Sam Dickie: Fisher Funds expert on the economic impacts from the Middle East crisis

There's growing concerns about the economic impact of the conflict in the Middle East.

Flurries of missiles are still crossing borders and the BBC reports Israel's launched more strikes on Lebanon.

UAE officials are responding to Iranian missile threats and Qatar has intercepted several drones. 

Fisher Funds expert Sam Dickie explained further.

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Episode Transcript

Speaker 1 (00:00):
Never duper cur Now, before the Iran conflict kicked off,
the US economy was flying, while New Zealand was struggling
and Australia was stuck with that inflation problem. Sam Dickey
from Fisher Funds is with us to talk us through
this high Sam Hey, Heather, how different were things looking
for the US economy versus US and the Aussies.

Speaker 2 (00:17):
Yes, very different stories across the three economies. So the
US was doing really well, sort of growing around three
percent the last couple of years, and inflation was continuing
to fall and it's almost at the Central banks target.
So that's otherwise known as Goldilocks, that really powerful combination
of strong growth and falling inflation. Ozzie had been growing okay,
somewhere in the middle about one and a half to

(00:38):
two percent, but it has an inflation problem. Inflation started
rising again last year. It's around three point five percent today,
well above the Central Bank's target. And then there's New
Zealand and then out of recession as we know, and
inflation hasn't really behaved that well either. It stayed higher
than than the US and headline inflation started rising last year.
So the US is sprinting Ozzie's been on a tree

(01:00):
mill again fighting a head wind. In New Zealand's been
on the stretcher.

Speaker 1 (01:03):
So why has the US been able to pull this
whole thing off so much better than we have all
the Aussies?

Speaker 2 (01:10):
Well, I mean, if we do start with the Aussies,
they just couldn't kill inflation. They got that double dose
out of the back of COVID, so massive COVID stimulus
like we all did from the government and a commodity
windfall that kept the economy running red hot. Now that
commodity tail in Australia is kind of fading fast, so
they face a tricky dismount as they're fighting yesterday's inflation

(01:33):
still but tomorrow's growth engine is sputtering. And as you know,
New Zealand has had hard off the post COVID boom.
Our house prices ran harder than most OECD countries that
two year fixed mortgage phenomenon, whereby we were hit in
the pocket pretty hard. You know, that mortgage bill went
for around two billion their quarter to six billion. And
then the US just has stuff that we don't have.

(01:53):
So they have nine their mortgages fixed for thirty years.
So there's a real staggered impact on the consumer. And
of course we've talked about this nauseam and the massive
AI investment going on over there, and of course they've
got a lot more fiscal large s, so they're running
kind of six percent fiscal deficits over there, which is
nearly double their fifty year average.

Speaker 1 (02:16):
Now that a run has kicked off, though, does this
blow up the US advantage or does it tilt the
playing field for each of the countries.

Speaker 2 (02:23):
It's no one knows how it's going to turn out.
But if the oil prices stay high, it's say over
one hundred dollars a barrel for a few months. On
the face of it, before we consider the all important consumer,
the US and Ausia are better off at a national level,
so they're both long oil or they are net oil exporters,
and you know that we're the odd one out. We're
a genuine net energy importer. So basically it's a at

(02:46):
tax on every Kiwi household. But the reality is consumers
in all countries get hit in the pocket at the pump.
So the only other nuance I would say is we're
kind of match fit for a tough environment over here,
and I don't say that lightly. That would just likely
prolong the temperate economy in New Zealand, whereas, given the
really high expectations of ongoing strong growth in the US

(03:07):
kind of muddied by the upcoming mid terms, I think
there could be a more painful adjustment over there.

Speaker 1 (03:13):
Okay, what does this mean then for investors?

Speaker 2 (03:17):
You know, as we've discussed, trying to read the tea
leaves on geopolitics is always fraught, but especially so this time.
And I think there've been six different reasons and five
different objectives floated by various people in the US administration,
and they all contradict each other at some point in time.
But just keep an eye on those circuit breakers you
and I talked about in April last year heither, which
was President Trump doesn't care about the stock market and

(03:39):
Wall Street per se, but he cares about hurting Main
Street and the higher oil prices obviously, but also the
higher interest rates we're seen in the US as a
result of the rising inflation expectations will definitely be hurting
the person in the street. So hopefully that will cause
them to blink sooner rather than later. But in the meantime,
remember to use this as an opportunity to kind of
understand exactly what you own as an investor, make sure

(04:01):
you're as convicted as you thought you were. Use it
as an opportunity to speak to your advisor. And if
there are fabulous companies you wanted to buy yesterday that
are much cheaper today, it can be an opportunity as well.

Speaker 1 (04:11):
Yeah, hey, thank you very much. Sam has always appreciated this.
Sam Dickey Fisher Funds For.

Speaker 2 (04:15):
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