Hi, my Boris, And this is straight Talk Chris Joey walking back to the straight Talk mate. Lots happening since I last said you like you're hearing what March March March this year and we were talking this is sort of trade war announcement, sort of period pre trade war, pre trade war. Okay, so it was pre liberation Day,
that's right, preliberation day, so called liberation day. So he announced and you know, you were predicting rate cuts, and we've got a recut in may RBA recut and then we're probably going to get a rate cut again in July. But we'll come back to that in a second. Just if we just peel back though, because you know, with Trump, you know, doing what he's doing, and with the world, the volatility is crazy. But sometimes we sort of tend to forget what has happened before, Like we just sort
of concentrated what's happening now. And we will talk about Israeli run. But if we just go back to that March discussion, just remind us what you were saying in March, pre trade war. Trump.
Yeah, so I said, I thought you were s equities would fall forty percent and that it was going to be really bad, and he was really serious on tariffs, and no one was prepared for this very hawkish Trump on tariffs, and that it was basically going to get pretty ugly. And what happened was the SMP five hundred. US equities fell twenty two percent post Liberation Day YEP, and the Nasdaq index fell twenty seven percent. And that
was through to nine April. So two April was Liberation Day, and then Trump, being the increasingly consummate iterator, backflips on nine April. He says, Okay, I've scared the shit out of markets. I've kind of declared a forever trade war on everyone. I'm going to focus on China, but everyone else I'll do a deal with. So he's sticking true to his plan. He's decoupling from China. That's happening. He's
going to bring all that manufacturing home. That's going to be super positive for US growth in the medium term. But he's doing trade deals with everybody. Markets loved it. The day he backflipped, the US sequity market jumped nine and a half percent. We on that day bought one point seven billion dollars of bonds.
And then we've been Colby.
Yeah, the firm I run, we run fifteen billion, and then from nine April to thirty April we bought four point six billion of bonds and we thought, so we were.
Super bearish March. He bonds between about global wares y.
Yeah, US banking, so he banks. But on the show last time.
I was, you know, the uber bear.
But we flipped one hundred and eighty degrees when we saw him basically shift from being an ideological trade warrior. So basically this hyper zealous guy which was Trump from the election to nine April to suddenly becoming a market whisperer. Our judgment was on nine April he was going to do everything he needed to do to plicate markets, and
therefore it was a super attractive buying opportunity. And at the same time he's still running some pretty serious intensive warfare with the boss of the Fed Power.
Yeah see that.
And interestingly, and I think this is genius.
Because because his term is coming up to yeah next year.
But the genius trade that Trump looks like I think he's going to affect is he's going to pre announce his successor I think.
Soon announce power successor, Yeah, which.
Is just genius, so he will undermine power and anoint his success who's dubbish. And the Federal cut rates this year and pretty aggressively, I think, because they can, and because rates are very high in the US, so they are around four and a half percent here ast with three point eight four And as you said on the show last time, we said that the RBA would cut in May. They cut in May, They're going to cut in July. There will be three more cuts this year,
so five cuts. In title last time we spoke about the fact that, you know, we were very bullish on housing. Sydney house prices started rising and Melbourne started rising in February and they're.
Climbing quickly off the back of the eight in the February cut.
Yeah, and so we call that cut in December, and basically of the view that the housing market would turn in February. It's actually notwithstanding we expected. It's quite amazing how inch straight elastic the market is and Sydney prices and Melbourne prices going gangbusters.
When you mean lest you get to a most sensitive so how the market responds quickly excuse me to either asset classes, particularly housing just explained something to our listeners. When you go off and buy global bonds, which were whether it be issued out of the US or Australia wherever, how do you make money in these markets? How does Coolibar make money for its clients or for its basic investors.
Firstly, our yield's really attractive right now. So we're earning interest rates on our bond portfolios of around seven to eight percent, which.
Is much higher than people would get if they put in the bank, for example.
So our yield's really attractive. And then when we buy and sell bonds, we trade about half a billion to a billion a day, and we make money eighty ninety percent of the time.
Because other people would like to buy those very attractive interest rates from you because they're not getting it anymore.
Correct, and they pay you a capital gain correct exactly. So we might buy a bond paying five point one percent and sell it for a year to five percent, and that lower yield to give us a bit of price appreciation, and that capital gain augments our total return.
And the reason you make cable gain because you don't buy one bond at five point one as eleven five of you buy thousands of millions.
Yeah, and they're trading like you know, up to a one to two billion a day, right, And you know I've got the fifty sixty super smart guys and girls that work for us, much smarter than me. I'm the brawn, they're the brains. I'm the window dressing and and but yeah, crazy smart team. I mean lots of university medalists and PhDs and super smart dudes.
How do you find these people?
We actually find I like to call us like the odd bods. Like our guys are always just you know, that crazy smart guy, a girl who's sitting inside a big organization, who's not political. He's probably been stiffed on camp a few times and wants to be part of a big team.
Stan they missed out on a commission that they're expected to get or get a bonus or something like that.
But they're not political, but they are the smartest guys in the room, and they want to play a team sport.
Basically, I don't appreciate it. Underappreciated.
Yeah, and all of our guys are pretty idiosyncratic, a little eccentric, but they're all team players and cool of bar as a team sport. Like you know, we're fifty sixty very talented guys and girls, but it's it's like a machine. It's not one person making decisions. Where ninety eight percent of our trading is driven by models, so financial models, and there's no rock stars, there's no heroes that billionaire a day. That way, trading is quantitative.
So when when when the RBA does its modeling And most people think that you know, the RBA just sits around there and they will put their hand UPBA or NA. There's actually the the people within the RBA. The people work there as opposed to the board. They make submissions as to what should happen. But the RBA is continually doing modeling. I mean they they run off I think one of the model models of the al models users called Martin I think, or.
Something along the model of that.
And there's another one to do GSC. I don't know what it stands for. But in any event, what are your guys doing relative to analytics around what the RBA is doing, because you know, like I just get this feeling though most people out there think that we're just sort of saying, well, you know that number coming out of the AUSTRAMI your statistics was a bit low or it was a great two point one is a great headline inflation rate, two four is a great trim million,
and therefore we should just reduce interust rates. No, the RBA has got all these variables, so they stick into their models and we'll come back to the model in a second. But they're sticking to the models, and that spits out a result. And there's lots of variables, like there's millions of them, not millions, there's a lot anyway, And then they build different scenarios for sensitivity. What do you guys do do you do work around that stuff too with your team I'm.
Talking about yeah, So, I mean most of our modeling is pricing the right interest rate for CBO, RAINS or NAB to pay us on their.
Debt so on a bond that U motorable from them CORET.
So we're lending money to everyone in the world Google, Apple, JP, Morgan Gold and Sacks, CBA. And what we do is pricing interust rates better than anyone in the world, we believe, and we require a huge amount of tech to do that. So we have like eighty models that we use around the world. We also more or less let the models trade, so we have our goes that trade alongside our humans basically like a proper count. Yeah, like ninety eight percent of our trading is quantitativele.
When sentiment gets involved and the cont doesn't understand it.
Yeah, so that's where the two percent comes in, right. You know, it's just not a cookie cut of trade. It might be April or you know, there might be a trade war, or it might be Trump backflipping, and then the team step in and saying, okay, we'll wait a second. The models are saying things are cheap, but we also think there's a regime change here the personality. Well, yeah, Trump's shifting course and that's really important for future pricing.
So in addition to pricing every bond of the world all day every day, we also run a ton of modeling to try and predict what the RBA and the fair are going to do. Not because we punt interest rates, so this is a little bit confusing. We don't bet on the direction of the RBA before they make a decision, correct, we never do that with price bonds. But we want to understand what the RBA is going to do and what's the what the Fed will do before anyone else so that we can better trade the bonds.
So just to take it back a step, just like you're very technical, super bright, I'll just try to put that into mark speak. So when you buy the bonds, you buy the word of the shoe prices, as you know, whoever's issue in the bonds will be whatever it is. And what if the shoe prices and the rate they're
offering you ines rate they're offering you. But what you're talking about is when you do do this analysis or your team does this analysis in a quantitative sense using perhaps software or the systems doing it for you, just put aside the qualitative stuff and a set We'll come back to that beause I want to talk about Trump. You're trying to get a sense of what the RBA is going to do, so you know whether to get ahead of it by doing a trade in relations to what you already hold.
Correct. Yeah, So the way I describe is that we don't trade macro like the RBA or what they're going to do almost all the time. However, once or twice a year, once every couple of years, macro is really important. Macro is super important in March and April. So because of our macro modeling, and our macro guys were saying Trump's going to be crazy hawkish on trade and that's going to blow up equities. We'd hedged twenty five to fifty percent of all of our skin March before Liberation Day,
and we'd sold a lot of our bonds. And then because of our macro analysis in mid April and the ninth of April, we thought that there was another regime and that he was going to be much more of a guy that tried to assuage market concerns and manage markets, and that this would be risk positive. So our macro influenced the one point seven billion of buying we did on the ninth of April. And you know, to talk a geopolitics, I mean that's been very important for our
trading as well. I mean I was sitting last week or soo two weeks ago in Zuri at the airport, and I think we've developed quite a good capacity to read Trump and to discern his tails.
He's got clear tells. Can you talk about that? Yeah?
So, like when he came out and said just before Israel launched it's onslaught against Iran, he came out and made this really strong statement.
He said thirteen fifteen days ago.
Yeah, and he said there is no risk of Israel attacking I run imminently, but they might do it. So at some point internally we were of the view that he was engaging in subterfuge and that there was a good chance that actually Israel was about to strike immediately.
And that's exactly what happened.
And in that Zime and I wrote about this actually in the AFI and the reason being, So, the reason being is he just can't help himself. He's a massive front runner of inside information. So whenever Trumpy has the good oil, which he as president of the United States and leader of the free world, ostensibly he gets the juice all the time, something cooking well. He always knows what, he knows what everyone's going to do right, all the time, and he can't help himself. He wants to be man
in the middle. He wants to be the center of attention. And so I thought he was being I said to my guys, he's come out bizarrely and said there's no chance of an Israeli strike, but Israel's going to do what Israel's going to do. They're an independent sovereign. Say yeah, that will be influenced by him. But it's kind of bizarre that he's taken away that sort of sovereign right and that decision making he would front run whether they would and wouldn't strike, because he's also taking.
Away there.
To capitalize on strategic surprise. Why would you do that? It doesn't make sense. So I said to my guys, I actually think they're going to have a shot, because this is Trump playing games. He's trying to manipulate global perceptions of what they will won't do. And subsequently, apparently he was all in on it, and he said that
to mislead the Iranians. But the really interesting thing was then, So I was sitting in Zurich airport, I guess almost a week later, and I was catching a flight to Dubai, and I had a conference call with my traders in London, New York. And as I'm talking to them, I'm reading this article that says that Trump's come out and said that he's going to give Iran basically two weeks, that he'll make a decision on whether to strike Iran in approximately two weeks time. And I said to my guys,
I think he's going to go. I think he's going to go this weekend. I wrote this in the Financial you as well. I said on the Friday before he bombed Ran, I said in the AFR, I think he's going to have a shot this weekend. And so we sold about three to five hundred million dollars of bonds in that phone call, just because I wanted to de
risk and dude. I then jump onto the Emirates flight and I wake up in the middle of the flight and the whole planes I can feel the g forces pushing me back into the seed, the planes kind of switching direction in an unusually sort of rapid way. I hit the in flight map. We're right on top of Baghdad, like literally right above Bagdad, flying through Iraqi air space.
And then I go to my phone and I look at my Bloomberg chat and there's a headline that the guys have put up missile sighted in Iraq heading towards Iran from Israel. And then I chatted my guys and said, what's going on? Any more headlines? And then they hit me with a stream of headlines. And so as we were over Baghdad, the Israelis had launched their wall and fired three hundred and thirty missiles at Iran and we were evacuating the air space and I opened my window
shade and looked at the window. I don't know what they were, but it was a very clear night sky. I could see Bagdad below us, all the lights, the city lights, and I could see about five different things moving at great pace through the sky, whether our cruise missiles fast jets, I don't know. And that the Iraqi air space within an hour would be a no fly zone. And so that was pretty discombobulating. And then we arrived in Dubai and I'm like, holy shit, like, you know,
get me help, Yeah, game on. And then, of course, you know Trump he himself bombs aren't so so this to answer your question, you know, fund managers and investors sometimes say things like stock because we'll say I pick stocks, I don't do macro, and I think that's all shit.
I think you got to do everything. And that's what we try and build. We try and bring to.
Bear unrelenting intellectual horsepower in every conceivable vector, whether it's pricing the bonds, predicting what the IBA is going to do. So we run a ton of quant models that are solely geared towards trying to forcus what the feed is going to do with the IBA is going to do, not because we're trading it day to day, but once a year it might be relevant and also doing a ton of geopolitical work. So you know, we built AI models that for the first time in history, we've published
research on this. You can go to our website predictingwar dot com we published years ago.
Go to your website cool and look on the tab predicting war dot com.
And there's actually a separate website called predicting water coom. We've created at about seven eight nine years ago, and we built AI models to predict military conflicts between nation states using two hundred years of military conflict data in
the University of Michigan data set. But we wanted to show you could put a probability on these things if you look at you know, what nation states are saying about one another, if you look at the development of their military capability, their power projection capacity, if you look
at their demography, their economics. The models are quite accurate, and you know, for example, they put a forty nine percent of the US and China being involved in some sort of conflict over the next ten years, and we published research on it none had ever done, but none it ever put empirical probabilities, predictive probabilities on the prospective military conflicts before it. I wanted to show that data
can give you a lot of insight on this. So so yeah, so I think we got the you know, we did a good job of anticipating the initial Israeli strikes.
And that allowed you to de risk.
No, we actually didn't do anything in response to that, so we didn't monetize that insight. But we then definitely did monetize the second event when we anticipated that Trump would strike over that weekend and bomb ran with the B two stealth bombers and the GBU fifty seven mop bombs of twelve thousand ton bombs.
That the two thousand pounds. Yes, yeah, that he.
Dropped on Fedora and the Tance and the third nuclear side and so we did risk ahead of that, and then when he executed that mission, we then so after that he basically announced the world, our bombers are out of Iraqi Iranian airspace. No American souls have been hurt. We've obliterated these nuclear targets. We actually put all the risks back on immediately and started to have continuously added risk, and our view was yeah, continuously brought billions. And that's
because our view was a few things. We think Comedie is dead. We think his son's dead. We've been arguing this. You still think that, Yeah, I think, I mean, I don't know, but we've thought for about a week or so that Comedy is dead.
I think it's very haven't seen him.
We haven't seen him. We haven't heard from him.
You've seen the foreign minister or.
His successor, which is his son. They're all am I A. And so we think either community is dead and his son's dead, which I think is very very likely, or there's been some sort of regime change that we don't know about yet. But I think the Iranians are going to reveal whatever they reveal in due course. And it looks like there's six hundred kilos of enricher iranium was
inside for door. You remember there was all this reporting that oh, they evacuated with it, but I think the intelligence suggests it was actually sitting inside for Door.
And it's been buried in there.
And the kind of mainstream media claims that they did no damage to Fedora absolute horseshit, Like all the damage assessments from the Iranians, from Israelis and now from the CIA say that you know, this stuff was very very seriously damaged and has put the program back many many years. So yeah, so macro is important, mate, as you know, like you, I do it all grow your whole life.
But but I mean, what I find extraordinarily interesting is working out the tell based on language. And it's not just based on words, but it's based on timing. There are probably a number of elements in these things. And we look, we used to sort of do this with
the Reserve Bank and the Geroe Powells. Well he used to always trying to sort of second guess what he or she's going to do, and you know, set your interest rates for example, and in my case at mees rates ahead of a rate reduction, trying to get ahead
of her and get market share. It's a bit more difficult today, but it's interesting in terms of the trades that you do that you look at your user comp models, but then you go off and you do your sort of you know, your reasonable inness assessment, your overall assessment based on what you see and where you see what you hear? How many other things leading up to that?
And I'll get off this and see but this intreaues me how many other things for example, for example, when Trump was not available to talk to Albanizi and sort of the meeting of the G seven, what it was when Albanzi turned up, Trump sort of made himself unavailable. Do you look at those things and also say, hang on, something is big going on.
Yeah, this signal with the noise wasn't just that. It was the key for me where I thought, Okay, this is really on. So we thought he'd bomb them that weekend, even though he'd set the world up to think it was two weeks away. Because he can't help himself again, he wants to be a man in the middle. He wants to be smarter than everyone else. And he is freaking smart. Like he is serially underestimated. Like I'm one hundred percent certain Trump is crazy smart guy. He's never drunk,
he's never done drugs. Yes, got all these hyperbolic and other sort of you know for many people on savory characteristics, but this dude is he's an absolute weapon.
Can we just get into that a little bit? Like, as I I'm waiting before we did.
Let me answer your question, h because there was something interesting. So he bolts from the G seven for his emergency national security meetings. He has multiple multiple meetings over the course of the weekend. But the thing that was really interesting for me where I thought, Okay, we've really got this right, was he's always giving presses, so he's always
talking the media. Every time he's in Force one, he's giving you basically a doorstop interview, and on this occasion, to the National security meeting and from the National security meeting, he refused to talk to the media, and I thought,
that's different. So the accumulation of evidence, the fact that he once again tried to mislead the world about the timetable and he wanted to be the smartest guy in the room, the fact that Israel had aerial superiority and it was a very easy mission to execute, the fact that the GBU fifty sevens are really the only weapon that can penetrate sixty meters of high performance contray concrete. And even then the GBU fifty sevens, which are the thirty pound bombs that they dropped on the tents and
for door fourteen of them twelve year, twelveteen. Yeah, but even though they actually can't get through sixty meters of high performance concrete, so they drop them through the aerill sorry, the air conditioning shafts, so the ventilation shafts, and so, you know, for me, and also being a narcissist, I thought, this is just such a perfect window of opportunity where he can come in. The Israelis have done all the
heavy lifting. You know, they killed thirty generals, They've got rid of all the air defenses, all the aircraft decimated. I ran, and he just comes over the top with his seven, you know, deathly looking stealth B twenty B two raiders and finishes the Iranians off. And then so this is the Kamene puzzle that we still don't know the answer to. He tweets out afterwards that the hit quote unquote is what sealed the peace steal right says like our raid on these nuclear sides and the hit,
but he puts it in adverted commas sealed the piece. Still, I reckon he was intimating to a Kamene hit. So I think he's got the old double entendre going. And so the one hit was obviously the hit on the nuclear sides. But the other hit was I think he knows that comedy's gone. It's also interesting, fascinating. Actually he called for regime change in Iran. He called for Migga makeer run great again. And then now when they've asked him a war about regime change run, he say, oh,
we don't need regime change in a run. You know, that would be chaos, That would be a huge one for me. What he's actually saying is we've already had regime change in a run. We're now dealing with the new guys and we're fine with that.
That's very interesting. And why do you think that it hasn't been revealed here is because the Iranians just don't want to tell the world.
Yeah, I think they want to manage the optics. I mean, they've just had the worst twelve day war, you know, arguably and ranks up there in the history of warfare. Is one of the most one sided conflicts ever. So you know, as a proud nation, they're obviously humiliated, and I think they I think it's also there's a real problem in terms of geopolitical precedent with a nation state knocking off a national leader doesn't really happen often.
It's very very rare.
So I think neither the Israelis nor the Americans really want to author that assassination, even though it's extremely likely that he and his son and he's in he's wider family have all been assassinated because they were sitting in a bunker in northern Tehran. I think it's called Leversan the suburb and the Israelis and the Americans, I think we're pounding. Well, the Israelis were certainly pounding that bunker.
Remember Trump came out and boasted on Twitter or truth social that he knew exactly where KEMANI was and we weren't going to kill him yet, right, We weren't going to We weren't going to take him out at this point.
But he You know, I could be wrong, but I think he's been taken out. That is, if I could just go one step further on their cynicism that some people might suggest it's just cynicism. But in terms of timing, do you think the whole thing was time for his arrival at NATO to sort of take control of NATO as well, Because like, if I'm wanting to convince ever a NATO, you now spend five percent or three and a half plus one and a half of your GDP
on defense. But if I want to convince you, I wanted to show you that I can do what I say I'm going to do. And I mean, do you think the whole thing was timed around this NATO? I think am I being super cinical here?
I mean, I just take a step even further back. I mean, it's extraordinary. This has been a multi decade problem for the world, dealing with a theocracy that is hell bent on trying to evistrate America and Israel. I mean, it's a really serious problem. And that was also hellbent on weaponizing uranium and developing nuclear weapons that they could potentially provide to the who he is and you know,
theirs pro mass Hesbela. So this was a profound, multi decade problem that George Bush, Obama, Clinton and Biden and Trump had never been up to resolve, and then one fell swoop. Trump has again superficially dealt with the problem now, but also in a very kinetic aggressive way, like sending his seven stealth bombers and bombing these guys, you know, back into the dark ages. It's pretty full on. I had never thought about the NATO angle. I think you're right.
I think he wanted to capitalize on that window. I had a naper Nator. But here's the next profound because it.
Was literally a week after but mart and he normally, I mean, he's not going to go unless he controls it. I mean, if you saw he sat, He's sat next to the president of NATO, right next to him. And actually they changed the whole event for him, so they because he doesn't like to sit too long in those disations, so they actually said, okay, we're just going to have one on ones. That's pretty amazing.
But here's what's even more amazing is this guy, the celebrity apprentice star. He'll from a business partner, right, he has single handedly, single handedly changed European history, Like he has reversed the course of European history by forcing these otherwise previously very dubbish from a military perspective, state, So we're spending nothing on defense to boost defense spending to five percent of GDP, I mean, that's extraordinary. That's sort
of in line with long term US defense spinning. But no one in the world spends that much on defense aside from America and China. Here in Australia, we're spending less than half that, and we're an arguably.
Just a small GDP relative everybody else.
And we're arguably in a equally if not more precarious position given our proximity to the south trying to see Taiwan. But Trump has done this. No one else has done this. You know, he was excoriated for you know, not being a multilaterist, and for threatening to withdraw from NATO, and for being you know, Pudin's bitch, and then Ella Mask's bitch,
and then China's bitch and North Korea's bitch. But actually he's There was some sort of interview I saw in the last twenty four hours where apparently the American head of NATA referred to him as daddy and this is Trump. But he's pretty, and he's the guy with the big swinging dick, and he's a trigger puller, like he's a killer.
And yeah, trump trade, the so called Trump trade, the taco trade, that was the other thing. So like he's absolutely blasted it.
Yeah yeah, so you know Trump always chickens out the taco trade trade. That was the other reason I thought he'd go hard and go quickly.
He wouldn't like that.
He would have hated the tarco trade and this taco trade was getting a huge amount of narrative or momentum, narrative momentum in the mainstream media, and that would have That's the antithesis of the way he sees himself. He sees himself as a hitter, right, and he is. He makes decisions, and he often changes his mind, but which is entitled to do right, Like, you know, he wages forever trade war and everyone and then he decides, you know, a week and a half later that he'll do deals,
but he won't do deal with deals with China. He's saying he'll do deals with China, but the reality is they're decoupling right that manufacturing is coming home, and that's his key mission. He wants to square up the rest of the world and make sure that people don't cheat on trade. And I think that's a perfectly kind of
reasonable ambition. But isn't it interesting that this guy that has been dismissed by everybody as being you know, hypermiopic and just incapable of rational cojun deep strategic thought, this is the dude that is revolution revolutionizing the geostrategic environment in the Middle East and Europe.
I mean, it's extraordinary generary.
He's aways been nominated for a Nobel Peace Prize as a result of the And not only does he bomb, you know, the Iranians into oblivion, but he is also catalyzed and negotiated the ceasefire. And I presume now that Ukraine and Russia and the crosshairs, and he's kind of started to create a lot of distance between himself and Putin because he's running around now saying, well, Puttin, offer to mediate between Punaimi and said, I'll mediate between a
run and Israel. And he said, dude, you mediate your own war. My problems with you, mate, You're not meeting anything, mediating anything on my buff.
He said this.
So it's interesting, and it's classically sort of he's a preternatural businessman, like, you know, I take you at face value until I can't take you at face value. But when I can't take you at face value, I'm going to treat you differently. And that's the way Trump seems to work.
It's very itederative.
We were talking about this before. He's massively adaptive, like he's constantly iterating his business model or his mental model to adjust for the circumstances. You know, if people want to be you do handshake deals and principle based transactions. I can do that. But if they fuck me over, well, then I'll fuck them back five times harder and then we'll see, you know what the consequences are.
Just if I could just go flip back to because that stuffs fascinating in terms of someone being so strategic and on their not on their own. Obviously you've got a team, but someone is so strategy and such a short period. He's had to be the president for like
most of this year. So if I just tracked back on one step bar in terms of the bringing manufacturing back to the United States and the point you just may decoupling, maybe we could just spend a little bit of time thinking about that, particularly in relation to interest rates, because in the US and the like, if we take what you just said is being correct, and I tend to agree with I do agree with you, his constant belligerent behavior against the current Federal Reserve boss your own
power would be indicative of a bigger strategy. Plant It's not just because he doesn't like him there's a Biggert strategy plan. What is it that? Why do you think he wants to get interest rates down in America irrespective and just take inflation out of it. Why is he trying to make money cheap in the United States? And why does he want to do couple from China? And why does why would he be happy for the US
dollar to suffer as a result of that? There's some obviously examples reasons for it, but maybe you could explain that, you know, like they might manufacture, they need to export get better currency results. Why do you take us through that?
So when you peel back the onion on Trumps, there's always a really lucid strategic clarity underpinning his decision making. That's what I'm finding. And you know, I'm not a trump ack lite. I didn't have strong views on him in his first administration.
Like he's different this time, Aroun one hundred percent.
Yeah, And this is the keyp on is different, which doesn't normally happen. Like we've just elected our government. Our bow is going to be exactly the same, charm is going to let me be the same. And presumably they're in bolden because they think they have a mandate, so
they're going to do more of the same. We're not going to see I doubt much iteration or evolution, other than them doubling down on whatever they were doing in the past, which is spending a shitload of money and crowding out the private sector, and government solving all of our problems and tax reform, which will be interesting.
Right so I think.
So the Trump program is actually really simple, but it is intricate. So part one is, okay, we set up this free trade system after World War two and we said we'll trade with anyone, and over the period since that time, we dropped all about tariffs and our trade subsidies. And the idea was if everyone trades on equal terms. You know, Mark bills houses, Chris has a factory that produces close that's your pawer of advantage, that's my competitive advantage,
and we all benefit from trade and we're prosperous. And that's the capitalist model, the Western liberal democratic model, which worked incredibly well post World War two. But then, of course some country started to cheat, like Australians to cheated. We decided to subsidize the production of movies and we start stealing investment from Hollywood. No one really talks about this, but the reality is we've stolen a ton of investment
from Hollywood. And then Trump turns around say's, actually, I'm going to wa one hundred percent tariffs on any foreign made films. And we're like, oh, shock, how did you do that? But the truth is we just can't compete with Hollywood, and so we're cheating by getting government to kind of bonds, yeah, compensate for our deficiency. So he's like, we need to square everybody up globally. But the main
culprit here has been China. China has been treating cheating relentlessly and also stealing an intellectual property and being very strategic in trying to dominate key market sectors that have long term geostrategic value, like telecommunications ext up with Huawei, and so Trump's like, we've actually thought we were outsourcing all of our manufacturing to a benign partner in China over the last thirty forty years, but actually they've ended up with control of all of our supply chains, and
the event of any kinetic conflict, we're really screwed. And the truth is now with automation AI and digital printing, we can produce all this stuff at home, because obviously Musk has been an influence in the background. You know, Musk with SpaceX and with Tesla has proven you can build anything you want in an America and be well beating.
You know.
He's got a monopoly in global satellite business more or less, and he was dominant in the EV business until the Chinese totle it all his IP and created a BYD and BYD started decimating Tesla. So so I think part one is he wants to get trade back on an
equal footing. Part two is unless you're a trusted counterparty, as in, if you're going to try and ask for US twenty four to seven and you're going to present a serious, potentially existential military threat to US, as the Chinese in his view, he's not going to trade with you at all, and he's going to bring all that investment home. So that's the game plan. To do that. You need to have credible trade barriers and that investment reassuring that home will create massive growth in the year.
So that's really positive the United States.
Massive economic growth.
Massive economic growth, but it also create capacity and that all things being equal. On the one hand, the investment could be inflationary, but the capacity could be deflactury. But just that's one part of his program. The second part of his program is he wants to deliver about eight
point one trillion tax cuts, massive tax cuts. He has to pay for them, and if he doesn't have money, he's got to borrow the money, and that means he's got to issue eight point one trillion dollars worth of debt and that's going to push up long term interest rates because people like me, the christ Joys the world are going to say, actually, Trumpy, I'm not going to lend you that money unless you pay me high rates.
And that's generally what's happened in the US. Ten government bond yield has risen from about three point six percent in September last year to mid fours and people are very worried about the global tsunami of government borrowing and therefore the dead binge, partly because here in Australia, the States and the Feds are spending crazy amounts of money. We've now our government has a share of our economy
is the biggest it's been since World War Two. Our government here in Australias accounted for two thirds of all economic growth since the pandemic and has accounted for more than fifty percent of all jobs growth.
And that's not your federal birth state now.
Federal and state, so that's Australia. Now Europeans are saying, well, we're going to spend five percent of g to be having done Circle one to fund defense. So where they going to get their money. They have to borrow the money and massive amount of debt, which means it's actually perversely good for someone like Maye because it means I'm going to get great interest rates on those bonds, right, so it means long term interstrates are going to stay high.
But coming back to Trumpy, he wants people to pay a lot of taxes. I get that. In California, if you're a top income, your top producer, you pay more than fifty to fifty five percent.
That's because you pay Californian text too, and federal text.
And in New York you pay over fifty percent as well. But in Florida, where they're running budget surpluses and they're running their finances really well, you only pay thirty eight percent total tax if you're a top income. So a lot of people are moving from New York and California down to Texas where you have the same think thirty
eight percent top tax, and Florida. And so the US has had this cathartic internal conflict that's created the huge intense debate between the Republicans and the Democrats because they're seeing economic mayhem and social mayhem in California, particularly San Francisco kind of failing city, California, fault state, massive budget deficits, sort of on the brink of insolvency. And then they're seeing the counterfaction, which is Florida and Texas, budget surpluses,
crime under control, generally, business thriving and flourishing. And that's I think what's galvanized the momentum behind Trump's program. So he wants to get taxes low. He's got to fund them to do that. He's got to get rid of big government. Specifically, he's got a shrink government by fifteen percent. It's not that much. If he does that, he gets about a trillion a year in savings, and that fully
pays for the tax cuts. Now, if you shrink government and you cut government spending by fifteen percent or a trillion a year, that's deflationary. Because all that money a trullion year was going out there to contractors, builders, you know, service providers and government employees. Now are spending that money. That demand goes, So that's deflation and that creates job losses. On the other hand, the tax cuts, tax cuts are inflationing because that's more money in people's pockets they can
spend that. And then clearly the returning all the supply chains back to America, so reassuring the manufacturing, getting this massive manufacturing boom in the US, which I think will happen. It'll happen much faster than people think over the next few years. That's also inflationy. But the key point is the Fed things are normal ingstraate it's three percent. They're currently at four and a quarter to four and a half.
Inflation has been pretty benign. Tariffs will push up inflation temporarily, but it'll pass through the data like a pig through a python. And here and now the Fed should be cutting now. Trump is right about power, So this is where the signal and the noise is. Power's a bit of a dickhead. Okay, I shouldn't probably say that, but I'll tell you he was very political prior to and during the U S election, So he was pulling super hard for Biden and Harris, and they were cutting when
they shouldn't have been cutting. As I argued at the time. As soon as Trump was elected, they stopped cutting. They cut once more in descemi've basically they said we're not going to do any more cuts. They haven't cut since. And he's been quite reckless in the way that he's been talking about, for example, the tariffs. He's been trying
to maximize financial market volatively. He's been trying to sheet home as much blame to Trump for the tariffs, even though the tariffs in and of themselves are necessary and reasonable because everyone the world's been cheating and stealing American sort of basically stealing their prosperity, particularly the Chinese, anyone who hasn't been trading on fair terms, and he's just trying to square them up. So you do need tariffs
of some sort to rewrite big global economy. But the ultimate endgame is we're going to have multiple trading blocks. We're going to have the non democratic authoritarian states, the Chinas, the Irans, the Russias and North Koreas trading with themselves and probably some African and Asian nations, and then you
have the Western liberal democracies. But you can see this is a big juggling tax cuts on the one hand, cutting government spending on the other hand, reassuring some applight chains, and then issuing potentially a lot of debt if you can't if you can't get the government spending changes, he will have to issue a lot of debt. And this comes back to the FED. The feeds at four and a half percent. Inflation in the US has been benign.
Normal is three. So what Trump is saying, you should be closer to three, and you should be moving towards three, and they haven't been doing.
And we America in the country as a as a borrower, as a borrower, could be paying a lot less interest exactly if you reduce the rate.
Yeah, that's the one liner. The one liner is the Americans have a lot of government debt. Potentially that government debt is going to increase unless they crush government spending. So Trump wants to get the interest right down on that government debt. And one way to do that is definitely try and get the Fed to cut But I think intellectually he's right, the FED should be cutting I mean,
I think the FED should be cutting right now. It's not that they should put rates at a really low level, but they should probably be getting closer to neutral and their way. I mean, they're miles away from neutro at four and a quarter to four and a half neutral three.
They should be much closer to three. And I think, you know, he's had it with power, and so he's latest I think movies to say, you know what, I'm going to appoint your successor or naming name your successor exactly, and then that will completely undermine powers authority, and power will be forced now to contend with an internal replacement that he will have to to some extent reflect the will of So so it's all really interesting and the world's definitely a more safe and stable place post Trump
Bombinger run, just make no mistake about that. Like, everyone feels better about the Middle East. The Saudis are happy, the Syrians are happy, the Jordanians are very happy, the Israelis are happy.
The Emirates happy.
The Emirates are very happy. Happy, everyone's even Qatar and Oman, which you know have had close ties to a run. Yeah, they're probably neutral to positive. So so you know, one guy's done this and it's just quite amazing.
It's amazing, It is quite amazing because.
We don't have leadership like that in this country. Mate. Well yeah, but like you should run for office, thanks very much.
So let's just bueld it back. You should do something. Yeah, well, you can't run for office in this country. The problem is in this country. You can in the US, but you can't in this country. In this country got to being a party. The party's got to win or be able to do deals with somebody else and have a coalition, so to speak. And then you're going to be by your party voted in to be the dute And that's the problem in this country. That's the issue around that.
I mean, it's fraught with danger. If I could just peel it back then. So relative to anyone who's listening to this, who's interested in interest rates and prosperity here in Australia, which by the way, is that the RBA is that mandate you know, welfare and prosperity of all Australians, by the way, which is the terminology in its mandate. What do you think all this means for Australia. So I'm not going to talk just put interest rates aside for the moment. What do you think this means for
US just as a nation? What's happening in the US.
I'm actually loath to kind of talk about it because I've got some pretty serious concerns and fears short term, like we're spinning like drunken salors. So all that a government levels, at government levels, all that public money from the states and the fairs, is going to mean that growth in austral is going to be good and the economy will look good, will look good. Economy is going to be totally fine because the government will be powering that growth well.
In terms of dudyp measurement. Correct, Yeah, but that doesn't mean it's good.
It doesn't.
If we go to look at private sectors part it's not so good.
Yeah, it's abysmal. And then we've also got super strong population growth and a lot of these new immigrants have voted for labor and so that's going to continue and it's putting a lot of pressure on cities. But as far as the economic data's concerned, people come to the country, they spend money. That's positive in the long run. I mean, we're really screwed.
Do you think it's your musing? Okay, do you think GDP today is a poor measurement of how well we're doing because it can be manipulated.
Yes, one hundred percent can be manipulated. I mean it's a measurement. It's a very carefully measured proxy for the rate of change in output over time. But I mean what I'm focused on is productivity and what that means is output for our work, So how much we produce for the amount of time we put into it. And on that basis, Australia. Australia looks terrible. I mean, we're on a productivity basis, labor productivity in total what's called multi factor productivity, but basically.
Whether you've gone backwards MFP, Yeah, it's gone backwards.
So if whether you look at broad productivity or just labor productivity, what you see as Australia's productivity performance has not really improved over a quarter of a century, and we're lagging Europe, We're lagging by long way the US, and we're going to end up Asia as of etha. We're going to be a beach resort for rich members
of the literati in the Indo Pacific region. And it's okay for the short term, it's okay probably for the next five, ten to fifteen years, but eventually for our children's children, it's going to be a massive problem and we won't produce anything. There won't be any entrepreneurship, any real innovation, and then living standards will start to decay signif.
Have but not significantly, I guess because one of the things I found quite fascinating the other day when I was looking at capital investments, So in other words, the amount of money that gets reinvested by not any prophecies, but also by the government in terms of how efficient, how efficient I should say, employees can be for example, you know the verious tools that employees can use to be much more productive. Our cabin investments like at an
all time low. As you just mentioned. Our productivity relatively speaking, has been in terms of normal measurements is ridiculously loan as probably the worst it's been for a long long time. But what a really fascinating is a sent about eighty
percent of our productivity is coming from services sector. It doesn't come out of product products actual products, So eighty percent and becaurse I'm not having here having to go at you, Jimlake, but you know, when you keep putting people long into public service and not having our public servance side because as a space for public service saying
can be wrong. But the more times you just keep loading up the employment number, well then I'm employed as a result of all the people you bring into the country. The more times you can continue to do that, you're just building up this services sector which by definition, generally speaking, isn't that productive. So as a result of that, the
productive productivity of the country is very very low. Opposite in the United States, opposite in Germany, and heavily with the amount of capital that Germany and the US have reinvested, we aren't investing anything into our public service in terms of making them more efficient and therefore more production.
You're exactly right, Mark, It's interesting, Well, not only we're not really producing anything in Australia like tangible goods, that's all been offshore, but we're not actually investing in technology or soft capital investment. Yeah, but we're not investing in technology to support our services.
Yeah, correct, that's what I'm saying. We're just saying, go into the job, so people working longer hours, more hours, but they're not working more efficiently and they're more productive.
So it doesn't matter hay sliced, does it. Whether you look at research and development, whether you look at the amount of money that firms are investing in technology, software and tools to make their employees more productive, whether you look at overall capital spending, labor productivity, which is bismal,
total productivity terrible. It's just a disaster, and we're kind of just kicking the can down the road by bringing massive amounts of people in the country to grow through population growth, and by borrowing from the future and spending today. You know, a country, a state like Victoria just prior to the pandemic in twenty nineteen, I think owed the world forty five to fifty billion. Within a few years Victoria owed the world close to three hundred billion. And
it's interesting. I saw Peter Thiel in the last twenty four hours came out and said that he thinks the reason that millennials have sort of pivoted to a hard left political direction is they've got a lot of student debt and they can't afford to buy a home, so they're looking for the public sector to provide that panacea to that solution. And I definitely, you know, notice it when I speak to the younger generations that worked for us, a lot of them voted labor and which is not
a bad thing, Jim. I'm not party political. I don't really care. I just want solutions. But but it is interesting I think people, and particularly in a very entitled place and economy like Australia, where you've had just like you've been hit on the ass by every golden rainbow, imaginable well beating population growth, world beating endowments of commodities and natural resources and now you know, mega public spending and the absence of a bona fidi recession since nineteen
ninety one. You know, people have just become accustomed to expect these solutions to be perveyed to them. And I think that's the problem. So Asias of bethro is the direction in which we're heading a beach resort for the well held of the region. And I think it's a huge problem. But what can we do about it in the meantime? In the short term, and everyone's so myopic and hedonistic. In the short term, everything's going to be fine. In Australia like rate's going to come down. The rbable
to cut three times this year. The cash read will go to three percent. It's currently a three point eight five percent. House prices are starting having been very weak in Sydney and Melbourne, house prices we're falling in twenty twenty four. House prices are rising at a decent clip, not a crazy clip, but we'll get a very robust housing recovery, which is good.
Do you subscribe to the View you rate reductions house price increases?
Of course? Yeah, Well it's not, it's an empirical fact. I know my esteemed mate he does not.
I saw I saw something of on next recently. He doesn't subscribe to View.
It's just wrong. I mean it affis purchasing power. The only way interest rates coming down directly and very materially change the amount of debt that you can afford.
To assume, and it goes straight into the property.
And therefore interest rates coming down directly impact the value of the property that you can purchase. Nothing formula, and it gets capitalized into prices and the only thing that can change that is supply. Yeah, and so you produce more houses. But you know, we can't change supply instantaneously. That's a multi year process. So the supply side, so you know, in the long run, the supply side should react to those changes in demand that are a function
of changes in interest rates. But there's no doubt that house prices are highly interest rate sensitive. And it's not a bad thing. I mean, this is what the NBA. This is called the transmission mechanism. The RBA cuts rates, that reduces borrowing costs, and that shows up in the form of more discretionary disposable income, higher house prices. So the housing market is a key channel through which monetary policy provides it bequeaths that economic relief to the broader community.
It's not a bad thing.
But yeah, there's a lot of power for our monetary policy too. We observe during the rate rise period because most trainers are on fixed on verable rates, but during a rate reduction period, that verbal rate is pretty valuable and it actually reflects in the purchase purchasing power. As as you said, it's amazing, it's actually just as solid on the way down as it is on the way up.
Well, I'll tell you this, and i'd say this to Kookie. Doubt Cookie's got to this, well, maybe has got to this part of the interview. But if you look at the daily Cooreo Logic house price indexes that I helped co create, they're published on College Week's website. You can see them every day, and you hit the back series tab on the core Logic website and you dis select every city except for Sydney. What you'll see is that Sydney prices were falling until the middle of Februar this
year cuts rates. Literally the same week they cut rates, house prices turned one hundred and eight degrees, started rising again, and then rose and rose and rose, and then they started to stabilize a little bit until May. When May came along, we got the cut and they went off again to the races. So there's you know, it's unambiguously the case that prices are very responsive to changes in the purchasing power of those properties, which is governed by incomes.
And income is fixed, but the amount of money you can borrow is variable. Because correct interest rates goes down, you can borrow more money. That's what we do. We lend you more money if because when we do our calculation, your debt servicing ability is far greater because the interest rate we assume you're going to pay is much lower.
I actually want to ask you a question, like, you've had a bit to do with Trump yourself back the day when he was the gregarious entrepreneur and he's political, he wasn't in that political decision making mode. But I remember asking you about this years ago. I actually can't remember your response. So what was he like?
Well, yeah, but the thing I've had a trumpes is very purposeful. So he knew everything he was doing, down to the most minute detail, how he dressed, how he addressed the camera, what we talked about. Because I interviewed interviewed him. I spent like forty five minutes interviewing him. Yeah, yeah, we did a live TV interview, Yeah, one online which I'm trying to call you but I can't find it.
But it's his purposefulness in relation to his answers and everything he tracks and he sits on the same topics he won't It doesn't matter what questions ask He knew what answers he wanted to give me.
So so interesting because I see that in that mindfulness and purpose purposefulness that you mention. You see that actually in his interviews.
Now he knows what he wants to get out before he gets there.
He's delivering those very, very clearly cultivated messages, but he's also very strategic with their delivery. Have you seen the there's a really good little video of him recently where he's getting ready for an interview.
Have you seen this one?
And so there's two actually, So he's prepping for an interview and there's a table with a glass of water next to him, and he's just sitting there and the camera's rolling and the MIC's hot, and he says, hey, John, move that table. And so he moves the table and he just sits and he says, actually bring it back, and bring the glass back. And the glass has a little piece of paper on top of the glass. Just get rid of the piece of paper on top of the glass, and get rid of the matt under the glass.
And he's just looking himself in the camera. Yeah, that's perfect. And then there's another shot of him in the Oval office and he's recording his commentary on the I think the US economy and he's being fairly there's a lot of gesticulation and he's quite emphatic, and somebody coughers coughs halfway through. You know what he is. This is a kind of distant coffee you can hear in the background because it stops. Why the hell would you cougher the room?
Leave the room and let's roll again, And he kind of seamlessly just slides straight back into that discourse.
But yes, super super, I would say this, Chris, like a irrespective of your politics, whether your Republican or a Democrat or a liberal or a labor whatever, never underestimate him. If you do, you're going to do it at your own peril. The guy is on on narrative, on brand, on everything. He absolutely does like he knows exactly what he's going to do the outcome and it is not right. He gets it fixed and he has the ability to.
By the way, when when when I did the interview to preempt where you might go first because and I won't say what he was asked me not to talk about, but he actually preempted a number of things to me before we got to that territory. And he did it through his head of pr person here they come and told me what territories you cannot go. And then when
we did talk about fainily enough. He was. He was extremely critical of China an Australia's relationship with China, and I said to him, well, you know, like at seventy percent of our trade, you know, like export trade, and he just didn't copy. He's just but they're raping you, he said, are they are taking you for a ride? And he did not. And I thought it was chill because like you know, this is like they're a major trading part I think I don't want to go down
the territory. But he didn't give a damn. So to some extent, and be honest, he's fearless. He's fearless like in a commercial Sceen is quite fearless. He doesn't care if the opposition is his.
Ear blown off. And he was up there saying five fight fight. The dude's got balls, like he's he's a hitter. Yeah, he's a real hitter. And it's interesting how controlled and yeah, strategic and disciplined he is with his own decisioning and external as you were saying, communications like everything the no drinking, the no drugs, the appearance, the way, everything's very very careful.
He's always on cure always and then he's messaging is just relentless, and relentless is a good word. And we're not here trying to blow smoke up the president's bump. But in terms of observations, I think relentless is a good word. He's relentless with his messaging about himself and everything that he's trying to achieve. In terms of his strategy, he's totally relentless. And even at seventy nine, just turns
seventy nine. That's quite amazing. Acuities, incredible leaks, bang bang bang, and he's on and everything sort of set out, And I just want to quickly.
Ask you before we go on, so one other point here that is important to your comment that we're not here to blow up, blow win up Trump's us. Like my job, I run fifteen billion, My job is to anticipate what the MOFO is going to do, right, I have to. You know, I invest a huge amount resources in trying to study him and understand him. And then through that process, if I find his decision making interesting and informative and illuminating, I'm actually trying to learn myself.
You know, how can I better prosecute my own decision making problems? You know, when you've got a guy that's been elected president twice, he's a multi billionaire. Okay, he comes with all his again let's say acknowledged shortcomings, but there's there's the signal with the noise, there's there's something we can everyone can learn from Trump.
And that's what today's about. And by the way, what do you read about the must trade?
Great question. Yeah, so I think he just blew up. I think he really regrets the you know, vicious exit. I think I think that was an amazing partnership. I really hoped that it would endure. I actually think there'll be a reproachment at some point. Musk will come back to owl between his legs. I mean, Musk got way over his skis. He was politicizing everything he touched. Tesla was blowing up, he was a risk of losing SpaceX contracts. He wasn't focused on his businesses. And you know, I
don't know, I mean he was. I don't want to call him a nascist, but he was clearly enjoying being in the Oval officer every day, sleeping in the Lincoln Room, being joint press conferences with Trump all the time, and I guess being at the center of a global decision making authority, dealing with leaders of nation states. So he
was clearly getting off on that. You could see whether he has this ketamine addiction, I'm not sure, but it's clear that that he's an unusual cat, and it seemed if you look at the tapes, he was on something.
And he has retracted a bit since.
Yeah, and he's you know, he's he's definitely retracted a fair bit since. So, I mean, the big beautiful bill. Sure it has a lot of pork barreling in it, but these things are always compromises. You know. The tax cuts are important, the defense spending is important. I thought Doge had a lot of momentum behind it. So he kind of torched Doge. He torched his constituency inside the White House. He potentially torched a lot of his access in the context of his own businesses like Tesla and SpaceX.
SpaceX's biggest customers the US government, So that's a that's a big potential problem. I think it's interesting how his crawl right back into his shell musk, and he's thus far been pretty a political except for the Californian rights where he's been retweeting what Trump and Jady Vance have been saying, so I think I think Mask made a big mistake and it wouldn't surprise me if he was intoxicated. I also thought the way that Trump dealt with him
was really interesting, like really interesting. He was far less vicious and far more restrained until Muss started dropping the personal bombs on Trump, and then he just said, listen, you know, if you want to get personal, we can get personal. Like, you know, we don't need to do business with you if you want to go down that route.
That's not shout, but that's like that's like the Iran Iran trade, like, yeah, you got forty days. Yeah, yeah, I mean will do a deal. He'll do an ultimatum that's to anyone.
Correat Yeah, And Jady Vance said, I thought it was really interesting. Jeddy Vance said, we love Elin, he's been great for us, but do you really want to get into a blood rivalry with Donald Trump at this point in his career. No, that's not the trade you want to do, and he was just like, you get back into your box. I love Musk. I think he's amazing and he's an extraordinary human being. He's done so much for society. But I think it was just a mistake.
We all make mistakes, and I think I think Musk will iterate big time. So I expect Musk to come back out and swing strongly behind Trump in whatever ways he can in the future. There was also I mean, I think Trump made the point that Musk was upset about him removing the electric vehicle subsidies by way of this big, bold, beautiful bill, whatever it's called. And whether that paid played part of it, I'm not sure. There was also, I think issues with Musk dealing with the
broader administration. It's one thing to have a bilateral relationship with Trump when you've got to deal with all of his lackey's. Someone like Musk is going to blow up those guys because he's just you know, for sure, he's a force of nature. And so yeah, but I'm disappointed, mate, because I thought Musk had a lot of answers to Trump's problems from a policy perspective, like Musk has really extraordinary strategic clarity, and he was right on the economics.
You know, you've got to cut government spending in the US in order to balance the books, and you need to balance the budget in order to start paying back the debt and reducing the burden of the interest rate servicing costs. So yeah, it was disappointed.
I got down in Murky on in next week. What would you say about the budget that came up from New South Wales on Tuesday this week?
Mate, Mooki is probably the best politician in Australia. Definitely the best treasure, best treasure in Australia. I'm sorry, definitely the best stay treasurer your soft mate, come on, So yeah, Mooki is definitely. I think he's the hardest working, smartest politician in the country. He is formidably intelligent. He know what's different about Murky as well. I think he really is in it for the right reasons. He doesn't want to be Premier or Prime Minister. He cares about change
and he's also very sensible. I've dealt with him a lot. He's a fucking weapon, mate, He's an absolute beast man.
How much of the budget do you think was about saying or preserving our credit rating for New South Wales I'm talking about.
I mean with a good look. Yeah, I think we think they're at risk of losing the credit rating. But he's doing everything he can to try and salvage it. I can tell you this. You know, the Victorians are borrying about forty billion a year, the Queensland's borring about forty billion a year. Mook, He's only borrowing twenty four billion a year for a bigger state, for a much bigger state. And so he's been incredibly disciplined on debt. And that's something I spoke to him a lot about
before he became treasurer. He's an immense he's an immense human being, and he's one of the good guys. Like if someone like him could become premier or Prime minister, that's when you win, you know, when you've got somebody who's there for the right reasons, who isn't a narcissist, who isn't just trying to accumulate power and kind of settle scores, And then.
That's how that's how I see Christian's by the way, at a state level, yeah, I think christ is there for the right reasons. Us again that right, but he's in the right reasons. He's not trying to settle scores. It's I think it's a bit different at the federal level. But I meant anyway, I rate both.
I've only met him once and I had like a meeting with Min's and Murky and Men's was fantastic. He went to Princeton. He's a farman, super impressive guy. And I think the fact that there is also normal normal and the fact that their relationship is sort of seem to be high fidelity is very positive.
One more question for Chris. So one of our listeners has asked asked us to ask you this question, he says, from one of our Mental Plus subscribers, Aaron Scott, and he says, I'm here to to hear Chris. Chris's thoughts about tax reform, and we like to see lower income taxes, a high broad based consumer tax such as an increase the GST, or he says, an increase in CGT. So I presume it could be meaning capital against AX or the GST. But we are we do have a reform. Sorry,
we do have a someone coming up in August. I think it is question is have they asked you to come along?
And they haven't asked me either, So what are you not one of the good guys as nor am I one of Charmers himself, or one of those guys said a long time ago that dealing with me, you've got to use fireproof gloves, so they don't trust me. And that's fine. I mean, I've got no problem with any of them. As said, I'm pretty a political but I just the problem is I say what I think and I can't be controlled and therefore, well, you're not going to be a job.
Why would you?
Yeah, But I think answer to the question, I think everything's on the table, capital gains tax discounts, capital gains tax period GSD.
He's made it pretty clearly.
I would just think that state taxes, gst capital gains taxes, you know, mineral resource rent taxes, stamp duty is like state and federal taxes. I think it's all on the table because they're going to need to raise a lot of tax.
Or that'll borrow more money, which is a problem.
Yeah, yeah, to pay the interest on the the borrowings of their currently.
Yeah.
So I think taxes are heading one way, and I think it's gonna be really nasty unfortunately. And I think this is over a ten. Particularly if they get another two terms, you're going to see a huge increase in the public tax stake to fund the NDIS. I mean, that's sixty billion a year, as big as medicare one and nine kids are apparently autistic. It's just the biggest. It's the biggest rued in the history of ruds.
And you know, one of the reason why I found it the other day is because if you're diagnosed and prescribed as autistic, and I don't mean severely autistic, I don't mean completely different everybody else, because there are autistic people in kids who are really at a disadvantage to some extent, and fair enough, but even if you're mildly autistic, however that it gets diagnosed that they at the HC, they get special advantages in terms of how they do the exam. They get much more time.
Well, it's also assessed not by anyone who's into pen interview, but both whomever you choose to have the assessment made by. And it's not means tested.
So clever parents will say that diagnosed every.
Man and their dogs now in the NDIS. And so I think the taxes are heading one way. I mean, you're going to be paying a lot of tax to the government because the government's got to pay for the NDS. They're going to pay for all this infrastructure, they're going to pay for the huge public service and the fact that they represent a larger share of the economy than any government we've seen since more or less World War Two.
So I think forget what they say, like any any claims that we're not going to do gs here, we're not going to do with stay taxes. I think it's all on the table. Maybe not this term, maybe next term, but it's they're coming for everybody. There's gonna be a lot of tax paid. I mean, and you see the bifurcation here between libertarian states like Florida in the US
and the super center left states like California. I mean, the totality of taxes you pay in California fifty six, where you're paying basically half that in Florida, because they're just two distinctly different business models. And I think it also is unfortunately generational. Younger generations want government to solve their problems. Order generations want government to get out of the way.
And yeah, have you got one quick, quick one that just came through to my mind. Let's forget about the unfairness of the total tax or the way its been calculator should say, but this superinnoation tax over over three million dollars was your view.
It just doesn't make any sense to me at all, Like, I have no idea where this came from.
It's not indexed.
I mean, it just looks like an a team gains unrealized gains. It looks like an attempt just to attax into oblivion anyone who has a large superbalance.
But what would be the episode?
Presumably the intent is to get them out of Super. But where's that money going to go? It's probably going to go back into the owner occupied property, right, Like, what are you going to do? You're going to take your fix million Super and say, fine, I'm just going to upgrade to a bigger house and get tax free capital gains on my home.
Maybe they've got that lined up as well.
Wouldn't surprise me, mate, it would not. I mean it's going to be nasty. It's going to be really bad.
This is terrible. But but it's not yet. We'll wait and see what happens in August or whenever he's having commting and what you know, Dreasure, you should be inviting this bloke and a few other people that I know, but I doubt very much again invite us. We'll at least tell you what you should you need to hear.
We won't be there, So I say what we need to do is Australian needs to be a magnet for the best talent globally and to do that we need to have globally competitive tax rates. And we know we're close, like we need to radically revise. We should be less progressive in our tax regimes.
It should be.
Much the tax CAU should be much flatter, much lower. And but it'll happen. What's going to happen is we're gonna have a couple of terms of this and then there will be big problems. But eventually you get a trumpy and style character who just come in and will just slash all the taxes, and so you know, the pendulum will swing in the other direction and eventually just gonna stay alive long enough, you guys, stay alive long enough.
Yeah, thanks mate, good to speak in Chris
M.