to take a short break here. Grab a quick word from this week sponsor and be back with more comedian versus economist right after this. Welcome back here on Canadian versus economist and Thomas. The Adani group is in a bit of trouble. What's going on there? I noticed the diver also talking about it this week. So it must be a big story. 

Thomas: [00:24:33] Yeah, big story there. Things always on the dive. So basically a short seller came out and released the big short selling report on Adani. So Adani should be pretty well known in Australia. Is an Indian company owned by a Guatemalan Adani. He is well, he was the third richest person. At some point, the second richest person. I think he's now down to 21, I think. Oh, Ouch, Ouch. Yes. 

Adam: [00:24:59] Imagine being only the 22nd richest person in the world. 

Thomas: [00:25:03] I know you just keep up with drug or street. Yeah. So Danny's like it is interesting because it is a massive conglomerate. So there's seven listed companies on the Indian Stock Exchange. So seven separate companies has all sorts of interests from ports, power plants, airports, datacenters, cement media. It includes Adani Enterprises, which is why it's famous in Australia because they own the Carmichael coal mine in Queensland. Right. And there were big the you know, the stop Adani protest. Yeah, yeah. It's sort of like they're the biggest company in India, like they're the, you know, the national champion of India, a.

Adam: [00:25:42] Bit like Wirecard was the national champion of Germany some years ago. 

Thomas: [00:25:47] Yes. Eerie parallels. Yes. So then Hindenburg Research and came out.

Adam: [00:25:53] Yeah. Not a good there's no good omen when Hindenburg started taking it.

Thomas: [00:25:59] So, Hindenburg research. You're a short selling institution. You're short sellers. They come out, they publish attack pieces on companies that say they're frauds. Hmm. This quote one of things that brought down Wirecard as well. And yes, so they've come out and said so Hindenburg got they were famous because they shorted Nikola, the truck maker Nikola. And we did a story on them last year. Yeah. Just sort of basic corporate fraud. But so was Hindenburg that brought that those poor Nikola down. And so they got a reputation in in the industry. And then they came out and said, We've got a big story. Everyone's like, Oh, okay, you brought down Nikola, What's it gonna be? 

Adam: [00:26:34] They also shorted Tesla, not Tesla. Twitter, Twitter, Twitter. Which is still not in Austin. Elon Musk said they're returning to neutral or something from they're not profitable but they're stop making losses. 

Thomas: [00:26:46] Okay now again. So yeah so yeah they got some, they got some some runs on the board and then they came out, they released a report called Adani Group How the World's third richest man is pulling the largest con in corporate history. 

Adam: [00:27:00] Who them's fighting words?

Thomas: [00:27:03] They are fighting words, indeed, saying the Adani Group has engaged in brazen stock manipulation and accounting fraud. Right. Yeah. And they really said they released a very detailed report is 132 pages just full of data and accusation. 

Adam: [00:27:18] It's longer than as they say. Yeah, yeah, yeah. 

Thomas: [00:27:22] So that said, they spent two years on the investigation. 

Adam: [00:27:24] Right? What are they accusing them of? Just massive fraud. 

Thomas: [00:27:28] More massive fraud. I mean, there's a lot to it saying the companies are sort of risky. They've got very high leverage, which puts them on a precarious financial footing. They use equity as collateral, which we saw with the collapse of Sam Bankman-fried. I'm afraid I forgot the name FTX. FTX That's right, yes. It was just inherently risky. They're worried about that. But the key accusation of sort of wrongdoing that seems to be in there is that they have undisclosed related party transactions. And so the basic idea seems to be that they have they set up these shell companies in Mauritius, 38 of them owned by Vinod Adani, which is Guatemala, that his older brother and those companies own a lot of Adani shares, But don't declare that they're controlled by Adani, right? Yeah. And so there's this idea of the free float. So like in India, all shares that are owned by executives, board members in their families has to be less than 25% of total shares. Because then, you know, you've got a liquid market and the share price is determined by actual trading. They're saying if it's more than 25%, it's 30% in Australia. But if it's more than that, if more than 30, 25 or 30% is owned by insiders, then you can't really trust the share price as being an accurate reflection of the company because insiders are controlling too much of them. 

Adam: [00:28:52] Yeah, okay. 

Thomas: [00:28:54] And so all of those seven companies split very close to that 25% threshold already, right? Like you're right on it or just a few one or 2% from it. But what Hindenburg reckon is that all these shell companies, a cold, independent share owners of these companies, but they're not actually independent because they're controlled by Adani's brother. Uh. 

Adam: [00:29:17] Right. So they probably might own 60 70% of. Shares. Yes. 

Thomas: [00:29:23] And they actually accused them of pumping the share price by actively manipulating the market and buying in particular times in order to push up the share price. Right. Yes. So that's what that's what that's the fraud element that they're using them of. 

Adam: [00:29:37] Okay. Yeah. And how did this go down with Adani? Did anyone get upset? 

Thomas: [00:29:43] They weren't happy.

Adam: [00:29:45] Yeah. Yeah. 

Thomas: [00:29:46] Yeah. So they came out. I mean, the playbook seems to be to come out like Wirecard did come out and attack the short sellers as committing fraud and or being horrible people, and that Adani's Adani went with this and played the played the nationalism card saying this is not merely an unwarranted attack on any specific company, but a calculated attack on India independence, integrity and quality of Indian institutions and the growth story and the ambition of India. Right. I mean, and to be fair, it did they did publish their report on Indian Independence Day, just like when they got their independence from Britain. 

Adam: [00:30:22] So. Right. The timing. 

Thomas: [00:30:24] Was a little bit odd, but it also.

Adam: [00:30:26] Begs not a British firm, is it? No. I mean, you can have even colder. Yeah, yeah, yeah. 

Thomas: [00:30:34] And Hindenburg came out and said, well, the reason that the time of that report, because Adani was in the market trying to raise $2.4 billion of fresh rocket capital from themselves. 

Adam: [00:30:44] From themselves is a particularly good time when you're buying your own stocks to point out the fact that you're buying your own stock. Yeah. So Hindenburg said that. To be clear, we believe. 

Thomas: [00:30:59] India is a vibrant democracy and an emerging superpower with an exciting future. We also believe India's future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation. 

Adam: [00:31:11] Hmm. Yeah, right. 

Thomas: [00:31:14] So, I mean, I think the thing I find really fascinating about the way short sellers are operating now is they are really flamboyant because the more attention they get, the more that pushes down the share price. So they have a strong incentive to be really colourful with their language. And that's what you see, like with the title and all the accusations. And, and they're also saying like kind of confident, they sound like they say bring on like if you want to sue us, bring it on because we're registered in America, which means you need to come to America and then you need to present a whole bunch of court documents which we would love to see. So bring it on their own thing. Yeah, very interesting. And Adani has been smashed by it, so they've now lost $100 billion in enterprise value over the seven seven companies. Seven companies. Yeah. So, yeah, it's just getting smashed. 

Adam: [00:32:04] The downside of them, though, is 100 billion a lot. I mean, it sounds like one of the biggest conglomerates in the world. 100 billion. 

Thomas: [00:32:12] Yeah, we're talking something close to like 30 to 50%. All right. Yeah, depending on the. Yeah. So Adani Enterprises, which until now owns the Carmichael mine that's gone that's lost 50% in five days. Right. So anybody giving him funds?

Adam: [00:32:31] No financial advice. 

Speaker 1: [00:32:33] But no one. 

Thomas: [00:32:35] Is talking about getting. 

Speaker 1: [00:32:37] Yeah. I mean, you know, it could have a setback. 

Adam: [00:32:42] Yeah. Yeah. I mean Adani. 

Thomas: [00:32:44] Enterprises down 55 50%, it was up 1,355% over the previous five years. Oh wow. So yeah, like it's just been going gangbusters and I but in Brisbane like a lot of that's just comes down to fraud, right. Yeah. Yeah. So yes, they're getting getting hammered. Seven of the ten worst performing stocks in the MSCI Asia Pacific index are now Adani companies. [00:33:07][23.3]

Adam: [00:33:08] Yeah right. Yeah. 

Thomas: [00:33:09] And then they, they pulled that $2.54 billion capital raising they just canned it said look there's not. 

Adam: [00:33:15] A good time to do that. Not a good time to be buying our own stocks. This is not the right climate. Right. Yeah. Well, the people holding the stop Adani signs will be happy. Yeah, maybe the mine. 

Thomas: [00:33:30] At the moment we've got a head start to producing. Started exporting in 21. Yeah. 

Adam: [00:33:34] Or did it? Maybe it's just a big maybe it's a front. So are there any other market implications here? 

Thomas: [00:33:43] Well, I think I think it's really interesting for India overall because because this isn't an Indian champion. It's kind of like Wesfarmers or BHP getting accused of massive fraud. And then if it turns out to be true, then everyone looks at the Australian market and goes, Whoa, what's going on there? Hmm. And I think it's the same story in India. Like if this turns out to be true, I think then it raises some governance questions in around in the Indian market and how secure investor funding is. And that might that might create some problems. I mean, and it's also already creating problems for like the people lending and exposed to Adani. So the state bank of India's down 11% since the report came out because I. Got big exposure to India. So it's a bit of a it's a bit is going to you know, it's hammering Adani, but it's bleeding into the Indian market overall, which then leads into your emerging market in your Asia Pacific indexes as well. 

Adam: [00:34:32] So is it any way, in any way like the Chinese property developer or the one that went that went. 

Thomas: [00:34:39] The Grand Haven Grand could be could.

Adam: [00:34:42] Because they were talking that was going to be the end of the whole world, like every gram went went under? Yeah.

Thomas: [00:34:48] I don't I don't, I don't think Adani has the same kind of into connectedness that the Evergreen has had. So I don't think I haven't seen anyone fretting about that. I've read probably a dozen articles about this and no one seems to be raising that as an issue.

Adam: [00:35:02] Right now because Evergreen was made up of actual companies. 

Speaker 1: [00:35:06] You know. 

Adam: [00:35:09] There's just lots of lots of names on lots of paper. Oh, what's this? Basically. All right. Finally telling us on the show, we're talking about the $5 note design. Someone's not happy with the new design of the $5 note. What's going on? 

Thomas: [00:35:25] MM Yeah. So the RBA's announced that there's going to be a new design for the $5 note. We knew that something was coming because the Queen died, so it didn't make sense to have her face on it anymore. 

Adam: [00:35:36] Yeah. Though it didn't stop the it doesn't.

Thomas: [00:35:37] Stop the Americans. They've got dead people in their money. 

Adam: [00:35:39] Arguably it's kind of it's a nice sort of legacy. 

Thomas: [00:35:42] Yeah. I mean, yeah, you could argue that point. I wouldn't. 

Adam: [00:35:45] Know. Yeah. Okay. Yeah. So, so this. 

Thomas: [00:35:49] Announcing a design that honours the culture and history of the First Australians is how they said to be some sort of Indigenous theme. 

Adam: [00:35:57] That.

Thomas: [00:35:58] Not going to go with a particular person. So, you know, there's some calls for Archie Roach or something like that to go on the right, the money, but that's, that's not going to happen. Could but they are going to go with some something indigenous themed. 

Adam: [00:36:12] Sounds good thoughts yeah. 

Thomas: [00:36:15] Well yeah so would Jim Chalmers with that he says he likes it says it strikes the right balance. You've got the monarchs on the coins and Indigenous Australians on the notes so that's a he feels like that's a nice balance. [00:36:26][11.0]

Adam: [00:36:26] Yeah. 

Thomas: [00:36:27] But Peter Dutton hates it and he's, he says yeah no he's not happy. Is grumpy Grumpy Dutton saying it's another attack on our systems, on our society and our institutions just love.

Adam: [00:36:40] No, no Peter I feel like, I feel like we're arguing about who should be on the cover of the White Pages. I believe in using it any more. 

Thomas: [00:36:49] He says. I know the silent majority don't agree with a lot of the woke nonsense that goes on. We've got to hear more from those people online, and business leaders have to speak up against it as well. That's a really cool I mean, surely this is the number one item in the Wesfarmers board meeting. 

Adam: [00:37:08] Yeah, we got lots of information on the thumbs on design time. We took a stand. Yeah, it is a strange one isn't it? Like, you know, like for Dutton to be so kind of outspoken, like, is this really the hill you want to die on? Is this the, this is the, this is the hot button issue on. I read a room.

Thomas: [00:37:31] Right You've just got massacred. 

Adam: [00:37:33] By the to use independence in inner cities and. 

Thomas: [00:37:37] The idea that no I don't think we should honour indigenous Australians on our money. 

Adam: [00:37:41] On our money. Yeah. 

Thomas: [00:37:42] I think we should stick to foreign monarchs. 

Adam: [00:37:49] I don't know, and we're going to catch those anyway, so. And the kings of the Kings on all the coins. Right. Which are like whatever coins aren't going to last. They'll be lucky to see the year out. With the way inflation's going, $5 probably won't be around a whole lot longer than coins. Yeah, so, I don't know, like, maybe I'd be interested to just get, like, just put, like, the king's head as his phone wallpaper when he's tanking and going, Oh, every time we pay lives just so that the cafe staff pick up your ladder. Look, it's the king one, which you and I. Peter. Small soy latte. We might leave it there. I reckon that's a fun night to end on. A fun, fun, fun night. Uh, look, don't forget the Equity Mates have their community survey out and about, so we'd love it if you fill that in as a chance for you to win $500. Cold, hard cash. Cash and a second prize of three tickets to FinFest 2023. FinFest is happening November the 11th at the Carriageworks in Sydney. Anyone who was there last year, it was an awesome event, awesome event to be part of and just to see head over to equitymates.com for it where you'll find links to both of them. Those things, but that's it for us for this week. Thank you so much for listening once again, and we look forward to talking to you again next week. Bye for now.