NAB Morning Call

Rodrigo Catril, NAB’s market strategist, sheds light on how China's rapid advancements in AI are causing US investors to rethink their strategies. He discusses the implications of this competition for American tech companies, particularly in the semiconductor sector. The conversation dives into market shifts, with a notable move toward bonds and safe-haven currencies like the yen. Catril also highlights the potential political ramifications and how these changes might affect future negotiations ahead of the upcoming election.

Friday 24th January 2025Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.Telcos, like Telstra and Optus, have been forced to change a lot over recent years. Their traditional revenues – providing phone calls and text messages – are disappearing, replaced by data access. But even that faces pressures, as people’s data demands increase at a faster rate than their willingness to pay.Luke Coleman, the newly appointed CEO of the industry body The Communications Alliance describes to Phil how telcos are changing. The major online providers, like Google, Microsoft, Meta and Amazon, need an increasing amount of resilient, reliable data storage and processing power. Telcos have an increasing role in providing these centres, or, at the very least, the high speed fibre connections between these centres. As Luke explains, it’s growing, it has to stay on-shore, and continues to provide an opportunity for Australian investors. Hosted on Acast. See acast.com/privacy for more information.

Friday 24th January 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABStrickland says he was much more conciliatory concerning his relationship with China, whilst reiterating that companies the world over have a choice to produce goods in America, at the world’s lowest tax rates, or face tariffs on exports into America. He also asked OPEC to reduce oil prices, which did lower prices for a short while, but didn’t hold. There’s also discussion about the Norgesbank on the podcast today, who find themselves in a very similar position to the RBA, and the global PMIs today, possibly reinforcing the case of America exceptionalism. Hosted on Acast. See acast.com/privacy for more information.

Thursday 23rd January 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere weren’t massive moves in any asset classes overnight. NAB’s Skye Masters says bonds were range bound with very little in the way of data, and nothing concrete from any of President Trump’s more contentious plans, particularly tariffs. It seems a review of trade will be completed on April 1st, so we could face several months of speculation before details firm up, meanwhile tech stocks have done well, in part because of strong earnings, such as Netflix after the close yesterday, as well as Trump’s proposed AI Masterplan. It’s second tier data today and tomorrow night, including Canadian retail sales and the US weekly jobless claims numbers. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 22nd January 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABIt’s the first full day for Donald Trump in the White House and markets are already assuming tariffs will take a bit of time and perhaps won’t be as pervasive as he was initially letting on. NAB’s Gavin Friend talks through the market response, which has assumed, ultimately, there will be a less radical approach to trade, with tariffs used as a leverage for a better trade balance. For Europe, for example, that could mean buying more energy and defence. On his counter to inflation, through a program of ‘drill baby drill’ Gavin doubts the US oil and gas industry will be that keen on upping production and seeing prices lowered. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 21st January 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABDonald Trump is now the US President again. At his inauguration speech, on what he called Liberation Day, he outlined a slew of Executive Orders that he will sign in the next few hours. NAB’s Taylor Nugent says hours ahead of the inauguration the Wall Street Journal published a suggestion that tariffs might not be implemented from day one. That doesn’t mean they are off the agenda, however. The new President talked of an External Revenue Service that will collect “massive amount of money” from foreign countries as part of an overhaul of the trade system, that will see consumers paying less tax on goods, instead the cost will be incurred by foreign companies through tariffs and taxes. Taylor and Phil talk through some of the other plans and schemes that the new President intends to enact. Hosted on Acast. See acast.com/privacy for more information.

Monday 20th January 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABUS markets are closed today, so a quiet start to a potentially very volatile week, depending on what executive orders the new President issues in his first week in The White House. NAB’s Ray Attrill says there was a reaction in the US dollar to a social media comment from Trump that a call with President Xi had gone well. There’s also been speculation in the Wall Street Journal about how China will respond to hefty tariffs, if imposed. If the response is to oversee the weakening of the Chinese currency, what impact will that have on the Aussie? Hosted on Acast. See acast.com/privacy for more information.

Friday 17th January 2025Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.The ABS Labour Market data showed a strong rise in the number of people employed in Australia. The unemployment rate at 4 percent is where it was a year ago, but more people have joined the workforce. So, why are more people taking on jobs? Phil talks to Bjorn Jarvis, branch head for Labour Statistics at the ABS. He provides some useful answers about who these new workers are and the perplexity about why Australia has a higher participation rate than many other countries. He provides some useful insights, but naturally steers away from the question everyone has -  is this low level of unemployment and high participation inflationary? And, after a year around 4 percent, is there anything to suggest the unemployment rate will tick higher anytime soon? Hosted on Acast. See acast.com/privacy for more information.

Friday 17th January 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABMarkets responded to a more dovish stance taken by the Fed’s Chrsitopher Waller, interviewed on CNBC. There was also some reassurance from the confirmation hearing into the intended Treasury Secretary Scott Bessent. NAB’s Rodrigo Catril says he said exactly what markets wanted to hear, including his commitment to the independence of the Fed. Whilst strong retail data in the US supports the case for an economy doing well, UK GDP growth has stalled and the ECB minutes highlighted that monetary policy might be too aggressive in light of slow economic growth, that could cause an undershoot inflation targeting. There’s also discussion about yesterday’s Australian employment numbers and what the resilience means for the direction of the RBA. And today we find out whether China hit their 5% growth target last year, alongside a number of economic indicators. Hosted on Acast. See acast.com/privacy for more information.

Ken Crompton, NAB’s market economist, shares insights on the recent CPI data, revealing its potential to prompt multiple Fed rate cuts this year. He discusses how declining inflation is impacting bond markets, causing yields to fall across the globe. Crompton also highlights the surprising employment data from Australia, pondering whether it indicates a tight labor market or prompts a shift in the RBA's inflation views. The geopolitical ceasefire in the Middle East barely affected market responses, with optimism prevailing in equities and bonds.