QAV #630 — The Dead Zone

QAV 630 Club_mixdown

Cameron  00:03

Wel­come back. This is QAV episode 630. This is the club edi­tion. You’ve made it. You’re in the spe­cial club. We’re record­ing this on Tues­day, the 25th of July, around about two o’clock in the after­noon. A lit­tle bit of a weird intro­duc­tion, just me in the edit­ing booth — by booth, I mean the office — because we had a guest on today, Brent Sweeney. He’s talk­ing to us about his vis­it to Berk­shire Hath­away’s annu­al gen­er­al meet­ing that he did back in May, telling us that sto­ry. We decid­ed to hold it back for next week, because this is a pret­ty long show as it was, and Tony is still trav­el­ling, at Cape Schanck, not sure where he’s going to be next week. So, I thought I’d hold back on the inter­view, and we can put it out next week and give Tony a lit­tle bit of a week off, or we can maybe do a lit­tle bit of addi­tion­al stuff next week. We’ll see how it pans out. Any­way, let’s just get into the me and Tony part of the chat and then we’ll throw the Brent inter­view into next week’s episode. He’s got some great sto­ries about his time in Oma­ha, Nebras­ka, with War­ren and Char­lie. But next week for that. How’s Cape Schanck going, Tony? Hav­ing fun?

Tony  01:11

Yeah, hav­ing fun. It’s win­try down here. It’s 12 degrees. Over­cast, so misty driz­zle. Speak­ing of Scot­land, it’s very good Scot­tish golf­ing weath­er.

Cameron  01:23

Per­fect. We’ll talk about more about what you’ve been doing in after hours. Let’s get into invest­ing news. Gold is a buy. Gold AU is a buy this week.

Tony  01:32

Oh, good.

Cameron  01:33

I don’t think that brought any­thing in par­tic­u­lar into our buy list this week. Let me just… I did­n’t pay too much atten­tion. Buy list, what’s gold? Oh, that means Perseus min­ing is a buy. What else? Swoope hold­ings, no, Kaiser Reef, sor­ry, KAU. Tri­bune resources, West African Resources. They’re all on the buy list and they’re all gold relat­ed. But when I was doing my buys yes­ter­day, I did­n’t need to buy any­thing, because I did­n’t have to sell any­thing and we’re full, but there was a lot of stuff that I could have bought if I want­ed to buy it. It’s one of those nice Mon­days. I do the buy list and go wow, look at that. Lots of stuff we could poten­tial­ly buy if we need­ed to buy, because it’s been tough to buy things. Have you bought any­thing recent­ly?

Tony  02:31

No. I think the last thing I bought was Pil­bara Resources and it was down 5% yes­ter­day, so not much fun.

Cameron  02:39

But up 6% today.

Tony  02:41

Oh real­ly? Oh fan­tas­tic. That’s great.

Cameron  02:43

I had to sell a par­cel that was rule 1d this morn­ing, and then it went up by 6% today. But I’ve got a few oth­er parcels, ear­li­er parcels that I bought that are still okay. But yeah, it rebound­ed nice­ly today, PLS. Lithi­um has come off. The lithi­um price is drop­ping, and I know a com­pa­ny called CXO was announced that they’ve got some delays to some of their mines. It’s been all over the Fin and they took a beat­ing. I think they fell 70% yes­ter­day. PLS some­how got roped into all of that, I think, but rebound­ed today, which is nice.

Cameron  02:45

No, it’s good. So, the mar­ket worked it out. Shot first and then asked ques­tions the day after.

Cameron  02:54

Speak­ing of shoot­ing first. This isn’t in our talk­ing points, but I just noticed before we went to air that the AFR was run­ning the list of the Top 10 super funds for FY22-23. And again, it’s just the annu­al reminder for me that super funds real­ly strug­gle to meet the index over the long term. This is the chart from the Fin, and their source is a mob called Super Rat­ings. Top 10 bal­anced option over ten years per­cent per annum. The num­ber one ranked fund is Plus, Host Plus with their bal­anced option: 8.9 per annum over ten years. That’s the num­ber one. Then you’ve got Aus­tralian Super, my super­fund. They’re bal­anced option 8.6 per year over ten years, and it goes down from there. So, not par­tic­u­lar­ly inspir­ing.

Tony  04:25

Yeah, so what I was gonna say is, I mean, bal­anced funds are there because peo­ple wor­ry as they’re get­ting close to retire­ment that the per share mar­ket could crash. And so, the idea is that these par­tic­u­lar funds are bal­anced across shares and oth­er asset class­es; bonds, prop­er­ty, these days a lot of unlist­ed assets, which I think is anoth­er issue alto­geth­er. So, if the share mar­ket does crash then you’re not gonna lose your retire­ment sav­ings in a big way. How­ev­er, last time the share mar­ket crashed so did the bal­anced funds because every­thing else went down. I think it’s a great fur­phy, myself. And the bet­ter strat­e­gy, you know, if you were get­ting close to retire­ment and were wor­ried about pre­serv­ing some of your cap­i­tal, is to, you know, work out some­thing you did feel com­fort­able with, like real estate or what­ev­er, and get out of the share mar­ket, get out of bal­anced funds and put it into some­thing you did­n’t think was suit­able to your risk appetite. Why any­one would go into a Bal­anced Fund has always beat me because they under­per­formed the index, and you could have been buy­ing a share mar­ket ETF.

Cameron  05:34

That’s what I was going to ask you. Why aren’t peo­ple just buy­ing ETFs?

Tony  05:39

Exact­ly? Well, they can’t charge fees if they…

Cameron  05:42

No, I know some of these super funds are employ­ment relat­ed, they’re indus­try funds, but even the peo­ple run­ning the indus­try funds, can’t they just take every­one’s, all of their employ­ees’ mon­ey, and just put it in an ETF and go home?

Tony  05:55

Yeah, exact­ly. No, exact­ly. And even if you get ques­tions from your mem­bers about, “oh, the US stock mar­ket’s beat­ing the Aus­tralian stock mar­ket,” by two index funds. It’s not hard, espe­cial­ly if you’re young and you’re start­ing out. Like I said, I kind of under­stand peo­ple who are in their 50s or 60s and think­ing, “I’m about to retire, I don’t want to face a big loss when I’m start­ing to live off the earn­ings.” But even then, the Sam­marti­no effect or prin­ci­pal, what­ev­er you want to call it, where you put your mon­ey in an index fund and for­get about the cap­i­tal, it can go up and down, but they always pay div­i­dends. They’ve nev­er stopped pay­ing div­i­dends and they nev­er will. So, you know, do that. But if you’re start­ing out in in your career, don’t put your mon­ey in a Bal­anced Fund. Super funds gen­er­al­ly have a growth option, which is bet­ter. That’s the one prob­a­bly to bench­mark against the index, and if that’s not achiev­ing index returns then def­i­nite­ly put it into an index fund.

Cameron  06:53

This arti­cle that I looked at today just had the bal­anced funds, it did­n’t show any­thing else, so I don’t have any­thing to com­pare it with. But I do have anoth­er arti­cle from the Fin, this is a Chan­ti­cleer arti­cle from July 24, so yes­ter­day: “Why the ASX is stuck in a trad­ing dead zone.” I part­ly liked that because it remind­ed me of the old great Christo­pher Walken film, The Dead Zone, which I rewatched again a few years ago. Yeah, great film.

Tony  07:21

Isn’t it?

Cameron  07:21

“All the uncer­tain­ty has investors sit­ting tight try­ing to work out what’s going on before mak­ing any sub­stan­tial trades.” It goes on to say, “it’s a bit qui­et out there in equi­ties desks. How qui­et? Sum­mer hol­i­days qui­et. Repeat­ed days with only 5 bil­lion or 5.5 bil­lion in Aus­tralian shares trad­ed, which is about 20% less than last year. Every­one has pulled their heads in. Insti­tu­tion­al Investors are sit­ting on win­ners longer and trad­ing less.” Sounds like they’re lis­ten­ing to QAV. “Retail investors look fatigued, although still don’t mind the red-hot lithi­um names.” They’d be unhap­py if they were in CXO. “And the big super­an­nu­a­tion and pen­sion funds seem more inter­est­ed in buy­ing bonds, just ask Aus­tralian super. It’s a six-month sto­ry. The mar­ket nev­er real­ly sparked back up after the last sum­mer break. Why? Because no one knows what to do accord­ing to Bell Pot­ter’s Richard Cop­ple­son, who has watched vol­umes close­ly for years for a read on investor sen­ti­ment. He says it all boils down to the prospects of a US reces­sion. Major insti­tu­tions glob­al­ly have fol­lowed the same reces­sion play­book for years, and that play­book says the econ­o­my should be con­tract­ing. The usu­al indi­ca­tors all light up; bank fail­ures, high inter­est rates, for exam­ple, but the reces­sion has yet to hit. That play­book has been thrown off course by a hot jobs mar­ket, which is a hang­over from labour short­ages caused by the COVID 19 pan­dem­ic and has kept the econ­o­my bub­bling along. Which gives first, the econ­o­my or the jobs mar­ket?” So, it goes on, but that’s part of the expla­na­tion. We’ve talked about these things before, obvi­ous­ly, but just more grist for the mill. Our mar­kets been doing noth­ing for a long time.

Tony  09:06

Yeah, because every­one who’s try­ing to pre­dict what’s hap­pen­ing can’t pre­dict it and there­fore, they’re sit­ting on their hands wait­ing to see what hap­pens. So, in the mean­time the mar­kets up and peo­ple that have been ful­ly invest­ed are say­ing, “thank you, so long suck­ers. Just go and buy some bonds. Off you go.” It comes back to pre­dic­tion. Like, the whole cen­tral core of that argu­ment was no one knows what to do because they think a reces­sion is com­ing. Well, a reces­sion is always com­ing. Just, is it this year, is it next year, the year after? No one ever knows.

Cameron  09:40

Yeah, that’s true. What do they say? Econ­o­mists have pre­dict­ed 10 out of the last two reces­sions or some­thing like that.

Tony  09:49

Nine out of the last sev­en. Yeah, that’s right. And we might go into reces­sion. But, you know, have a sys­tem that takes that into account for good­ness’ sake. These are meant to be pro­fes­sion­al investors. They’re sit­ting on their hands. What am I pay­ing you to do?

Cameron  10:04

Yeah, it’s the thing that always bog­gles my mind. Like, what is going on? Why are these peo­ple get­ting paid mil­lions of dol­lars?

Tony  10:12

Well, the rea­son is, because what gen­er­al­ly hap­pens in the fund man­age­ment indus­try is that if you take a risk and it goes against you, instead of peo­ple say­ing, “oh, that was a mis­take, but your long-term returns are good,” they leave you in droves. They take their mon­ey out and put it some­where else. So, there­fore, fund man­agers hug the index and don’t want to be seen to stick their heads up and have it shot off. They’re being paid to take risks for good­ness’ sake, you’ve got to accept that they may get some wrong occa­sion­al­ly.

Cameron  10:41

Speak­ing of the mar­ket hav­ing a good month or so, as I’ve been say­ing to a few peo­ple, in my expe­ri­ence doing this last four years or so, it seems to me that when the mar­kets doing bad­ly, when it’s tur­bu­lent, we go along with it. We have a rough time, but hope­ful­ly we don’t get down as much as the mar­ket. Some­times we under­per­form. When the mar­kets hav­ing a good time, we have a good time. We go up as well, not as well per­haps as the hot tech stocks or the cryp­to stocks or what­ev­er. We don’t get shoot the lights out crazy per­for­mance across our port­fo­lio, but it’s nice and healthy and steady dur­ing the boom cycles, the bull­ish cycles. Just in the last month, the last thir­ty days accord­ing to Navexa, our dum­my port­fo­lio was up 7.29% per annum ver­sus the STW in the same peri­od, which is up 3.8%. So, in the last thir­ty days, the mar­ket’s been healthy, we’ve done about two times the STW over that peri­od. Comes and goes in cycles, right? We have our good cycles and then we have our not so good cycles, but the good cycles tend to negate the bad cycles.

Tony  12:02

Yeah, that’s exact­ly right. That’s exact­ly what the stock mar­ket does over the long term. If you look at a graph over a hun­dred years, it’s in the bot­tom left and the top right of the page. There’s lots of squig­gles in between. But that’s, you know, over your life­time, that’s how it goes. And you said before that we gen­er­al­ly, you know, fol­low the mar­ket up and down, and we kind of do because we’re teth­ered to the mar­ket, but I have had years where the mar­ket has gone neg­a­tive, and I’ve gone pos­i­tive. That’s not unusu­al as well. Because, you know, by the nature of val­ue invest­ing we’re buy­ing stocks which the mar­ket does­n’t like, and then they come good, and we can be hold­ing those even though the mar­kets drop­ping. Like gold stocks, for exam­ple. That’s the clas­sic one. The mar­ket can be going down, which means — in the past any­way — peo­ple had gone for a safe haven, and they bought gold. So, the price of gold went up and the gold min­ers improved. So, I’ve seen that many times in the mar­ket.

Cameron  12:57

I look for­ward to see­ing one of those cycles. Mean­while, I just have to live with the squig­gles. I think it’s a fish. Turn it upside down, Miss Jane. I think it’s a fish with a hat on smok­ing a cig­ar. Indeed. Anoth­er arti­cle in the Fin that I found inter­est­ing. This is this morn­ing actu­al­ly. “A cru­cial $40 tril­lion week looms for high fly­ing stocks. It’s shap­ing up to be a piv­otal week for glob­al stocks as com­pa­nies with a com­bined 27 tril­lion US dol­lar mar­ket val­ue gear up to report quar­ter­ly earn­ings. As Net­flix and Tes­la showed last week, the pres­sure is on to deliv­er or face a sharp sell off. Com­ing into the sea­son, investors were focused on bets that cen­tral banks would stop rais­ing inter­est rates soon and the US econ­o­my could avoid a con­trac­tion. Look­ing past a steady whit­tling down of near-term earn­ings esti­mates, they lift­ed the MCSI All Coun­try World Index as year-to-date gains past 15%, and at almost twen­ty times for­ward earn­ings, the S&P 500 is trad­ing at a pre­mi­um to its long term price val­u­a­tion.” What’s Buf­fet­t’s met­ric on the PE of the S&P?

Tony  14:17

There’s a cou­ple. One is the ten-year aver­age. I think he want­ed it to be around more like six­teen rather than twen­ty. And then there’s one where he com­pares the size of the mar­ket to GDP from mem­o­ry as well. If it gets ahead of GDP, he does­n’t like it.

Cameron  14:32

Twen­ty times sounds expen­sive.

Tony  14:34

No, not over­ly. I don’t know what the aver­age is in the US. In Aus­tralia, it’s about six­teen. The US might be slight­ly high­er. Like, a few years ago it was thir­ty.

Cameron  14:46

Okay. It says, “more than five hun­dred major com­pa­nies world­wide will reveal how they fared this quar­ter and how they expect com­ing months to shape up. In the busiest week of the sea­son. earn­ings reports will flow from the likes of Microsoft, Google par­ent Alpha­bet, LVMH, Ban­co San­tander, Volk­swa­gen, Air­bus, Sanofi.” We should expect a lit­tle bit of fun and games in the mar­ket while these com­pa­nies… Noth­ing to do with Aus­tralia direct­ly, but no doubt it’ll have an impact on the Aus­tralian mar­ket in some way, shape or form.

Tony  15:18

Well, it will. And it’s one of those… The US reports quar­ter­ly, and we report six month­ly, but we’re com­ing into our report­ing sea­son start­ing first of August, which is next week. Some com­pa­nies will start to report. We’ll prob­a­bly see a cou­ple of ear­ly birds out of the gates this week. But it’s going to be an impor­tant report­ing sea­son, because six months ago in Aus­tralia there was less talk of reces­sion, inter­est rates weren’t as high, and we were still awash with COVID cash. So, it’ll be inter­est­ing to see what hap­pens. Con­fes­sion sea­son has shone a light on dis­cre­tionary retail in par­tic­u­lar, and we’ve seen those stocks come off. I mean, the mar­ket has been tricky up and down. But gen­er­al­ly, by now I would have thought if the mar­ket was expect­ing hor­ren­dous, results in the Aus­tralian con­text any­way, it would have fac­tored that into the share price, and it’d be a lot low­er than what it is now. So, yeah, who knows what will hap­pen? There’s always sur­pris­es in report­ing sea­son, we’ll see. But I guess my point is we can’t do any­thing about it, except be dili­gent over the next four weeks and adjust our port­fo­lios if we need to, as new num­bers come out. And it’s just a reminder for peo­ple that August is one of the months of the year when we do a lit­tle bit more work than nor­mal and in oth­er months dur­ing the year.

Cameron  16:37

Not real­ly. Back in the days before QAV when you only did a buy list four or five times a year.

Tony  16:44

Cor­rect.

Cameron  16:44

Now we’re doing it every week any­way. Might have to do a cou­ple more a week, but yeah. The only oth­er thing I had to talk about, Tony, was just to let peo­ple know that I’ve start­ed a tri­al using Stock­o­pe­dia as a data source as an alter­na­tive data source to Stock Doc­tor, for a cou­ple of rea­sons. Num­ber one; Elio D’Am­a­to, who used to be the pub­lic face, the chief ana­lyst or some­thing like that, of Stock Doc­tor, left a cou­ple of years ago. He’s now, I think, the man­ag­ing direc­tor for… He reached out to us a while ago and said, “hey, would you be inter­est­ed in using Stock­o­pe­dia as a data source?” I’ve been try­ing to build a check­list to use their data, and I’ve final­ly fin­ished a ver­sion of it a week or so ago, and I’ve built a test port­fo­lio using their stocks. They don’t have some stuff that Stock Doc­tor does. Some of the stuff they do have that Stock Doc­tor has does­n’t always line up, like ADT and things like that, that I’ve been play­ing around with. But basi­cal­ly, it’s pret­ty close. The check­list that I’m gen­er­at­ing out of Stock­o­pe­dia each Mon­day is the same as the check­list, the buy list that we’re get­ting out of Stock Doc­tor. And the oth­er rea­son we’re doing it is because Stock­o­pe­dia has US and UK stocks, where Stock Doc­tor does­n’t and does­n’t look like they’re going to have in the near future, and we have lis­ten­ers in the US and the UK who want to apply QAV in their geo­gra­phies. I’m hop­ing that this will be a way of help­ing them do that if this check­list can… If I can build a ver­sion of this for the US and the UK, which I’m work­ing on now. The rea­son I men­tion this on the show today is because if peo­ple have a Stock Doc­tor annu­al sub­scrip­tion renew­al com­ing up, you might want to think about your options. Stock­o­pe­dia is a lit­tle bit cheap­er. We haven’t done a deal with them yet, but we’ll work on that, too. Tony shak­ing his head.

Tony  18:49

I love Stock Doc­tor. I’ll be keep­ing my sub­scrip­tion going.

Cameron  18:53

Sure. If peo­ple are look­ing for options, and par­tic­u­lar­ly if peo­ple are inter­est­ed in play­ing with the US or the UK mar­kets as well, it may become an option with Stock­o­pe­dia.

Tony  19:02

Yeah, well, hope­ful­ly we haven’t jumped the gun here. I think I think we need to run a dum­my port­fo­lio for a while with both and see how that per­forms.

Cameron  19:11

I agree with you. We’re going to run it for a while and test it. I’m let­ting peo­ple know that we’re work­ing on it. I’ve told a few peo­ple via email, just to give them a heads up. Yeah, I think it would be good to have an alter­na­tive data source in case Stock Doc­tor goes out of busi­ness next week.

Tony  19:32

We used to have two data sources in QAV when we first start­ed. Yeah. That’s great. Well, maybe a bit of com­pe­ti­tion might get Stock Doc­tor to do their US ver­sion, which they’ve been talk­ing about for a long time now.

Cameron  19:45

Maybe.

Tony  19:46

Any­way, maybe. Yeah, that’s good. Well, thanks for your work on that, Cam.

Cameron  19:50

That’s alright. What have you got to talk about today, TK?

Tony  19:53

I’ve got a few things. So, fol­low­ing on from stocks in the news, just a cou­ple of arti­cles caught my eye in the Fin Review this week. One was that URW, the pulled pork from a few weeks ago, Uni­bail-Rodam­co, which is the shop­ping cen­tre own­er that bought the West­fields over­seas, an inter­na­tion­al chain of shop­ping malls, has been sell­ing down their US malls. So, they took on a lot of debt to take over West­field and now it looks like they’re pay­ing off some of that debt by sell­ing some shop­ping cen­tres, and par­tic­u­lar­ly those in the US. So, that was inter­est­ing for peo­ple who own that stock. Obvi­ous­ly, inter­est rates have been bit­ing the debt load in that com­pa­ny. But I think from mem­o­ry that pulled pork showed they have lots of cash as well, oper­at­ing cash flow any­way. And now that COVID is sub­sid­ing, they should be pay­ing off that debt with cash flow, too. So, that’s URW. The oth­er one…

Cameron  20:53

Before you move on.

Tony  20:54

Yeah, sure.

Cameron  20:55

Just want to point out that the URW share price is up 10% since you did your pulled pork. The pulled pork curse, I think, is offi­cial­ly spent.

Tony  21:07

Well, the sec­ond arti­cle that caught my eye was one on Rio Tin­to, and it was about their push into recy­cling met­als. So, of course, they’re a big iron ore exporter, and recy­cled steel is anoth­er source of steel for peo­ple who want to use it. And it has been a com­peti­tor to Rio for a long time, although the indus­try isn’t that big. But Rio have now been acquir­ing scrap recy­clers and get­ting into that mar­ket, which I guess is, you know, try­ing to bur­nish their green cre­den­tials, I guess, because it’s eas­i­er to smelt the recy­cled scrap than it is to smelt iron ore orig­i­nal­ly. And it just caught my eye because one of the stocks that I own, and it’s on the buy list, I think, or it was, is SGM.

Cameron  21:58

Yes.

Tony  21:59

And they’re a big recy­cler. So, you know, I don’t know what this means for Sims. I guess it could go one of two ways. Poten­tial­ly they could be a tar­get for Rio going for­ward, or one of the oth­er iron ore min­ers. Or Rio could end up being a big com­peti­tor for Sims. But I thought it was inter­est­ing that Rio was buy­ing into this mar­ket.

Cameron  22:24

What’s hap­pened to SGM’s share price recent­ly? It’s up a lot since the end of May. It’s 14 bucks at the end of May. It’s now 15.49. It’s been on a bit of a good run.

Tony  22:35

Well, maybe peo­ple are also think­ing the way I am, that it could be a poten­tial acqui­si­tion for Rio. But who knows. That’s a pre­dic­tion. SGM is a good stock with­out that. So, hap­py to hold it. What else have I got? I’ve got stocks of the week in terms of per­for­mance, and the best per­form­ing stock this week was Cred­it Corp, our old friend Cred­it Corp, which I also own. Up 12.7% accord­ing to both Navexa and the Fin Review. They’re stock for the week in the Week­end Fin Review’s rank of the week.

Cameron  23:10

That might have been before it dropped by 10% today.

Tony  23:13

Did it real­ly?

Cameron  23:15

Yeah.

Tony  23:16

Oh, okay.

Cameron  23:17

Some­body post­ed on the Face­book chat group ear­li­er, “any­one know what’s going on with CCP today?” Dropped from $23.54 down to $22.18, so not quite 10% but 5% maybe. But it’s been on a hell of a run. It was, like, 70 bucks back at the begin­ning of June. So, it’s had a good cou­ple of months. I said it might just be some prof­it tak­ing, might just be tak­ing some­thing off the table.

Tony  23:46

It’s quite pos­si­ble. You know, on the oth­er hand, I thought it would be a good sign going into report­ing sea­son that it was up 12% last week, but it could also be a bad sign if it fell off today. Because typ­i­cal­ly, Cred­it Corp is one of the very ear­ly report­ing stocks in report­ing sea­son. But we’ll know in a few days how it’s gone. The oth­er stock that was up last week in our port­fo­lios is SMR. That was up 8.7% accord­ing to Navexa last week. Stan­more Resources. The last thing I want­ed to talk about, and it was­n’t in the notes because I came across it after I sent them through to you; this is a quote from Jen­nifer Hewit­t’s col­umn in today’s AFR. I just want you to think about the log­ic of this, right. It’s about the RBA, and it says, “depart­ing Reserve Bank Gov­er­nor Philip Lowe has been warn­ing for months about the impact on infla­tion and inter­est rates giv­en that rents are the biggest sin­gle con­trib­u­tor to the con­sumer price index. That vicious cir­cle is show­ing no signs of eas­ing, with an aver­age rent increase expect­ed to be up to 10% this year alone. For the bulk of mum and dad investors, or even larg­er finan­cial insti­tu­tions and devel­op­ers, high­er inter­est rates trans­lat­ed into high­er rents to help com­pen­sate for high­er costs.” So, Philip Lowe, the head of the RBA is say­ing, rents are the biggest part of the Con­sumer Price Index, and they’re going up. But I’m not hear­ing him say­ing, why are rents increas­ing? Why are rents increas­ing, Cam?

Cameron  25:16

Accord­ing to the arti­cle you just read, and the fact that you’ve been beat­ing out about this for a month, rents are going up because inter­est rates are going up. What do we do? We have to put inter­est rates up, because rents are going up.

Tony  25:27

To bring infla­tion down. So, fair dinkum, can we just take the RBA out and shoot them? It’s offi­cial­ly now gone through the look­ing glass. They’ve come out and said, “we’re caus­ing infla­tion.”

Cameron  25:39

We need to bring Rob Sitch in on this con­ver­sa­tion. This is the kind of con­ver­sa­tion that he would have in Utopia. “Why are we putting up inter­est rates?” “Rents are going up, Tony.” “But why are rents going up?” “It’s because inter­est rates are going up.” “So, why are we putting up inter­est rates?” “Because rents are going up, Tony.”

Tony  25:55

To bring infla­tion down. What’s the cause of infla­tion?

Cameron  25:59

It’s Dawe and, what’s his face? Who were the guys who used to do 7:30 report until one of them passed away?

Tony  26:07

Oh, yeah, Bri­an Dawe and I keep think­ing of him as Fred Dagg.

Cameron  26:12

Yeah, that’s what I was think­ing, too.

Tony  26:13

John Clarke.

Cameron  26:14

Clarke and Dawe. Yeah, that’s a Clarke and Dawe rou­tine, which is pret­ty much what Utopia is. Utopia is like episode length Clarke and Dawe rou­tines.

Tony  26:24

I was just lis­ten­ing to some ear­ly John Clarke recent­ly, too. The farnarkling episodes. They’re fan­tas­tic.

Cameron  26:31

Oh, yeah. Yeah, I vague­ly recall those.

Tony  26:35

Yeah. Well, I guess they’re on YouTube now, but they were on New Zealand tele­vi­sion. Fred Dag­g’d come out as a farmer in a blue sin­glet and gum­boots, and he’d go, “yeah, g’day. I just want to talk to you about the phi­los­o­phy of Kierkegaard now,” and he’d just go on. And that would morph into the Farnarkling Cham­pi­onships, where the Soren­son broth­ers were play­ing on the wing and the cen­tres. It was just hilar­i­ous. So good.

Cameron  26:58

Clever guy.

Tony  27:00

Yeah. So, any­way, I think the RBA hope­ful­ly will improve after the review and the appoint­ment of a new gov­er­nor. But gee, I mean, seri­ous­ly. Yeah. Rob Sitch needs to go and sit down with him and just point out that they’re eat­ing their own tail at the moment. That’s incred­i­ble.

Cameron  27:18

A new gov­er­nor, but the same board, right?

Tony  27:20

Yeah.

Cameron  27:21

As we men­tioned last week, I think the only job she’s ever had has been at the RBA. I don’t know I would expect her to come in and rev­o­lu­tionise things. She’s part of the fur­ni­ture.

Tony  27:33

I agree. I don’t. It’s a shame, isn’t it? I used to par­tic­u­lar­ly like the RBA board, because half the peo­ple were exter­nal appoint­ments and you’d get some, you know, heads of indus­try. Lind­say Fox, or maybe Solomon Lew. Peo­ple who would come in and talk straight with them, you know, with all these econ­o­mists who get, you know, right down into the brush and don’t see the wood for the trees. That’s not hap­pen­ing now. I don’t know who’s on the RBA board now. One of the points of the review was that they did think that the busi­ness lead­ers on the RBA were being cap­tured by the econ­o­mists. But any­way, I think it’s a shame, it’s hurt­ing every­one and they’re to blame.

Cameron  28:14

None of your extend­ed fam­i­ly are on the board any­more.

Tony  28:17

No, that’s right.

Cameron  28:18

That’s when it all fell over?

Tony  28:21

Maybe. But I think what’s hap­pened, and maybe it was always hap­pen­ing, is that the appoint­ments of the RBA have tend­ed to fol­low the gov­ern­ment of the day. It’s a bit like the Supreme Court in the US. I don’t know who’s there now, so I won’t crit­i­cise them, but, you know, some­one pull a mir­ror out and have a look.

Cameron  28:38

Tony’s not going to crit­i­cise the RBA, peo­ple.

Tony  28:40

I’m crit­i­cis­ing the gov­er­nor. He’s come out and said, “here’s the prob­lem.” He’s the gov­er­nor. He can fix it. He’s caus­ing the prob­lem. He’s not fix­ing it.

Cameron  28:48

Yeah. Where did you read this? The Aus­tralians? Maybe he said to them, “lis­ten, I know that I’m part of the prob­lem here because…” And they went, “no, we don’t need to say that. We’ll just leave that bit out.” Maybe he has­n’t been quot­ed in full. That hap­pens on Utopia all the time. Rob Sitch’s char­ac­ter did­n’t even-they just took the sound­bite. “They did­n’t include every­thing that I said, it makes me look bad.” Maybe that’s Philip Lowe’s prob­lem. I was gonna say Rob Lowe’s prob­lem, but Rob Lowe’s prob­lem was a sex tape with two six­teen-year-olds.

Tony  29:25

I watched Rob Lowe last night. We’re not into after-hours yet. In a new Net­flix series, which is quite fun.

Cameron  29:35

Oh, real­ly? Okay.

Tony  29:36

Yeah. I for­get what it’s called. Unhinged or some­thing like that. He plays a Sil­i­con Val­ley genius whose wife died and he’s gone a bit crazy. It’s actu­al­ly real­ly good, but it’s very light. But yeah, it’s actu­al­ly quite watch­able. Sam Seaborn caught my eye.

Cameron  29:50

Sam Seaborn. Yeah. Would also be a good title for a series about Philip Lowe and his inter­est rates strat­e­gy.

Tony  29:58

I don’t think it’s called Unhinged. It’s called some­thing like that but I’ve for­got­ten it.

Cameron  30:03

All right. Are you gonna do a pulled pork?

Tony  30:07

I am. Yes. Hasti­ly cob­bled togeth­er before the show.

Cameron  1:02:25

The QAV Pod­cast is a pro­duc­tion of Space­craft Pub­lish­ing Pro­pri­etary Lim­it­ed, autho­rised rep­re­sen­ta­tive of AFSL 520442, AFS rep­re­sen­ta­tive num­ber 001292718. Please don’t make any invest­ment deci­sions based sole­ly on lis­ten­ing to this pod­cast. This is pre­sent­ed as gen­er­al advice only, not per­son­al finan­cial advice. We don’t know your per­son­al finan­cial cir­cum­stances. Please see a finan­cial plan­ner before mak­ing any invest­ing deci­sions.