Shane Solly: Harbour Asset Management spokesperson on whether the US Federal Reserve will cut rates

New inflation data out of the US has experts speculating potential rate cuts in the coming months.

The Federal Reserve is set to meet on Thursday - and it's likely they'll offer an update about when rate cuts will come.

Harbour Asset Management's Shane Solly explains further.

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Episode Transcript

Speaker 1 (00:00):
And I welcome to the program. First time I've spoken
to Shane Solely from Harvard Asset Management.

Speaker 2 (00:04):
Hello, Shane, Hey Andrew here, you going very good.

Speaker 1 (00:07):
We've got some inflation data data. We've got some inflation
data out from the United States of America and it's
looking promising. And could that mean a rate cut by
the Fed?

Speaker 2 (00:18):
Yeah, it is. It is data data, whatever you want
to call it. And we saw a personal consumption experience. Sure,
this is the key measure that the Central Bank and
the US the Digital Reserve focuses on. It came in
zero point two percent for during two point six percent
for the year, and it just means that the US
is on track to hit the fence inflation target. They've
got a meeting on Thursday to discuss whether they're going

(00:41):
to cut rates or not. And certainly markets don't think
they would do it this time, but they'll start using
language it's more softer about reflecting the full on inflation
and labor markets, and so there's a lot of thinking
about as the CUPTA in September or there's a later
and summer markets have got quite a lot price. Then

(01:02):
if they do start cutting, there's a long way to
go back to sort of four percent by June twenty five,
so more than one and a quarter percent. And of
course that's helpful for our part of the world as well.
Be whereas our long term government bonders, interest rates teem
to refer back to that US rate.

Speaker 1 (01:19):
Do we want lower rates?

Speaker 2 (01:21):
Do we want you know?

Speaker 1 (01:22):
You know what I mean, because during COVID we had
everyone was going, God, God, do it go going vis
they're giving the money away. It's free money, and they
can actually distort an economy just as much as expensive money.

Speaker 2 (01:34):
You're right, yeah, And there's no such thing as as
three rates, but you're right. They're abnormally low, and it
creates some abnormal outcomes. And that's the price we're paying
right now, Andrew. And that's why we've got central bank
rates back to above average. Long run This is still
a by beverage, and so we would expect them to
settle somewhere a little bit lower. But I'd like to
see them to go back to the COVID lows unless

(01:55):
we do actually have a disaster like COVID or war.

Speaker 1 (01:59):
Or something like that. But there we go. Is it is,
by the way, it is data because I checked this
apparently data data was the americanization. Data is what Routers says,
and I'm trying to train myself to say data. So
let's talk about New Zealand economic data, which continue to
be weaker than we thought.

Speaker 2 (02:16):
Yeah, and anyone's at the string of weaker data confirmed
again with another piece today, which is a data point
that's not looked at very often. It's killed jobs employment
and that's a bit of an indicator about whether the
employment growth is stepping up or down. And unfortunately we're
down zero point six percent for the gene quarter, and
that means the unemployment that I may actually get above

(02:38):
five percent, and the Reserve Bank that's again when to
give about sitting policy. They're thinking it's going to be
around as a four and a half four point six percent.
So unemployment will we hire means there's more capacity in
economy taking some of that inflation push it down. We
all know it, we can see it in the street.
But there's a question about central bank policy works for

(02:59):
a lag, takes time to work, and so we're all
thinking about when does the Reserve bankings on cut rates.
Do they go on August or in fact, do they
go a little bit later as some of those non
trabletation peaks. So it's kind of win rather than if.
And certainly our economies is a weeknd quite fast. And

(03:19):
I know mister Nicolaie wallis making some comments this afternoon
saying who you are, Reserve Bank, You've got what you need?

Speaker 1 (03:27):
Yes, But she wouldn't quite say that with me because
she's got She said, I've got to stay in my
own lane. But you know it's a week wink and
a nudge nudge there.

Speaker 2 (03:34):
It's important central bank that's in attendant the reason people
trust us.

Speaker 1 (03:39):
Yeah, but go on, honestly, wink wink, nudge nudge. Now
it's not just Kimi Rail that has problems with boats,
because Fletcher Building had a problem with a cement bulk
cement carrier ship as well, and now they're building their
whole share prices down. They've had another further earnings down, Greg,
What's what's going wrong there?

Speaker 2 (03:55):
Yeah, really unfortunate for Fletcher Building. Ships down out of
the five point seventy cent to day turned three dollars thirteen.
And indeed they've command given a profit guidance warning of
a ten to thirty million dollar hits from the disruption
with the vessel, the cement carrier having to be a
paid out of the next two to four months and

(04:16):
that tend to thirty men is about a four percent
cut to earning spot Bus relative to what the market
had expected. It's really unfortunate for Fletcher Building mainly have
a modest impact for the new Zealm building Itus through.
There are ways around this. They can truck, they can
use containerized shipping to get that cement to where it

(04:37):
needs to be, or they can actually do contracts with
third party cement supplies such as Wholesome. So yep, a
bit of a hit for Fletcher Building. They just can't
catch a break of the month and this is just
another cack.

Speaker 1 (04:50):
Good on your Shane Sally I thank you so much
and Shane comes to us from Harbord Asset Management.

Speaker 2 (04:56):
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