Category: Podcasts

This podcast is originally published by BBC Business Matters here: https://www.bbc.co.uk/programmes/w172ydq0jbyj4ls

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UK Prime Minister Liz Truss is expected to announce a package of support to deal with rising energy bills in the coming days. It’s understood the government could spend $115 million on plans to subsidise bills. We weigh up the pros and cons of subsidies and windfall taxes with Caroline Meyer, energy analyst and CEO of Meyer Resources.

US e-cigarette maker Juul is to pay a $438.5 million settlement, following a lengthy investigation that found it had marketed its products to underage teenagers. Rachel Butt from Bloomberg in New York explains the background and implications of the story.

Rahul Tandon is joined from Austin, Texas by Tony Nash, CEO and founder of Complete Intelligence, and from Freetown, Sierra Leone by media entrepreneur and TV presenter Stella Bangura.

Transcript

BBC

Hello, there. How are you? This, of course, is Business Matters here on the BBC World Service. I’m Rahul Tandon as always, coming up on the program, we’re talking about changing your leaders. Does it work? That’s happened here in the UK. Liz Truss was sworn in into her new job. We’re going to be looking at the energy challenges that many countries, many of you listeners, are facing at the moment.

BBC

It’s going to be a terrible winter and in many countries, it will be for some of the lower income households. It will literally be a question, do I heat or do I eat?

BBC

There we go. That is a question I think that many people, unfortunately, across the world, will be facing. A lot of tough questions that are going to face businesses here in the UK. Tony Nash joins us as well this evening from Complete Intelligence. Hello, Tony. Always a pleasure to have you on the program. Our new Prime Minister here is going to need a lot of intelligence. Can I ask you, Tony, sometimes when we’re faced with big problems, we think, let’s just change the leader. That doesn’t always work, does it? Just putting a new person in charge. The problems are still there.

TN

The problems are still there. And the problems that we have right now are very hard problems to solve. So Liz Truss is going to really need a lot of help and a lot of deep thought to solving these problems.

BBC

Let’s switch it on its head, though, sometimes, having that new leadership in place, new ideas, new thoughts. She announced her new team a short while ago, Tony, that can make a difference. A fresh look at difficult problems that people are facing, whether it’s countries or businesses as well.

TN

Sure it can. I think some of the problems she’s facing right now, though, are they’re global problems. It’s the energy supply chain, right? It’s the cost of energy, it’s the downstream costs of energy. It’s the cost of things like fertilizer and food into next year. So these are not problems that the head of the UK, the leader of the UK, can solve on their own. This is something that really takes some deep thought to solve, say, the domestic symptoms of those problems, or not the symptoms, but the domestic impacts of those problems, as well as the global sources of those problems. It takes a lot of effort, especially for a new leader, to come in, set up their team and get going.

BBC

Yeah, that’s a good point. Tony, last question to you on this particular issue. Sometimes with leadership, the key is knowing when to take over. This is not the best time for any leader to take over in the country because of those problems you outlined there, which we’re going to be talking about in the program in a lot more detail a bit later.

TN

No, you’re exactly right, but I think there’s a certain kind of leader that’s attracted to taking over in a very difficult time. So I’ve done a turnaround and a couple of startups in my day, and it takes a different kind of person who to want to take a leadership position in that situation. And hopefully she’s a person who is focused. Hopefully she’s a person who can take criticism really well. Hopefully she’s a person who can get people on her team and build trust. And if she can do those things and all of the other things that a leader is supposed to do, she may actually do really well.

BBC

Stella, you were talking about the elections in Sierra Leone, which are coming up by the beginning of next year. I wonder we’re talking about leadership. I suppose the true test of a leader or somebody who wants to be a leader is taking over in difficult circumstances. Not when it’s easy, but when it’s tough. Against your labs. Tony, when you go around Texas, are you seeing a lot of youngsters vaping nowadays?

TN

I have two kids in university and one in junior high. And my kids who are in university were part of that initial group that was marketed to. And so when they were in high school, there was a lot of vaping in high school, and there still is. And even now the kids in junior high are being marketed. And so when I say junior high, that’s kind of 12, 13, 14 years old.

TN

So are they being directly marketed to? Probably not. But the problem here yes, that’s right. And the influencers and the way that they get to these kids, and there are efforts in the schools here to counter that. A lot of the messaging in the schools is countering, and again, I’m talking 12, 13, 14 years old is countering vaping and trying to get the kids to not start vaping. So it is something that’s very common even at a young age, and there are a lot of efforts to really stop it.

BBC

Yeah, go on, Tony.

TN

Yeah, the appeal here for the kids, there are a couple of appeals. First of all, they don’t smell like tobacco, right? So it’s a lot easier to do and conceal. But the other part that’s pretty common is to get vape use that has THC in it. And kids in, say, public schools will smoke in the bathroom between classes or something like that. But it’s the THC juice for their vape.

BBC

Because I’m listed, I know what that is.

TN

It’s basically smoking marijuana, right? It’s the THC is the active ingredient in marijuana. And so it’s a very easy and pretty inconspicuous way to distribute this to schools, to kids in schools. And so it’s not necessarily nicotine, it’s the THC. I’m not saying every kid who vapes has THC in their vape juice, but it’s both. And it’s balancing both out that we see a lot in the junior highs and high schools here.

BBC

I want to bring in Tony here very quickly, because I remember being in India when the government had demonetization completely changed the currency. It’s not that easy, is it? Sometimes?

TN

No, it’s not easy. It’s a shock. And I think that it’s a little bit of a shock by design so that people understand the new value. But when it doesn’t hold, then that’s a real problem. So I’m not laughing at this specific situation now, but with demonetization in India, obviously, that had an organized crime drive, right? Like they wanted to take out the large bills to take the power out of some of the organized crime transactions. Is that fair?

BBC

Yeah, it was. It was also about removing some black money from the economy. Did it work? It’s an interesting discussion that’s still going on in India. Lots more interesting discussions coming up here on Business Matters after the latest news.

BBC

What about where you are in Texas? That’s a part of the world that is known, isn’t it, for its energy resources? It’s fossil fuels, also renewables. Now we’re heading towards Midterms. How big an issue is energy there? Not quite as big maybe as it is in Europe, I suppose.

TN

Well, I live in Houston, Texas, the energy capital of the world. So you should know that everyone in my neighborhood has put in a new swimming pool except me over the past year. So the energy companies are doing well and my neighbors are benefiting. And so I don’t say that to be horrible, but these times part of the problem with times like this is people realize that there is actually under investment in energy.

TN

And so whether it’s electric, power companies or storage or transmission, other things, so what comes out of Texas is natural gas, which goes to Europe to kind of fill the gap that isn’t coming from Russia. Okay. And so because there’s not as much supply, those prices go up, and that benefits the people who take things out. But the under investment happens in two places. It happens kind of on the electricity side, but also on the extraction side. So things here actually in Texas pretty good, and we’re not seeing a lot of the downsides that Europe is seeing.

BBC

Yeah, very much. And I suppose the price of the gas at the moment, a lot of that liquefied gas coming into Europe at the moment means that a lot of those companies in Texas will be doing very well. We were talking about Liz Truss earlier in the program, the new British Prime Minister, because she’s unveiling her energy plan a little bit later this week, on Thursday. But it’s quite clear now that her government’s going to borrow hugely to keep bills low. In the EU, though, Brussels are going to propose levies on energy companies that would channel sky high earnings back to vulnerable households and businesses.

BBC

This is going to cost Europe a huge amount of money because they’re going to have to bail out a lot of people because of the rising cost of energy here and that’s going to have long term economic consequences for the continent.

TN

Sure, yeah and I think that whenever you get a governor estimate, it’s always a little bit low. So whatever the governments are putting out to spend, you can probably count on two times that or more maybe then. Sure, yeah. The government estimates are intentionally low and they always are because they underestimate probably supply constraints in this case.

TN

If you look at things like gas storage. So I’m not of the belief that we’re going to have like a horrific event in Europe this year or this winter because if you look at gas storage, for example, Germany has a natural gas storage, it’s something like 84% of reserves and their target is 95% and they’ll fill that 95% by probably November. So there will be supplies of gas in Europe. It will be expensive.

TN

So as your guest said, people will have to choose between food and heating. I don’t necessarily think that’s the case. If you look at the German government, they have the capacity to issue a massive amount of debt to pay their people to survive through the winter. So not every government in Europe has that luxury, but Germany certainly does and a lot of northern European governments too.

BBC

Well, we did see, didn’t we, earlier this week, the Chancellor of Germany outlining plans to help people will have Liz Truss do that as well. Texas, California, two rivals. I think a lot of our listeners across the world will be surprised to hear about blackouts in a state like California, one of the wealthiest in the US.

TN

Well, yes, in California needs a lot of investment in its power grid. That’s really something that’s long overdue and they haven’t necessarily put the investment in. It’s got a creaking power grid and so this is why power is so inefficiently distributed in California. And until they do that they’re going to continue to have these brownouts and blackouts and power distribution problems.

BBC

And do you think that’s one of the reasons why we’ve seen a movement of quite a lot of businesses, haven’t we? It’s not just about taxation from California to your part of the world.

TN

Yes, absolutely. It’s about regulation, it’s about the continuity of power and it’s about education. And the students that come out of Texas institutions are very good, very hard working students. So there are a lot of factors related to it. And land, there’s a lot of land in Texas that can be built on for things like Tesla and other places.

BBC

Stella well, that’s very similar to the situation in Bangalore, a city that you know well. As you Tony know very well, yes.

TN

Gosh, I spent a lot of time in Bangalore about 20 years ago, before the new airport, before the second ring road, all of that stuff. So it was the same town, but it was a little bit different, not quite the scale that it has today, but the disasters there, it’s heartbreaking.

TN

I moved to Texas in 2017 when we had a Hurricane Harvey, and one of the things your guest was talking about is how people would help each other out in Bangalore with the floods. And that’s exactly what we saw here where we went and helped ten or 20 people take all of their belongings out of their house and started new life. It’s heartbreaking.

BBC

It is indeed. And it has been a sad end to the program, talking about the city I know very well in Bangalore. Hopefully, I’ll get on its feet. Thanks to Tony. Thanks to Stella. We’ll be back same time, same place tomorrow.

This podcast is originally published by BFM: The Business Station for their Market Watch show. Here’s the link to the original content: https://www.bfm.my/podcast/morning-run/market-watch/snp500-us-job-market-economy-consumer-target-costco-oil-price

Can the Federal Reserve engineer a soft landing for the US economy? Are the odds stacked against them especially if consumer spending stops suddenly. Tony Nash, CEO, Complete Intelligence gives us his views.

Transcript

BFM: The business station BFM 89 Nine is seven. 6th Thursday, the 1 September, and we are in the final quarter of the year. But nonetheless, we don’t need to look so far ahead because in the next half an hour, I’ll be speaking to Hannah Pearson of the travel consultancy Pet Anderson on Asian tourism recovery.

But in the meantime, let’s recap how global markets closed yesterday. So the Dow was down 0.9%, S&P 500 down 0.8%, while the Nasdaq was down 0.6%. Meanwhile, in Asia, Nikkei was down 0.4%, Hang Seng was up very marginally by 0.3%, Shanghai was down 0.8%, Singapore Street Times was up 0.6%, and our very own FBM KLCI was of course close due to the medical holiday.

But for more in terms of where global markets are heading, we have on the line with us Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Now, the S&P 500, in fact, the US markets continue to slide, but the S&P 500 we know, is down by 4.2% on a monthly basis, even though US jobs and consumer numbers released this week were largely positive. So why is this bearish sentiment in the equity markets persisting?

TN: It’s pretty easy. Equity investors weren’t prepared for Powell to have the conviction to fighting inflation that he showed in last week’s speech. So everyone else, bond vestors, commodity investors and so on, understood Powell’s conviction.

But equity investors had expected the Fed to pivot. And by pivot, maybe coming close to loosening and maybe coming close to ending rate rises. But the Fed was never going to pivot. If anything, the pace of rate rises may slow, but the Fed’s ultimate destination is 4%. And they’ve said that for months.

So there really shouldn’t have been any surprise with that. But equity investors just didn’t want to believe it. And so they’re in price discovery, continuing lower now. So once they hit the valuation that will reflect getting to 4%, I think we’ll be back in decent territory. But until then, we’re in a downward price discovery mode.

BFM: Okay, Tony, the other thing that’s going to happen in next few weeks is of course, the Fed going to reduce their $9 trillion balance sheet. What kind of impact do you think this will have on markets?

TN: Well, it’s tighter. So it’s going to be more difficult. So in September, the Fed will double quantitative tightening. So they’ve been tightening at about 47.5 billion dollars per month. They’re going to more than double that to 95 billion in September. So it will definitely add upward pressure on interest rates.

And when there is upward pressure on interest rates, that means the cost of money is higher and the cost of buying a house is higher, and so on and so forth. And with respect to buying a house, the Fed is about $50 billion behind on shrinking their mortgage-backed securities portfolio. So they do have some catching up to do, but they’ve got time on their side. They can do it at whatever pace they want.

BFM: Okay. In the meantime, right, let’s look at the US consumer. Super important in the US. Economy, but at least 60% of GDP. Do you have a sense of what’s happening there? Are they still very confident? Are they still buying, especially discretionary spending? Has it been robust?

TN: I don’t necessarily think. You have a separation. You have luxury buyers who are very confident. But I think your average buyer, I don’t necessarily think there’s a lot of confidence behind their buying. I think they’re just trying to maintain their pace of spending.

So spending continues to grow, but consumer credit has also expanded. Visa, I think, two days ago said that their payments volume grew by 11%. So that’s not the value. I mean, you could say with inflation, of course, the value is going to go up, but they saw their payments volume go up by 11%. Part of that is due to things like back to school here in the US. The school year starts in late August, early September.

But until consumers stop growing their spending, the Fed will keep raising because the Fed, part of what they’ve been trying to do is what’s called demand destruction. And until consumers and businesses stop raising the pace of their spending, the Fed will continue raising interest rates in tightening conditions.

BFM: But doesn’t this then just mean that the US is officially in a recession? Because you’re basically sending out signals to the market that the economy needs to slow down. And if we continue to do so, we’ve already seen two-quarters of it, right, which means it’s a technical recession. How bad will this recession really be? I mean, it will be official at some point.

TN: Yeah, I really honestly don’t care if we’re in a recession or not. If two quarters is the rule of thumb, then we’re in a recession. And we’ve been in a recession since Q1. So it’s really just a matter of labeling.

I think the difficulty is, as you say, what’s the impact on, say, business growth, job growth, spending growth? And we’re seeing that the job market has remained pretty strong, spending growth has remained pretty strong. And the concern is, will that stop? When will that stop? And I think we have seen things slow down, at least in terms of economic growth, but a lot of that has been around government spending as well.

So things will likely become dramatically slower in 2023 if the Republicans take over the US. House of Representatives, which controls the budget. So if Republicans take over the House, they will put a stop on a lot of the spending bills that the Biden administration continues to want to pass, and they’ll be more budget conscious. So government spending may not necessarily decline, but the pace of the rise will stop. And so government spending has been what’s been keeping, say, GDP and other things moving, but that will likely stop if Republicans take over Congress.

BFM: Okay, but what about the Fed, the actions of the Fed? Because so far it seems like markets are looking to them for engineering a soft landing in the US. Do you think they’ll succeed, though, or are we going to look at the politicians for doing so?

TN: It all depends. Well, not all. A lot of it depends on the Fed’s actions this month, in September. So if the Fed slows the pace of rate rises, let’s say to 50 basis points instead of 75, they’re signaling that they’re willing to slow down a bit with the destination remaining 4%.

So if the Fed were to come and say, a 25 basis point rise, then that would be a real signal that, yes, they’re definitely committed to getting to four, but they’re willing to slow down to get us to four by, say, Q1, maybe late Q1 of ’23. And I think that would be a signal to equity investors that the Fed understands and they’re okay if some of these valuations continue to be stretched.

If we see a 25 basis point rise, which I don’t think anybody is really calling for in September, then that would be a real kind of green light from the Fed. I think we’re likely to see 50. 75 is also likely, but I think 50 is slightly more likely. So we’ll likely see 50 and then a few 25s. And that’ll get us to four in, I think, December or January. And at that point, the Fed is just going to reassess and figure out kind of which strategy to pick after that.

BFM: So is it too optimistic to say that maybe we might have a year-end rally for US. Markets? What do you think?

TN: It’s possible. I wouldn’t necessarily count on it. Again, I think the upside is capped for a period because of the uncertainty of the Fed, at least until we have clarity on the September signaling. So if they do raise 75 in September, then that likely means we have a couple of 25 rises in October, November, something like that. But it doesn’t necessarily mean they’re going to stop. All it means is that they’re going to reassess and the beatings will continue effectively.

BFM: What about oil, though? It’s now $89 a barrel for WTI. Why have prices come under pressure so much?

TN: Well, the Saudis came out with a statement last week around the gap between the paper value of oil and the physical market. And they have been talking about cutting their output because of the difference, the broad difference between the physical market and the paper market. And so I think when we see falls like this, it just convicts the Saudis more. Unless there’s political pressure put on them, it just convicts them more to cut their output.

The Saudis, the Emiratis and others have come together and said we’re likely going to slower output. Part of this is also putting pressure on the Iran deal, assuming that there’s more capacity from Iran. So if exports from Iran are normalized, then that could put downside pressure on the price. So the Saudis are just trying to keep the price up.

Within that context, we also have to look at the Strategic Petroleum Reserve releases in the US. So that will end in October unless they slow down the pace of the SPR release, but that effectively cuts off supply to the market. And so when the SPR release ends and if the Saudis cut their output, we could have a spike in crude prices, say in Q4.

That’s kind of what we’re expecting is for crude prices to rise into the end of the year. The US midterm elections will be passed as Saudis will likely cut their output. Other OPEC countries will likely cut their output. And the US SPR release will be done. Unless the Russia-Ukraine war ends, which would put crude in the open market, we do expect to see crude price rises towards the end of the year.

BFM: All right, thank you for your time. That was Tony Nash, CEO of Complete Intelligence, telling us that we can expect Brent crude prices to actually perhaps go up for the last quarter of the year as there are more output cuts despite some of the demand destruction we are seeing because of the global economic slowdown.

This podcast is originally published in BBC Business Matters with the link here: https://www.bbc.co.uk/programmes/w172ydpzfk05ps8

Roger Hearing is joined by writer and journalist Karen Percy in Melbourne, and the Founder of AI firm Complete Intelligence, Tony Nash, in Houston. 

They discuss the tech giants in China that have shared details of their algorithms with Beijing for the first time. 

The first day of campaigning is getting under way in Brazil’s presidential elections, due to take place on the Second of October. What is the impact on the economy? 

The Prime Minister of Australia, Anthony Albanese, has confirmed his predecessor secretly held five parliamentary roles undertaken in the two years before losing power in May earlier this year. Meanwhile, in the US voters in Wyoming are expected to oust Liz Cheney from her seat in Congress in Republican primary elections taking place on Tuesday.

Transcript

BBC: Also say hello to Tony Nash, founder of AI firm Complete Intelligence, who’s joining us from Houston. So, Tony, very good evening to you.

TN: Hi, Roger. Good evening.

BBC: Good to have you with us. And we’re going to talk let me come to you coming. You’re involved in the AI world, which I guess is in that zone, too. I mean, our algorithms really the great bugbear that we think they are, as Ken was saying, leading us in places we perhaps don’t want to go but are unable to resist, or is it just a very simple way of selling us stuff?

TN: Sometimes they are, sometimes they’re not. These things are trade secrets, whether or not they are, say, patents or excuse me or something like that, these are trade secrets. And companies have spent a lot of time and a lot of money developing them. And so in China, you can expect to have these things demanded to be revealed because there really isn’t personal property in China as much as we think there is, there isn’t in the west and the US. We like to think that we have personal property and company owned property. And so if a government were to command a company to release an algorithm or a trade secret or a business process, then that would effectively be nationalization of property, and it’s just not right.

BBC: Yeah. Some members of Congress certainly want that, as we heard from Facebook and others.

TN: All they do is talk for a living. They’ve never built a business. They don’t know what it’s like to actually value something. And so if something were commanded to be opened, unless it was for a national security reason, which everyone understands, but if things were commanded to be opened, it would be a long fight. But property rights, intellectual property rights are a really big deal, especially over the last 30, 40 years, as we’ve had a software led world. So, again, you can get this in China, where there really are not individual property rights. And for one to expect to have individual property rights in China is silly. But in the west, one would hope that we would have property rights, especially intellectual property rights, and this would not be something that would happen.

BBC: Yeah, but I suppose there’s always compromise in that. That’s a fair point, Tony, in the sense that these are mega companies with enormous power and they are trading in our data. So it isn’t a normal commercial relationship, is it?

TN: No, Roger. What governments have to do and what citizens have to do, if there is objectionable behavior, then they have to legislate and regulate that objectionable behavior. If people are being discriminated against, if people are being threatened, if one political party or another is being favored, those things need to be regulated and legislated. But seizing intellectual property is not the way to do it because the precedent there is devastating. And in the US. Where you have an IP based economy, it would take down valuations of massive companies very quickly.

BBC: But we’ve heard, Tony, that Twitter has effectively open source on this. I mean, maybe they’re not doing brilliantly, but they’re doing okay.

TN: That Twitter API.

TN: Has been available for years, and it kind of tells you what’s going on, but it really doesn’t. And so it’s not a credible example, really, because they kind of let you know a little bit of things. And sure, you can download the data, and that’s a business that Twitter has had for a long, long time, where you can download the data to detect patterns and these sorts of things, but it’s not really letting go of their trade secrets, and that’s where the value is.

KP: That one of the concerns I would have is that politicians, though, rarely want to regulate or legislate. There’s this whole kind of mantra like, oh, no, we’ll let you do your thing, whether it’s the market or whatever. Politicians don’t like to regulate, they don’t like to legislate, and they’re in the rub for me.

BBC: Well, I think there are politicians and politicians, if I can anticipate what I.

TN: Mean, I live in America. Politicians here love to regulate.

BBC: Maybe economics. Tell me there’s a funny aspect of this that Brazil almost seems to be shadowing the US. In a funny sort of way. A similar kind of president, perhaps, in Bolsonaro to what we saw with Trump and some of the same economic issues.

TN: Yeah, I really don’t follow Bolsonaro all that closely, although I know he’s populist and he’s had some new economic measures go out recently that were very populous. So from that respect, you may be right. I think Brazilians have seen Lula before, and they’ve seen Bolsonaro before, so they know what to expect from each president. So at least they’re voting with their eyes open because they know how each performed in previous administrations.

BBC: Yeah, which may of course, be what’s informing the polling, if we believe the polling at the moment. Exactly. And tell you, one of the aspects always seems to me is this is the classic sleeping giant. I mean, it’s an enormous country with enormous resources, and one always bumps into Brazilians. Almost everyone goes, you still about China in a way. It’s a sleeping giant of this. It’s odd that a country like this hasn’t risen to its proper position in the global economy.

TN: Well, but it’s getting there. If you look at, for example, the AG exports that Brazil provides to China, it is a major supplier of the Chinese economy with AG and metals. So Brazil is getting there, and it’s gradually building up. Of course, there’s still a lot of poverty there, and I don’t know of administration in Brazil, and maybe I’m overstepping here, but I don’t know of an administration in Brazil that hasn’t been accused of corruption. Lula was, Temerer was.

BBC: They all are. I think it seems to be a regular thing. True or not, it seems to be there.

TN: Right the time I was absolved. So I just want to make that clear. But they were accused of that coming out of office.

BBC: Of course, one of her key issues is what happened on January 6. She’s on the Congressional committee investigating that at the moment. So meanwhile, Mr. Trump has backed a candidate rivaling her, Harriet Huggerman, who opinion polls suggests will easily win the Republican nomination for the seat. Miss Cheney earlier urged Democrats to register as Republicans in order to boost her slim prospect. I mean, Tony, this is an extraordinary sort of development in a way, because this change is close. It comes really to Republican royalty, isn’t she?

TN: Unfortunately, yes. So we don’t really like royalty in American politics. And so I think part of the problem here is that Lynn Cheney is in the House of Representatives and she represents a state that, whether she likes it or not, is very pro Trump. And so she is not representing her constituents. And at the end of the day, that’s really what this story comes down to, is when a representative is elected by a state, the people expect that representative to actually represent their views in Washington, DC. That’s how the US legislature works. And what’s happened is Liz Cheney has decided that she doesn’t want to represent the people of Wyoming and she wants to have her own views and do things that they don’t want her to do. And that’s really what this comes down to.

BBC: Isn’t there an issue here, though, to do with you delegate and representative? I mean, many people who represent an area in the legislature aren’t necessarily going to transmit the views of the people who elected them because they were elected to have their views heard in the parliament or wherever it is.

TN: In the US Congress. In the House of Representatives. They have two year tenure and they have to be elected every two years. And that’s to ensure that we have a diversity of opinion in Washington, DC. Whether or not one likes Trump or doesn’t like Trump doesn’t matter. I think the issue here is that Liz Cheney is not representing the views of her constituents and they have every prerogative to vote her out. And that’s really what this is about. The people of Wyoming, I haven’t seen the results. I don’t think polls are closed yet.

BBC: But no, I think they’re still open. This Cheney represents the people of Wyoming, not just it is predominantly a Republican, as you say, but not just the Republican Party. She represents the people who voted for it.

TN: But there is one representative from Wyoming. And so, yes, she represents the people of Wyoming. But if she’s a representative of a political party and she’s elected by that political party and the voters in that, so the Republican Party of Wyoming has actually censored her. So they’ve told her that the actions she’s taking are not endorsed by the republican Party of Wyoming. She’s known for over a year. So shortly after the 2020 election, they censored her. And so she’s been way out of bounds for almost two years because it’s the party, she has to go through the party system at the state level to get on the ballot for the primary, so she can win the primary to win the election. And so she really does report to the people and to the party in Wyoming. So it’s kind of the ugly side of democracy, but there is accountability in representation.

BBC: Well, clearly, but I suppose the other thing is that I’ve heard reported is that Liz Cheney, in terms of her views, apart from on the subject of Donald Trump, her views aligned pretty perfectly with most of the Republican voters of Wyoming. Very conservative on most issues. It does seem to be Trump. That’s the issue. Which seems strange to hear that this man still has so much influence over almost everything that happens in US politics.

TN: I don’t know that that’s the case. I think, to be very honest, I think Trump is good for US media and I think US media love covering Trump. Trump has very little to do with a lot that goes on. But if you watch US media, every day has a story about Trump and that story gets the most clicks and the most views. So whether or not Trump has something to do with the story, us media love to make the story about Trump because they know they will get traffic on that story.

BBC: But the reason they get traffic on the story is because people are interested in them. It’s a circle, isn’t it?

TN: Well, I don’t know. I think most people would like to understand what the actual issues are exclusive of Trump, but with the obsession that US media have on Trump, people just can’t get away from it because you have a kind of a splintered media environment in the US. And a lot of that is partisan to the left and to the right. So people can get partisan news really anywhere. But it’s the main US media that really seemed to have this obsession with Trump that they just can’t quit because he gets views and he gets airtime and people watch their shows when he’s on it.

BBC: That would be true in Texas as well as Wyoming, where you are.

TN: Anywhere in the US.

If a story is about Trump, some people intensively hate him, some people intensively love him, and people are in the middle and you just cannot avoid it. You just can’t avoid it.

BBC: Penny I mean, your neck of the woods, I guess that might be where the William Mammoth ends up if colossal get their way. How do you feel about all this, Penny?

TN: Well, it’s a Texas company that did it exactly. Maybe they just wanted more things to hunt, right? We like to hunt in Texas.

BBC: Everything is big. Of course, in Texas. So that makes some sense.

TN: Yeah. So if we do make woolly mammoths, great. And I think I’m kidding about the hunting, but I think it’s really interesting as different species are, say, overhunted or whatever, I’m curious how they’ll be accepted once they’re reintroduced. So let’s say someone is the first farmer to find this to be a pest and shoots it. So how will that person be treated if this marsupial is reintroduced?

BBC: That’s a really key question.

This podcast is originally published at https://www.bfm.my/podcast/morning-run/market-watch/fomc-minutes-hint-at-50bps-hike

Transcript

BFM

This is a podcast from BFM 89 Nine. The business station BFM 89.9. It’s seven seven thursday the 18 August. And of course, you’re listening to the Morning Run together with Keith Kam and I’m Wong Shou Ning. Now. In about 30 minutes, we’ll be speaking to our own pie from Mong’s Hill Ventures on the Asian carbon market outlook, or the lack of one. But let’s recap how global markets closed yesterday.

BFM

Wasn’t such a good day for Wall Street. It ended a five day winning streak with the Dow down 0.5%. The SNP 500 down 0.7%. Net site was down 1.3%. All these follow the release of retail data and the Fed July meeting minutes earlier today. Asian markets, it was a bit mixed. Nikkei was up 1.2%. Hong Kong’s Hang Seng and Shanghai’s Composite were up 0.5%. Singapore’s STI was up 0.3%. Back home, the FBM KLCI was marginally lower, 0.4% down.

BFM

So for where markets are heading, we have on the line with this Tony Nash CEO of Complete intelligence. Good morning, Tony. Now, US stocks did dip last night, but we are still far higher than what we saw in June. Earning season show that four out of five companies are either meeting or beating street expectations. But does that matter? Or is the Fed still dictating market direction.

TN

Dynamics first is we’re in the last weeks of thinly traded summer equities in the States and Europe. And so you are seeing movement on not a lot of volume. So that’s one thing we really need to consider. The other is, yes, companies have reported fairly well, but the Fed really is what people are thinking about. And the Fed, if you want to know what’s in the Fed’s mind, they’ve really been looking at the University of Michigan survey quite a lot lately, which is kind of a mainstream economic item, but it’s a little bit obscure. But there’s some conflicting data there.

So if you look at the Michigan survey, they survey current financial condition of consumers and it’s as bad now as it was in, say, 2009. So the current financial condition for consumers is not great. And then when you look at inflation uncertainty, which is also what consumers look at or the University of Michigan looks at, is very high. It’s the highest it’s been since the 1980s. So the Fed is looking at those gauges and if you looked at the Fed notes that came out today, they were a little bit dovish.

They were leaning dovish, I’ll say I won’t say they were dovish, but they were leaning more dovish than people thought. So I think traders are looking more to the Fed their September meeting, what their intentions are, rather than any specific earnings call, although Walmart was a good call, and we’ll talk about that in a second, but there are some earnings that are coming through that are helping some portions of markets.

BFM

So, Tony, are you expecting a 75 basis point hike or maybe a 50 basis point hike because swaps now are indicating or at least increasing odds of that half point hike next month.

TN

I’m leaning towards a half point hike because we are seeing things slow down. I don’t necessarily think we’re going to be in a recession that’s at the depth that people are fearing. But consumers are laden down with worries, businesses are cutting staff and so on and so forth. So I think the Fed is likely going to slow down the rate of rise of rates,.

BFM

Meanwhile, all prices have come under pressure in last few days. Is it more due to demand destruction or increasing supply coming on stream and what sort of impact do you see going forward at least in the short term?

TN

It’s both actually. There has been demand destruction and people have slowed down some of their purchases because of demand destruction. But the SPR release in the US has really provided supply that has curbed some prices. And so if you look at year on year, US. Imports of crude are down 1.7 million barrels per day and US exports are up 1.5 million barrels per day. So that’s a gap of 3.2 million barrels a day that has been added to the market. So we’ll likely see crude trade in a range or the price will be capped until that SPR release stops, which is the end of October, which is coincidentally just before midterm elections here in the US.

BFM

Okay Tony, let’s go back to the conversation early. So it was kind of mentioned which is consumer. So consumer stocks like Walmart and Home Depot reported better than expected profits. But on the flip side, Target numbers weren’t so positive. So help us make sense of this. I mean where is the consumer, US consumer? How do they feel? How are they doing?

TN

Yeah, I think a big part of that is expectations. So Walmart’s Q2 earnings, or the ones they came out with three months ago, they were really negative. They had overbought. They had overbought because of supply chain issues and a lot of other issues. Walmart has since laid off a bunch of headquarters staff, really cleaned up their supply chain issues. And so their report yesterday or two days ago was fantastic. Target’s report yesterday on a relative basis was pretty terrible because Target didn’t prepare markets as negatively three months ago. So markets were still relatively optimistic on Target. And then this morning it opened, I don’t know, 6% down or something and it recovered a lot of that loss but markets were relatively negative.

What’s interesting to note on retailers is this: retailers are pushing price hikes across to consumers. So you’ll see say a 10% rise in revenues or something on quarter for example, but only a 1% rise in volumes. So what that translates to is retailers are passing along price hikes to consumers. So for those retailers who have the power to pass along price hikes, they will do well. Those who can’t pass along price hikes, they will have a really hard time.

BFM

And then the tech heavy Nasdaq has jumped 23% from June’s lows, perhaps driven by cheaper valuations and optimism that growth is back in fashion with inflation in check. Are you like the street, which believes the story except for Intel, which is still underwater?

TN

Well, I wish growth was back in vogue. I mean, we can look at everything from, say, VC to Meta to see that there’s still a lot of skepticism around growth in tech and chip firms like, say, Micron, which are still way down compared to a few months ago. So Meta, as I mentioned, Meta is still underwater from June, and it’s trading about half the level it did a year ago. Amazon is up 40% from its June lows, which is huge, but it’s still down from a year ago.

Although things are in a relatively better place than they were a few months ago, they’re still down on year, and that’s really hurting. A number of the tech. Valuations still seem stretched. I think some things really need to play through the economy. And if you look, for example, at ad space with, say, Netflix soon to be offering ad based business model and a number of other kind of ad supply coming on the market, a lot of the tech plays like Meta and Twitter and other guys who are ad based models. They will have headwinds as they try to raise if they try to raise their revenue guidance.

BFM

All right, thank you for your time. That was Tony Nash, CEO of Complete Intelligence, warning us that growth may not still be invoked at the moment and that he’s expecting a 50 bps hike at the next FOMC meeting, actually, as opposed to 75 basis points because it looks like the US. Economy is beginning to slow.

BFM

Well, the Feds did say that they’re still committed to raising interest rates because, well, let’s face it 8.5%.

In a distance, big, far off distance by talking about us without cisco, which is actually the biggest maker of machines that run the Internet, did have a pretty good set of results for fourth quarter, and it beat street expectations and provided better than expected forecast for the coming year. Earnings were at $83 per share. Net income decreased, however, by 6% to $2.8 billion.

And revenue was at $13.1 billion, which was slightly higher than what analysts had been expecting. Cisco’s numbers generally topped estimates the company is still struggling to grow. The tech world is rapidly shifting to cloud and subscription software and away from buying physical boxes, which is what Cisco is known for. Right now, Cisco stock price is down 24% this year.

Yeah, but if you look at the street, right, I think that’s reflecting why the share price hasn’t done well. It’s somewhat mixed 14 buys, 16 holes, one sell. Consensus target price for the stock, $52.91. Close at 05:00 P.m. In us at 46.66. Now, something that we mentioned just a few seconds ago, it’s Target. Now, they released their second quarter results. Profits fell nearly 90% from a year ago. But I get the sense that the market is all about expectations, right? So if you guide early and you guide well, then the street doesn’t get disappointed. But it doesn’t remove the reality that your set of numbers are actually bad.

Yeah. They still have quite a huge backlog of stock inventory for them. What we are looking at is that there was deep markdowns on unwanted merchandise, which is now what everybody is worried about because eventually it’s going to bite them, right?

Yeah. They’ll have to write it off. 22 buys on this top ten holes, no sales consensus. Target price for target $187.67. It closed at 05:00 PM. At 175. USD $34. But up next, we’ll be speaking to David Thio on DBKL’s new housing renovation rules. Stay tuned for that. BFM 89.9 you have been listening to.

This podcast is originally published on BFM: The Business Station, which you can see in this link: https://www.bfm.my/podcast/morning-run/market-watch/us-federal-reserve-bond-market-equity-market-slowdown

Macroeconomic data and the bond market are signaling that the US economy is heading for a slowdown but yet equity markets remain robust. Tony Nash, CEO of Complete Intelligence explains why whilst giving us his views of Asian equity markets.

Transcript

BFM: And you’re listening to the Morning Run with Keith Kam and I’m Wong Shou Ning.

Now in about 30 minutes, we’ll be speaking to William Passet from Nikki Asia on Nancy Pelosi’s Asian trip. But let’s recap how global markets closed yesterday. 

Yeah, on Wall Street, the US markets are looking quite green. The Dow ended up 1.3% the S&P500 was up 1.6%, while the Nasdaq was up 2.6% earlier in the day. Asian markets, we are looking at the Nikkei which ended up 0.5%. Hong Kong Hang Seng closed 0.4% higher, but Shanghai’s Composite was down 0.7%. Singapore’s STI was up 0.4%, while back home burn, Malaysia’s FBM KLCI ended 0.3% lower. 

So for more on international markets, we have on the line with this Tony Nash, CEO of Complete Intelligence. Good morning, Tony, always good to speak to you. Now, we’re still in the midst of well, it’s the tail end of earning season, which hasn’t been too bad. And of course, last night there’s an influx of economic data coming out of the US. But can you tell us what actually determines the direction of markets because it’s just been so volatile in the last few days?

TN: Yeah, I think there has been a growing view in the last week or so that the Fed may change direction in September. And I think markets are becoming optimistic that the Fed may ease or at least stay neutral in September instead of raising. At this point, I think that’s a little bit over optimistic, but I think it depends on how economic data, say, inflation particularly come out over the next, say, 40, 45 days. 

BFM: So your view we are far from peak inflation? 

TN: I don’t necessarily think we’re far from peak inflation. I think there are a number of things that could potentially over the next, say, four to six months, actually ease inflation. If for example, the Russia Ukraine war stops, which I think that is a potential over the next six months, those types of things really could help to ease inflation. Something that could hurt inflation is, let’s say, China decides to actually let loose some of this fiscal spending it’s been talking about for so long. If they do, that could really put upward pressure on things like energy and precious metals. So there are some major kind of forces that could swing markets one way or another.

BFM: Another data that came in, Tony, it was July US PMI manufacturing index. And that came in lower than June at 52.8, but it still indicates expansionary activity. What was responsible for this upbeat reading? 

TN: Yeah, it’s above 50, which means things are growing. But I don’t know that I’d necessarily call it upbeat because the economy is decelerating right now. So we saw new orders and employment, both contracting, manufacturing backlogs are growing. 

On the positive side, supplier delivery times are improving. So that tells me that kind of supply chains are improving, which is great. Raw materials inventories are growing, which is great, and prices are rising at a slower rate. 

So inflation, at least PPI, according to this survey, things are slowing down. So I think if this continues to slow that with the services PMI, we could potentially have another quarter of negative GDP growth. So I’m not saying it’s going to happen. I’m saying with this and the services PMI, that raises the prospect of that happening. 

BFM: Can we say that we are actually over blowing fears of an economic downturn? That, I mean, it’s not as bad as some analysts put it. 

TN: Well, it’s definitely slowing. I think the downturn I don’t know that it’s necessarily being overblown. I think those fears are well founded. But if you look at the way, say, consumers and businesses continue to spend, what we don’t have is, let’s say, volume growth, necessarily of markets, but we do have price growth. So if you look at some of the consumer companies, like food manufacturers, consumers have accepted double digit price growth in the most recent quarter. But volumes from manufacturers, from, let’s say, food manufacturers, have grown by kind of 0% to 1%. So their revenues may have grown by double digits, but their volumes have stayed pretty steady.

BFM: Another thing, Tony, is the bond market, right? So we’ve seen the shorter tenor yields rising, but longer, maturity rates decreasing depending on key yield curve, inversion signaling a recession. So we have many indicators of a recession, but yet markets seem to be holding relatively well, especially if you look at it from a year to day basis. Still negative territory, but isn’t so bad. So why the confusing messaging?

TN: Well, I think part of it is the Feds not being clear about what their next actions are. Powell in the Q and A of the most recent meeting said basically, look, there’s a long time between now and September, which is the next Fed meeting, and there’s a lot of data that’s going to come out. So we actually don’t know what our policy is going to be in September. And they stopped forward guidance. So when you stop forward guidance and markets need information to set price expectations for securities, markets are searching for a pricing level. Is it higher or is it lower? They’re always searching for that. So without guidance, it’s really hard for investors to understand where those prices, meaning stock prices or commodity prices or whatever, will be.

BFM: What’s your view in terms of Asian equity markets in the last two, three days? Of course, North Asian markets like the Hong Kong and the Shanghai have seen sharp corrections on the back of Nancy Pelosi’s visit to this region. Do you think actually it’s a buying opportunity? Very well could be.

TN: Again, I think the Chinese government could kind of as a way to frustrate the Biden administration, they could actually launch a massive stimulus program and get money into the economy very quickly. If they did that, it would raise commodity prices and it would really make the Biden administration look bad just before the midterm elections in November. It could be bullish for Chinese securities and North Asian securities. It would also be bullish for commodities. So it wouldn’t surprise me because Chinese government is very smart. It wouldn’t surprise me if they did something like that in order to frustrate the Biden administration and have his party lose both houses of Congress.

BFM: All right, thank you for your time. That was Tony Nash of Complete Intelligence giving us

his views on where markets are. And it’s rather confused because we also aren’t getting much signaling coming from the Federal Reserve, which is the key, I think, if you ask me, the key driver in terms of where markets are hitting.

I think everybody who is questioning whether peak inflation is here, it probably is very close. But is this the end of this normalization of monetary policy? How many more rate hikes are the Fed going to implement before the end of the year? But very quickly, we’re also looking at some results.

First off is Ebay. They reported second quarter revenue that beat street expectations and an upbeat profit outlook, evidence that a new focus on luxury items and collectibles is helping offset slowing sales and customer traffic. It shares rose about 5% in extended trading and back to the sales, it decreased 9% to 2.42 billion. Rigid analysts. On average we’re expecting $2.37 billion not ring gate earnings per share was ninety nine cents per share, beating estimates of Ebay shares rose to a high of $55.4 $55.4 in extended trading after closing at 50 and a half in New York.

Well, there are ten buyers on this name, only 18 homes and two sells. So not a big buy on Wall Street by any measure. Consensus target price for this stock is 53 USD $46. Like he said, it actually closed. This is not after hours trading, but closed at 05:00 p.m.. US. Time it was $50.48. It was up 2.5 cents. Now, another company that reported results is booking.com. They reported bookings in the second quarter, pun intended, that top street analysts and forecast record revenue in the current period, confirming what we already see a very strong start to what was expected to be a blowout summer travel season.

Anecdotally we can also see that generally people are out traveling a lot more and booking.com recorded gross bookings, which represent the total value of all travel services booked.

It came at $34.55 billion. And this beat and endless expectations of 32.8 billion. Total sales nearly double to $4.29 billion, less than analysts’average projection of 4.33 billion.

Not that far off its net income came in at $857,000,000, compared with a loss of $167,000,000 last year. But that was Colbyte. Yeah, I would expect less from them. The street likes the stocks. 23 buys ten holes. One sell consensus target price for the stock.

Am I looking at it correct? $2,524. Last time price $1,966.48. It was up ten point $18.

But Abdic will be speaking to Doctor Jeffrey Williams on Malaysia’s move on MNC tax implementation.

And what does this mean for foreign direct investment?

This podcast is originally published in BBC Business Matters with the link here: https://www.bbc.co.uk/sounds/play/w172ydph59lnj14

US House of Representatives Speaker Nancy Pelosi has become the most senior US politician to visit Taiwan in 25 years, despite China warning that Washington would “pay the price” if she visited the island. Beijing warned it would respond to any potential visit from Pelosi, who has not been backed by the White House to visit Taiwan.

The first grain ship to depart Ukraine since Russia’s invasion – The Razoni, has arrived at Turkey’s Bosphorus strait. The vessel which is carrying 26,000 tonnes of corn, will be inspected on Wednesday morning before continuing its journey to Lebanon.

Transcript

Roger Herring: Tony. Well, let me come to you because you know this part of the world extremely well. You live there, of course, for a while. You know the ins and outs of it. What do you make of the US position on it? Because Biden has said he doesn’t support what Nancy Pelosi is doing. But is there a bit of, give and take, I mean, underneath, is he perhaps quite glad that it’s been brought to a head like this?

Tony Nash: I think both sides are glad it’s been brought to a head. So bear with me for a few seconds, Roger. The economy in China is pretty bad. The political situation is pretty bad. There are a lot of difficult domestic issues in China. So a galvanizing event before the November senior political meeting is helpful for China domestically. And in the US, with the economy the way it is, with a number of kind of political issues, this is helpful for Pelosi and potentially for retention of the House representative. So this is, yes, on the front there’s a lot of conflict, but in the back, this really helps the politics of the ruling parties in both countries.

RH: Yeah, that’s a really interesting insight actually, the real politique, I suppose, is a terrible cliched word does seem to be there. In fact, maybe, Tony, President Biden, at the moment, he’s already had a hit on Al Qaeda, which I guess he probably likes, might help his ratings. But certainly a major crisis in Asia and a war isn’t going to help, is it?

TN: No, I don’t think it would help anybody just given where the world economy is and given where some of the lingering kind of post-COVID problems are, I don’t think anybody would find it helpful. I don’t think it serves China or the US. 

RH: Because apart from anything else, of course, we’re in the middle of another crisis in another part of the world, and many think they are related, that we are seeing confrontations with the two biggest and most powerful authoritarian regimes on the planet and confronting the west in all kinds of ways. And what, of course, I’m alluding to is what’s going on with Ukraine and the difficulties there with the Russian invasion, the consequences, one of the big consequences for the world from that, of course, has been the lack of grain coming from Ukraine, because it’s effectively borcaded now that…

I’m not much of a sailor, but I have to take my hat off to the crew who steered through that area of the Black Sea. It must have been absolutely hair raising.

TN: Yes, they definitely are in their pay. It sounds like.

RH: Well digested, literally, of course, when it gets to wherever it’s going, we hope, because that’s the whole point of it. But Tony, let me pick up on this, because it’s something that puzzled me. I’m interested your view on it. Why is Russia allowing this to happen? Because I can’t see how it plays into Vladimir Putin’s endgame? 

TN: I think, on some of it, it’s Middle East relations in the US, from Russia. Russia doesn’t want to be seen as starving out people in Lebanon, Egypt, other parts of the Middle East. And I think that is probably a clear consideration for them.

RH: Yeah. And I mean, it also exposes hugely the fragility. During COVID, we learned about the fragility, of course, of supply chains. 

But Tony, this means that food globally, it seems almost on a hand trigger. One thing in a country far away from an awful lot of people changes everything. 

TN: But this is what happens with global supply chains, right? As we concentrate sourcing of food, manufactured goods, commodities, so on and so forth, we concentrate risk in supply chains and they become very fragile, and we realize they’re COVID exactly how fragile global supply chains are.

RH: Yes. A lot of rethinking, I think, going on in a lot of countries and also a lot of companies as to where it all comes from. Tony, how solid is US backing now for Ukraine in the midst of all this? Because there are lots of crises. We’re talking about Taiwan, of course, taking up a lot of bandwidth, if you like, in the State Department. But is it still solid behind Ukraine, do you think and unmoving? 

TN: Roger, it’s $40 billion solid. So there’s quite a lot of financial backing. So I don’t think there’s much doubt that there’s US back in there.

RH: Yeah, okay. Well, it’s solid and remains. And hopefully the food issue in all this could be moving towards the solution. But we’re going to talk about a wider problem in the moment in the next part of the program. Tony, what about you, just on that principle, the idea. In the States, I imagine federal workers get paid the same whether they’re working in California or Idaho, don’t they?

TN: I don’t know, but I don’t think they should. Obviously, they need to be paid according to the costs around where they live.

RH: That’s interesting. So you back the idea, really? You think it makes sense?

TN: Absolutely. Look, I’m a pretty rational, data driven economic mind. And so if somebody is paid for a salary, if they’re based in DC, but then they move to, say, Texas, where the house cost is a third or somewhere around there what it would be in DC, should they make the same wages they made in DC? I don’t think so. 

RH: But I suppose the argument we had there from Jagged at Chad was actually it attracts when you put money into an area like this, a, you get the best people, I suppose, working in difficult areas, and also they will fuel the local economy anyway when they spend.

TN: Well, it’s very… That kind of clustering theory, used to economic development consulting around

clustering about 20 some years ago, and there are a lot of dependencies there. So you don’t necessarily just attract kind of the best people just because you pay the most or something like that. There’s a lot of social infrastructure and other things that are required to capture kind of the talent that you need. So I do think the reality is private sector companies don’t really work that way. People are paid according to kind of where they live. It’s kind of indexed. And I think if I don’t really follow UK politics

and I don’t really have opinions on UK. 

RH: Lucky you. I think most people feel at this stage. 

TN: But I think it would have been smarter to say, hey, we’re going to appoint a private sector HR advisory firm to index salaries based upon things. Outsourcing, that type of expertise, rather than saying you have regional boards of bureaucrats deciding the stuff is probably sounds a little bit better.

RH: I have to say, Tony, with some experience that they do have such advances and consultants, they’re not popular at all. Of course they’re not. As you can imagine, that doesn’t always get. Our was Michelle Ferry in New York.

Come on, Tony, I’m going to ask you, what would $5,000 a month get you in Houston?

TN: Roger, I’m looking at a listing right now for $4900 a month you get a four bedroom house. 3500 square feet. It looks beautiful.

RH: That’s a rental. We’re in a different world, aren’t we?

TN: Yes, sir.

RH: I got to take a fly here and say that each of us in the past, perhaps when we were younger, has rented. I bet you rented, didn’t you, Jessica? At some point.

Jessica Kind: I currently rent now. My balance sheet light and I can tell you that an average semi detached house in a delicious, delightful quiet estate is 1100 US for 3800 sqft.

RH: That is a lot of space. Yes. That’s nice. That’s good. If I were in Kuala Lumpur somewhere like that, right in the center of the fashionable areas, obviously be a lot more. But because you’ve got a lot of people in the financial I mean, this is maybe the problem in Manhattan. You’ve got people with large amounts of money forcing all this stuff up. I mean, that would be true, Jessica, wouldn’t it? Places Singapore, I guess. 

JK: Actually no big gap between KL and Jahor, really. Singapore is now artificially inflated by a lot of escapees from Hong Kong. Refugees from Hong Kong are pushing up the Singapore property market. Rental and purchase.

RH: Yeah. The point in all this, I suppose, is these are unregulated markets. There was an issue a little while back, I think, in Berlin, where there was a strike because regulated rent strike because regulated rents were coming to an end or being lift or being abandoned, and that makes a big difference to people. Is there a case, do you think, for regulating rent? 

TN: Gosh. It makes things really hard. There are a lot of economic case studies on that, but rent control in New York was notoriously problematic. So as I heard the story and I heard the woman talk about a 48% rent rise. I spent most of my adult life in Singapore and a 48% rent rise you would have to take in stride every so often. That’s just the way it was. There were years you say, take in. Stride, but you had to be earning a hell of a lot to do that, didn’t you? You would figure out how to get it done and there were years, I think, in 2007, eight, where rent would double. There have been times in Singapore, and I’m sure Hong Kong is similar, where rent would just simply double. Yeah, and there have been times when you found it,

you’ve had to make big changes, you’ve had to take deep breaths. Well, that’s what pushed us to buy a house in Singapore and we had to scrape together the money to buy a property so that we could get out of the path of that because it’s too volatile, life is too risky without that.

RH: That’s interesting. Jessica, you say you travel like you rent, you must have had must have been times when you found rent difficult I guess everybody does, and you have to cut back and I suppose think about other ways of doing it.

JK: Once upon a time, when one was young, Roger and Tony. I remember it vaguely. It was a long, long time ago in my case. A little internal benchmark that I never let rent go above 25% of my take home. So for the New Yorkers, with an average salary of $70,000 pre tax, that five grand, I think bites. I think it’s hard. 

RH: Well, we heard in Michel Flores report that 30% was the kind of working rule I mean, Tony, if you were renting, you’re not, but is that a sensible a third of your income effectively? I think people say also the same which you’re paying, if you’re paying a mortgage, should be around that.

TN: Well, it depends on where you are in life, right, Roger? I lived in London when I was in my 20s and my rent was way too high and I could barely afford it, and after a year and a half in London, I left with debt because it was so expensive. So I think it depends on where you are in life and can you really afford it or will you just make ends meet or get roommates or something like that? So we’ve all had to make those trade offs. But I suppose we’re talking about perhaps normal economic times.

RH: But Jessica, I mean, an awful lot of people have gone through COVID when certainly here in Britain, there were lots of rules went in, including people weren’t allowed to be evicted because obviously they couldn’t work, they couldn’t earn, therefore they couldn’t pay rent. Should we perhaps post-COVID take a rather more, I don’t know, involved view of private renting and see if there are ways in which to avoid people who are really vulnerable being put in a really difficult situation like this?

JK: It’s so difficult. I think Tony mentioned earlier in our conversation, didn’t he, that rent controls and those sort of committees and sort of pricing, having foundations for pricing, I think it is all extremely difficult and I have no idea what is the best solution.

But I know that in Singapore now, if you try to rent a flat, you think you’ve sealed a deal with the landlord

in the morning, in the afternoon, you pop back with the deposit you’ve been gazumped. Yeah, well, of course that happens. Property buying as well. I mean, it’s simply another version of that.

RH: But, Tony, what about the principle of social housing? We have quite a lot of it in this country, not perhaps enough, but where there is, it is provided by the local authority in Britain, mostly at a controlled level and affordable level. Is that the real answer to real deprivation, as we’ve heard about in New York?

TN: I don’t have a problem with that. I think there is room for that in society and I think we have to provide for some people, and some people just haven’t had the right opportunities. So I don’t have any issue with that. I think the problems remain when people become, say, you come to an earning level where you can

afford more, but you remain in those places. So I think it can lead to some difficult, say, trade offs. But I do think that… Singapore has that, and again, I was there for a long time. There is housing in Singapore for people who can’t afford more expensive housing. So it’s something I’ve seen work. It doesn’t work well here in the US. It’s a big difficulty and one that we’re not going to come up with an easy answer for a course on a program like this, but it’s always good to talk it through and to get experiences we’ve all had in that market.

RH: So I hope that has been helpful and indeed elucidating, and we hope, entertaining as well. My thanks to Tony Nash, Jessica Kind and to all you for listening.

This video was originally published in https://now.asharq.com/program/6/%D8%A7%D9%84%D8%A7%D8%B1%D8%AA%D8%AF%D8%A7%D8%AF-%D8%B4%D8%B1%D9%82%D8%A7/1432135/%D9%87%D9%84-%D8%B3%D9%86%D8%B1%D9%89-%D8%AA%D8%A3%D8%AB%D9%8A%D8%B1-%D8%B1%D9%81%D8%B9-%D8%A3%D8%B3%D8%B9%D8%A7%D8%B1-%D8%A7%D9%84%D9%81%D8%A7%D8%A6%D8%AF%D8%A9-%D9%84%D9%84%D9%85%D8%B1%D8%A9-%D8%A7%D9%84%D8%B1%D8%A7%D8%A8%D8%B9%D8%A9-%D8%B9%D9%84%D9%89-%D8%A7%D9%84%D8%AA%D8%B6%D8%AE%D9%85-%D8%AE%D9%84%D8%A7%D9%84-%D8%A7%D9%84%D9%81%D8%AA%D8%B1%D8%A9-%D8%A7%D9%84%D9%85%D9%82%D8%A8%D9%84%D8%A9?t=0

This podcast first appeared and was originally published at https://www.bfm.my/podcast/morning-run/market-watch/usd-euro-parity-currencies-euro-monetary-policies on July 21, 2022.

Currencies have been in a flux with the US dollar gaining strength on the back of the rising Fed fund rate. Our CEO and founder, Tony Nash tells us if there are actually investment opportunities from this.

Show Notes

SM: BFM 89 nine. You are listening to the morning run at on Thursday the 21 July I’m Shazana Mokhtar with Wong Shou Ning. In half an hour, we’ll discuss the emerging market economies that are at risk of going the way of Sri Lanka. But as we always do, let’s recap how global markets closed overnight.

WSN: While I haven’t seen this in a very long time because every market that we’re going to report pond is actually in the green. So the Dow was up 0.2%, the S&P 500 up 0.6%, Nasdaq up 1.6%. Meanwhile in Asia, Nikkei was actually up 2.7%, hong Kong up 1.1%, shanghai up 0.8%, Singapore street times up 1.7% and our very own FBM KLCI was up 0.6%.

SM: These days are far and fewer between indeed when the board is completely green. But for analysis on what’s moving markets, we speak to Tony Nash, CEO of complete intelligence. Tony, good morning. Thanks as always for joining us. So another choppy session on wall street, but the SP 500 posted its first back to back gains in two weeks. Do you think markets have bottomed and is there a sense of relief that results season so far has been pretty decent?

TN: I think the result season has been okay. It’s still a slowdown from the previous quarter. I think it’s really people taking a sigh of relief about the Fed. They’re was fear last week that the fed was going to raise 100 basis points for a few days and that really led to dramatic falls. And what we’ve seen is a sigh of relief that that’s unlikely to happen. We’re likely to see 75, which although that’s elevated, it’s less than a 400 basis points. So I think it’s more that than earnings right now because there’s not a specific sector that’s necessarily doing dramatically better or dramatically worse. Of course tech, we have some tech gains, but we also had other areas where things gained, so it’s more broad than anything else.

WSN: Tony, what did you think of Netflix? Sorry, Tesla’s results that came out just a few moments ago. Did it surprise you in terms of how well they’ve done considering the shutdown that they experienced in China?

TN: Yes, it did. And they banked a billion dollars on bitcoin. So I think that I’m hoping that Tesla starts to get more focus on their performance and their actual market rather than speculating on cryptocurrency. I think every business, at least in America is having to come back down to earth and focus on their own operations now and Tesla is one that really needs to do so. The results were good and that’s great, but I think more focus is needed, especially with the opportunity they have right now in the US.

WSN: And another thing I want to ask you about is some of these leading tech companies. So we see in Google, we’ve seen Apple actually coming out to say that they’re stopping. They’re hiring. At this current juncture, does this make you nervous about the state of the US. Economy or is it actually pretty good because the job market was too high and inflation was a major concern?

TN: Does it make me nervous? Yes or no? I’ll tell you what’s been happening here in the US. If you’re under 30 and you work for a tech company, you know that if you work for a company for twelve months and you jump to another job, you’re going to get a 20% to 30% pay rise. So for the last few years, if you’re under 30 or say under mid thirty s, you would work for a tech company for a year, then switch jobs and get a significant pay rise. So because of that, these tech companies have over solicited jobs. We’ve heard about these millions of unfilled jobs in the US. Those aren’t real jobs, okay? Those are jobs that tech companies have been waiting for people to move on from because they know their employees are going to move on after twelve to 15 months. And so they’re prepacking the employment queue so that they don’t have disruption in their business. That’s what that’s all about. So Microsoft, Google, Netflix, all these guys saying, we’re taking all these jobs out of the market. It’s really just them seeing that the market is slowing down and their staff aren’t going to jump jobs as much as they have been.

WSN: And one other thing I want to ask you about is the aviation sector. So last night, United also reported numbers that were below street expectations a lot due to capacity constraints across the industry. Do you think it’s time to buy this if we really believe in the reopening theme, because these are just temporary blips.

TN: Oh, the time to buy airlines was like three, four months ago. I would be really careful right now if I were to go on airlines. I’d want to know the summer travel season, it’s halfway behind us. So I think if you were buying airlines, you should have done it excuse me? You should have done it a few months ago and then seen the rise as we went into the summer season and sold just before earnings. But as we’re seeing some of their earnings come in somewhat disappointing, I think that’s the real kind of warning for, say, Q Three. So these disruptions, they’re not necessarily getting any better. Disrupted flights are not necessarily getting any better. So corporate earning or stock market prices are about expectations. They’re not about actual performance. So we saw the expectations in Q Two disappoint. So that’s going to really erode expectations for Q Three. So I would be really wary of looking at airlines right now.

SM: Okay. And if we take a look at Europe, the European Central Bank meets today to decide on whether or not to raise rates. What do you think they’re going to do?

TN: Look, Europe is pretty rudderless the ECB is pretty rudderless. They’ve got negative real interest rates and they don’t have a way out. So they’re kind of either already entered or about to enter a recession. So if they raise rates or tightened too much, they’ll steepen the negative slope of the recession. They’ll make it worse. If they don’t raise rates, then the recession will be a bit easier. But they’ll weaken the euro. And as they’re importing all of this power gas and oil and same natural resources, it’s just making those things more expensive in euro terms. So if they tighten, it’s likely about the purchasing power of the Euro more than anything else. The other part that they’re likely to do is look at things like demand destruction, which is what the Fed has been focusing on for about four, five months. They’ve been raising rates so fast that people feel less purchasing power and they stop buying as much. And so if the ECB raises, say, 75 basis points, which I doubt they will, what they’re really signaling to people is they want them to stop buying so much. But we really think the ECB is going to kind of have a moderate tone to the meeting and really not surprised the upside.

WSN: Okay, I want to stay in Europe and I want to talk about the week euro. I mean, at one point you said parity with the US. Dollar. But do you think that actually a weak Euro does provide some stock picking opportunities?

TN: Yeah, it can. I mean, if you look at those European companies that export a lot, let’s say to the US. That would give those companies opportunity to expand their margin in local currency terms while keeping their US. Prices either constant or raising them right. So I would look really hard at European countries who are exporting to places, dollar nominated locations to where they can absorb some of the same gains. For example, not a European company but Pepsi, okay, they make snacks and drinks and this sort of thing. Last quarter they raised their prices by 12% and they had a 1% volume expansion. So American consumers are accepting price rises, double digit price rises and they’re continuing to buy. Okay, so European companies could look that European companies that export a lot to the US. Could really look at this market and put that into their strategy for US. Exports. The problem in Europe right now, a big part of the problem is the expansion of energy prices. German producer prices rose by 30% last month and so they have a real problem with productivity or with profitability. Their costs are rising so fast they have to find a way to raise prices.

And they can only do that into a strong dollar market. It’s very difficult for them to do that elsewhere.

SM: Okay. And speaking of energy, currently, how much correlation is there between oil and natural gas prices and which one do you see undergoing more price volatility in the coming months.

TN: It’s almost zero, actually, over the last month. The correlation is zero point 607, to be precise. Okay.

WSN: It’s a real number.

TN: No, I actually did the calculation. I did the math. So that’s what I do all day long. So normally that’s kind of a zero seven to eight, which is a significant correlation. Right. What we’ve seen is that we’ve seen crude prices, downward pressure on crude prices over the past month. There’s been a lot of pressure, especially in the US. With the Biden administration really kind of bullying crude prices down now that gas prices have been pushed up because of the issues of gas exports out of Russia. Okay. And so you’ve had a disintegration or disconnection sorry. Of those correlations. Where do we expect more volatility? Well, we expect crude oil to be kind of range traded, say, between 95 and $115 for the next few months, that gas can continue to rise, especially if Russia does not turn the gas back on the pipelines. Which decision is, I think tomorrow or the next few days? If they decide not to turn those prices back on, the price of gas continues to rise pretty dramatically.

SM: All right, Tony, thanks very much for speaking with us. That was Tony Nash, CEO of Complete intelligence, giving us his take on some of the trends that he sees moving markets in the days and weeks ahead. Ending the conversation there with just a look at how natural gas and oil prices are expected to trend in the coming months. Crude oil to trend within the range of natural gas. Now, that’s where we could really see some price volatility if geopolitical situation in Russia and Europe doesn’t, I guess, stabilize.

WSN: Yeah. All this is going to feed into inflation. Right? And we are already seeing that in UK numbers. So it came out yesterday, hit a new four year high as food and energy prices continue to so. The consumer price index there rose 9.4% annually. It’s a lot, and it’s mainly due to fuel and food prices, which were the most significant contributors to the rising inflation rate that we’ve seen. So as a result, the bank of England might actually consider a 50 basis point high at its August policy meeting.

SM: Something to keep an eye on, and I’m sure something that the incoming prime minister, whether it’s Rishi Suna or Liz Truss, will need to start strategizing from now 718 in the morning. We’re heading into some messages and when we come back, does the antisexual harassment bill that was passed in parliament yesterday pass muster? Stay tuned. BFM 89 nine.

This podcast first appeared and was originally published at https://www.bfm.my/podcast/morning-run/market-watch/us-federal-reserve-interest-rates-hike on July 7, 2022.

Despite weaker economic data, will the Federal Reserve continue their hawkish stance? Do the FOMC minutes offer any hints of their stance? Our CEO and founder, Tony Nash tells us whilst telling us the impact of rising rates on the banking and property sector.

Show Notes

WSN: BFM 89.9. You’re listening to the morning run is seven o’ 7, Thursday, the 7th of July there and keeping you company till 10:00 a.m. Is Shazana Mokda in an undisclosed location far, far away. And I’m Wong shining in the studio now in half an hour, we’re speaking to Manpreet Gill on fixed income and commodity the investment strategy for 2022. But let’s recap how global markets closed yesterday.

SM: So if you take a look over in the US, markets actually closed up despite Fed meeting minutes coming out signaling a more hawkish stance. The Dow was up 0.2%, the SP 500 and the Nasdaq was also up 0.4%. Looking over in Asia though, it’s mostly red. No, it’s all red really. The Naked and Hansi were both down 1.2%, the STI was down marginally by 0.01%, and the Shanghai Composite and FBM KLCI were both down 1.4%.

WSN: So for more on where international markets are hitting, we have on the line with us Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Now so far the economic data coming out of the US shows a slight deceleration of the economy. So do you think that the Fed will then hold back on their hawkish pace of rate hikes despite June’s FYMC minutes indicating that they intend to keep raising rates?

TN: I think they’re definitely going to keep raising rates, I think until we see a marked slowdown in particularly commodity price inflation, but also other things like wage inflation. I think they’re going to keep accelerating. So it’s unlikely they’ll continue with a 75 basis point hike, but they will almost certainly have a 50 basis point hike and continue for the next couple of meetings at least.

WSN: I have another question though, Tony, in that when do you think interest rates will peak or when is the peak of the tightening cycle? Will it be early 2023 or you’re looking maybe later in 2023.

TN: Well, some people are saying that it’s possible they continue to hike until the end of the year, and then in 23 they have some rate cuts similar to what happened in the early 90s. That’s possible. I think it all depends on where the economy is at the time. But I think for now they’re just worried about inflation and the downsides of inflation and they’re looking at asset prices and where asset prices are, and it’s really troubling for them given yeah, the economy has definitely slowed down, but we still have wages rising, we still have very high commodity prices, and we also have an appreciating dollar at the same time. So anything imported should be cheaper on a relative basis, but those prices keep going up as well. So Fed continues to be worried, although they’re getting pressure from the outside because it is an election year and the party in power does not want there to be a recession going into the election. And so they’re getting huge pressure from the treasury and from other people to moderate their stance so that there is not a recession going into the election.

SM: Well, what do you think then, Tony? We know that economists at Goldman Sachs have put the risk of a recessionary slump in the US. In the next year at 30%. So they’re still looking at next year. Some consumers feel it’s already here, I guess. Where are you standing in this debate?

TN: Yeah, I think we have unemployment still falling in the US. So you don’t usually have a recession at a time when unemployment is still falling. We also have high inflation. So on a real GDP basis, you may have a negative real GDP number. Well, you have a positive nominal GDP number. And I know that’s a little bit confusing, but what that basically means is that the rate of inflation pulls the economic growth into a negative number simply because of inflation. So we’re in a place where it’s kind of hard to identify a recession because of the real and nominal difference. But when we still have jobs growing, when we still have investments and other things happening, it’s really hard for us to hand on heart say that we are in or entering a recession.

WSN: Okay, let’s get into the weeds then, with regards to the recent set rate hikes and how that might play out in certain sectors. And I want to look at the US. Banks. So how do you think they perform this quarter? Are you a bull or bear?

TN: Well, it’s a tough time for banks. They had mixed results in Q2, and I think higher interest rates obviously help their net interest margin. But borrowing cools off, and it’s things like mortgages. Other things have cooled off dramatically over the last same month or so. Banks will likely have a very tough Q3, and then when things stabilize, they’ll be better. But I think Q3 is going to be rough for them. I wouldn’t say I’m necessarily bearish on banks, but I would say I’m neutral on banks.

WSN: What about the property sector, Tony? I mean, we’ve heard, of course, a few months ago that whatever you put up in the market, it gets snapped up within the day. But is that trend continuing? Are you a bull or bear for property?

TN: You know what? It depends on where you are in the US. Where I am in Texas, things are really strong. But a lot of other places in the US. Things have slowed down dramatically, and mortgage applications nationally have come to a standstill as interest rates have risen. So I think a couple of weeks ago we may have talked about how a house that was purchased in January, the median price house purchased in January, if it were purchased today, it would cost $800 a month extra. And so the interest rates just had a dramatic impact on house prices. So mortgages have really slowed down.

SM: And can we turn to oil, Tony, because oil prices have dropped below $100 per barrel for West Texas. Does this level accurately reflect supply and demand for crude? And does this then invalidate the bullish forecast of $150 and above that analysts were predicting not too long ago?

TN: Yeah, I think we’re in a really strange place for oil right now. And if you look at the later months of crude oil futures that are being traded, they’re actually trading higher than the current month. So there’s something happening in the current month, like maybe somebody’s books blown up or something. But there’s something happening in the July future that rolls off in a couple of weeks. And I expect that we’ll see higher crude prices going into August and the rest of Q three, early Q four. So it’s going to be pretty choppy for the next few months in energy and commodities generally.

WSN: One last question for me, and it’s more long term economic question, and that’s about Biden’s infrastructure bill that was passed in November last year, but it’s gone really silent. Do you know what’s happening on that front?

TN: Nobody does. There’s been very little news about it. What’s happened partly is inflation has taken a bite out of it and it’s really caused a lot of projects to stall. So the problem with federal appropriations is the longer the money sits, the less money that gets spent, which is good for taxpayers. Right, but I think inflation is really forcing local and state governments to pause on their investment plans because they do have budget, but they don’t have enough budget to get the projects done that they want. So can they appropriate can the US. Congress appropriate more for the next fiscal year? It’s possible. It depends on who’s in power. So if the Republicans come into power in November, then they may not raise the appropriations level and we’ll be stuck with the level that we have, which it’s $500 billion, a massive amount of money. I don’t want anybody to mislead anybody, but the Democrats will likely want to raise that level if they remain in power after the November election. But to date, not a lot has happened. There has not been a lot of movements. We haven’t seen a lot of major announcements of new projects, these sorts of things.

And if it was successful, we would see a lot of major announcements of new projects.

WSN: All right, thank you for your time. That was Tony Nash, CEO of Complete Intelligence, giving us his views on global markets, in particular the US. And whether the Fed will continue to raise rates until 2023. He says maybe, and then maybe they might even cut rates like they did in $2,000.

SM: That’s right. I guess one thing to note is the question is whether we’re going to see a recession sooner rather than later. Yeah, and Tony did point out the fact that labor unemployment is still at really low levels. Unemployment is decreasing so that’s really at odds with a recession and that’s what everyone is looking to see. I think if we start to see unemployment go up, that heralds that a recession is either here or coming.

WSN: I suppose we are living in really weird economic times. None of the normal correlations that we see are making any sense. I think that’s a lot to do with the fact that during COVID-19, governments basically just took the let’s do whatever it takes attitude. There was so much money pumping into the system by every major central bank and the recession was extremely V shaped, sharp recovery. But then that also caused supply chain disruptions and we had the war in Ukraine. It was like the perfect storm of Black Swan events which has resulted in this current situation that we are in now. Very quickly, we’re looking at the Fed minutes that just came out now. Indications are that they are signaling another rate increase of between 50 to 75 basis points lightly in the July meeting. And this is the interesting part, they are willing to accept the price of a slower economy in order to tame inflation.

SM: And this is sort of a change from their soft landing rhetoric, right? So earlier they were trying to say oh, it’s not inevitable that there will be a recession, we can still avoid it, we want to get that sweet spot. But I think now they’re trying to navigate those expectations to go like hey, I think we need to kind of expect pain. There is going to be pain, but it’s better to have this short pay now rather than long term pain later. So I think the Fed is really trying it’s got itself in a pickle essentially in terms of trying to prime expectations of the public.

WSN: I think that’s on the back of the fact that they spend the whole of 2021 telling everyone that inflation is transitory, hey, no problem. And it didn’t turn out to be transitory, so there’s a need to rebuild back that credibility. But up next we’ll be speaking to Carmelo for little on malicious overnight policy rate. Stay tuned for that.

This podcast first appeared and was originally published at https://www.bbc.co.uk/sounds/play/w172ydpfbz0vnx1 on June 30, 2022.

As markets tumble, users are left unable to withdraw from some exchanges, and a leading hedge fund prepares to enter liquidation. Is crypto in terminal decline? Scott Chipolina, correspondent for the Financial Times, says investors are well used to challenging conditions.

Sri Lanka is among the countries to be worst hit by inflation, and living standards are falling. Joseph Stalin of the Ceylon Teachers’ Union, and Steve Hanke from Johns Hopkins University, tell us why a solution may be some way off.

It’s a host’s worst nightmare: an out-of-control party in your Airbnb. As the platform cracks down on gatherings, we hear the story of a rental gone wrong in the Bahamas.

Also on the programme, a boss at H&M explains why leaving Russia was a tough decision; and it’s happy 15th birthday to Apple’s iPhone.

We’re joined throughout Business Matters by financial consultant Jessica Khine in Malaysia, and economist Tony Nash in Texas.

Show Notes

BBC: Tony Nash, the CEO at the finance forecasting platform, complete intelligence in the US. State of Texas. How’s your day been, Tony?

TN: Great, thanks very much.

BBC: Good to hear. All right, well, thank you for joining us too. Tony Nash in Texas. I wonder what’s your overview of all this? I mean, it’s obviously bad news for crypto investors, but is it also a warning for other people who might have been entertaining the idea of getting into the crypto market?

TN: Yes, it is. The whole kind of crypto fallout that’s happening right now, it’s not the funds that I worry about. It’s the individual investors who have been investing in crypto that really worry me. And that’s the really kind of sad part of this crypto kind of drama is you have crypto assets that have fallen by 70%. People have put their savings and their hard earned money into crypto. And so I do worry about those guys because there are a lot of people, individuals who have lost a lot of money because they believed the narrative about crypto.

BBC: And I think during the pandemic, we saw a lot of people sitting at home starting to think, oh, maybe I’ll give this a go. They’re the most recent entrance into the market. I guess they’re the biggest losers.

TN: They are. So I did have a crypto journey where I invested in something called dogecoin, and I bought it at like four cents, and I ended up selling it at like 68 or $0.70, something like that. So it was just a small amount of money I didn’t want to put very much at risk, but I did, I wanted to understand what that was like, so I put like $50 into it or something like that and then just saw it go up to $70 or something and then sold it. But I think a lot of people thought that it would continue going up not just dogecoin, but a lot of the cryptos. So it’s not like your guest said, I don’t think this is the end of crypto. It is what they call crypto winter, and it’s probably going to last a couple of years. I don’t think we’re going to see crypto bouncing back immediately.

BBC: Presumably that experiment was enough for you. You’re not tempted to get back in, given the latest news?

TN: I don’t like volatility that much. At least with those assets, like your guests said, there’s nothing underlying those assets. There’s not a company, there’s not a physical commodity. There’s nothing underlying them. It’s just trust. And so I can sell sales in my excel workbook and have the same amount of assets underlying as any crypto asset does.

BBC: Listening to that in Texas, do you agree? Did governments like the US. Government make a mistake with all those support programs?

TN: I think they did, but I respect Steve. Thank you a lot. I follow him on twitter. I think they did make a mistake, but I honestly think that governments at the time were just afraid. I don’t think it was necessarily intentional that they overstimulated. I think they were not aware of what was going to happen around the corner, and I think they panicked. They were just afraid. It’s easy to look back from this point in time and say what they did was wrong and other stuff, but I actually think giving them the benefit of the doubt and saying they just panic, they were afraid and they didn’t want people to starve or suffer or lose jobs or whatever, and they stimulated way too much in hindsight.

BBC: Tony is this enforceable from Airbnb, do you think? Can they really stop people having parties? What if they just clean up really well the next day?

TN: Well, I think part of what happened through the pandemic is a lot of Airbnb hosts started charging exorbitant cleaning fees. And no matter how clean or dirty you left the place, the cleaning fee was applied to your Airbnb fee. I stay in Airbnb, or did stay in Airbnbs pretty regularly, but the cleaning fees became so large that I won’t stay in them anymore.

BBC: I didn’t realize the cleaning fee was at the prerogative of the host. I imagine it was like a blanket 10% or something.

TN: No, they’re huge. And so I have no issue with Airbnb enforcing a no party’s rule, but they really have to have a trade off and put a cap on the cleaning fee for Airbnb hosts because they in some cases are as much as the nightly rental.

BBC: Oh, wow.

TN: And these are things that you don’t see when you do a search in Airbnb and you see a nightly price, it does not include the cleaning fee. So if Airbnb is to put on this ban on parties, they really need to put some pressure on their hosts to reduce the cleaning fees.

BBC: It is a kind of fine line, though, isn’t it? I mean, I’ve had friends rent Airbnb and there’s been a few of us and there’s been drinking, but I guess what they’re talking about is when you invite strangers, or not necessarily strangers, but people who are not staying the night or booked in to stay, that’s when it becomes a party. Is that how they’re going to define it, do you think? Tony

TN: Yeah, I don’t know. If I’m staying in an Airbnb and I want to have some people over for dinner, is that a party if I want to cook for some friends and have them over? I don’t know. I think it could be, obviously loud music, drunk people, that sort of thing. Of course that’s a party, right? So they have to define it. I’m not a lawyer. I’m sure they can find a way to define it legally so that fees can be kept or whatever.

BBC: Tony you’re in Texas, not far from California. Have you heard of this issue before of land being seized from African American owners? I must admit it’s the first time I’ve heard of it.

TN: I’ve probably seen it in movies. I’ve seen it elsewhere. I think I’ve run across it, but I don’t remember it. But when I read this story today, it was great. It was great to hear and really interesting to dig into the story. And it was terrible that people had to suffer with that for 80 years.

BBC: It does say a lot, though, doesn’t it? If neither you nor I, you’re there in the States, have heard of this issue, I mean, from what Alison was saying, this wasn’t the only case. Has it been underreported, do you think?

TN: I don’t know. I don’t know how much property African Americans were allowed to hold before a certain point in time. I’m just not really sure. My family that settled in New Amsterdam when the Dutch still ruled America, had some property that was seized by the British in 1671. So it happened.

BBC: How did you find that out?

TN: We know our family history pretty well, but this was land in lower Manhattan, right around where Wall Street is, and so it was seized. These things happen. I’m not in any way trying to take away from the racial injustice that was done in California, not at all. But these things happen occasionally, and I’m just glad that these guys could get their land back and benefit from it eventually.

BBC: Tony, you’ve been looking at hmmm. We’ve been hearing there about its planned expansion into Latin America, but at the moment you’ve been looking at where their product is sourced. And we were just speaking about Myanmar. It’s Myanmar, sure.

TN: Yeah. Asian sources quite a lot in Myanmar. And part of the problem they’re facing is a lot of the manufacturers in Myanmar are being driven to insolvency because of energy prices. And so H and M doesn’t only have a problem generating revenue to replace Russia, but they do have a supply chain sustainability problem with matching the costs they can get in Myanmar, but also replacing that manufacturing pretty quickly as those manufacturers are driven to insolvency.

BBC: Tony, listening to that, how much has the iPhone changed your life, do you think?

TN: I have never owned an iPhone.

BBC: Smartphone. Do you own a smartphone?

TN: I do. Yeah. Of course I do.

BBC: So do you think iPhone opened the door to that?

TN: Of course it did. But I just never got into the Apple ecosystem. And I just haven’t owned an iPhone anti Apple. I just haven’t been I’m just waiting for it to get a little better. But of course, it’s influenced phones and it’s influenced the way we engage with technology. And it was a great product at the time. It was revolutionary. I remember I was using a Nokia phone at the time. Keep in mind, this is 2007, and you could play your music on that phone and have conversations, and I thought that was pretty cool. But that was before the iPhone came out. The navigation the interface. Everything just really changed the way people interact with phones. It’s great.

BBC: I think that’s all we have time for on this edition of business matters. Thank you so much to Tony in Texas and Jessica in Malaysia. And thanks to Joanna Stern from the Wall Street journal, who brought us up to date on iPhone’s 15th birthday as well. This has been business matters with me, Vivian Nunes. Thanks for listening. Bye.