March 24, 2026 • 7 mins
Tom Shallard of Craigs IP gives an insight into how the local economy is looking heading through challenging times.
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Speaker 1 (00:12):
Tom Show out of Craig's Investment Partners, joins us here
as we catch up with a team every couple of weeks.
Good afternoon, Good afternoon, Andy.
Speaker 2 (00:20):
Certainly been a bit of water under the bridge since
we last caught up.
Speaker 1 (00:24):
Well in the case of Ron Burgundy, well that escalated quickly.
Speaker 2 (00:29):
It certainly has. I don't think the Trump administration expected
to be and it's a fourth week of a war
in Iran.
Speaker 1 (00:38):
But he's just got to own this now because he
started it.
Speaker 2 (00:41):
He does. I think. Now that's a question of how
can Trump figure out a way to declear victory, because again,
he's not going to stop unless he can say he's won.
But what that looks like nobody knows.
Speaker 1 (00:57):
And when that looks like as well, depending on who
you speak to. People saying it will be over and
done with in two weeks, But the ramifications that we
face and economic sense are going to be found throughout
the year quite.
Speaker 2 (01:07):
Easily, exactly. The spread of possible outcomes is now so wide.
Even if there's a resolution to conflict today, the supply
training disruptions will flow on at least another three months
minimum to renormalize the system.
Speaker 1 (01:26):
Okay, straight off the bat oil. We've got these ridiculous
prices and no respite seems to be inside.
Speaker 2 (01:32):
The key fact is the Strait of Hormoz normally carries
about twenty million barrels of oil a day flow through
the straits, currently down somewhere between ninety and ninety five percent.
That's obviously an enormous reduction and it explains what we're
seeing significant price differentials opening up in different parts of
(01:52):
the world. So physical crude in the Middle East for
immediate delivery, say in Dubai or Ama is trading well
above headline brentor or West Texas intermediate benchmarks Somediate immediate
delivery in the Middle East, barrels have or until last
week had been trading around one hundred and fifty dollars
(02:14):
dollar mark. And even jet fuel in parts of Asia.
There was barrels of jet fuel trading it over two
hundred dollars a barrel in Singapore last week. So yeah,
there's volatility across geographies.
Speaker 1 (02:30):
And there's no end in sight regarding these rises in price.
I mean, diesel at the moments over three dollars Dare
I say it does a reach.
Speaker 2 (02:38):
For Yeah, well, even if the conflicts stopped today and
every tank are currently in the golf made a break
for it. It's still three months minimum to renormalize the system.
And almost all of our refined products here in New
Zealand come through the Gulf in the Middle East.
Speaker 1 (02:58):
Well, one thing about these events, it's occurring around the
world as we're getting a geography lesson every time. I
mean the California wildfires, I think the Palis slaves for example,
I never heard of the end before all of a sudden,
boom fard there they are, and the Jumas Strait, which
you never really contemplated before, and all of a sudden
we're realizing this has such a detrimental effect on supply
(03:19):
chains can namely fuel and red meat as well. Nonetheless,
we don't even talk about fertilizer.
Speaker 2 (03:26):
The r kl's here of global trade, Andy and fertilizer. Look,
it's a supply chain story that doesn't get covered nearly
as much as the oil price, but it's arguably the
most important for rural economies. Roughly a third of global
fertilizers supply originates through the Middle East or passes through
(03:46):
the Strait of Hormos, Iran. It souse a significant producer
of urea and an ammonia, and there's large volumes of
sulfur flying through the strait, so all key inputs that
we rely quite heavily on here in South.
Speaker 1 (04:02):
So how does New Zealand set compared to the rest
of the world in this conflict?
Speaker 2 (04:08):
So I guess one of the well, the two most
obvious issues West regards to say, the primary expert sector
are air inputs, fuel and fertilizer flow on. Obviously will
be interest rates already you can see some commentary and
media about longer dated interest rates rising across the across
(04:29):
the banks. I think that repricing may ultimately prove misguided
and practice. Rising energy costs are a direct tax on
households and businesses, so you know, when prices at the
pump climb, consumers must dellocate a greater share of their
their disposable income simply to maintaining existing levels of activity.
(04:52):
So yeah, the magnitude of this transfer is pretty substantial,
represent hundreds of billions of dollars in purchasing power shifting
away from oil importing economies towards energy exporters. So while
it might be inflationary in the short term, it's a
(05:14):
handbrake on economic activity, so ultimately a rate rise wouldn't
be justified.
Speaker 1 (05:20):
So what's the gat feel around the markets with this situation?
I mean, is this just going to be the new
normal for the result of the year courtesy of what's
going on?
Speaker 2 (05:28):
The honest answer is that the timing of the resolution
is the single biggest variable, and that's inherently unpredictable. So
what's clear is that the supply change effects, particularly energy
and fertilizer, already in motion. That'll take a while to
work through the system, regardless of what happens next politically.
(05:51):
But yeah, look, it's worth noting that markets aren't pricing
a catastrophic outcome. The working assumption still seems to be
that resolution comes reasonably soon. Key variable is how quickly,
how quickly it emerges, and whether the inflation signal from
prim energy and food starts to feed through to the
(06:12):
broader economy.
Speaker 1 (06:13):
So likes of inuest rates, what are we going to see?
Speaker 2 (06:16):
Yeah, I mean, as I said, we've already seen a
spike in some of the longer dated rates, but my
views that's probably probably misguided, just a response to inflationary concerns.
But the energy shock itself is a pseudo rate rise,
right because it flows through to consumers prockets. So if
(06:37):
this blows over three months time, yeah, I don't know
if we will, we'll be looking down the barrel of
an immediate rate rise to to steam inflation. Ultimately, energy
is only a small part of what makes up the CPI,
the consumer price and Dix calculation.
Speaker 1 (06:54):
Keeping it local thim. I suppose the other thing the
look is look at is that everything's still looking pretty
chipp wise. Majority of the province is looking pretty good.
Not far from you. Actually it's pretty dry at the moment,
but all in all, I think everybody on the farming
sets for the middle of March is going pretty good.
Speaker 2 (07:10):
Yep, the mode's pretty boyant out there. Yeah, one I
can show a couple of weeks ago, great, great opportunity
to catch up with everyone in South London and and
O Targo and yeah, the modes mode's very positive. So
look hopefully a short term event. And yeah, that's certainly
the way the markets are looking at it at the moment.
Speaker 1 (07:29):
Right out Tom Craig's investment partners, If anybody wants to
go and catch up with you guys, Location.
Speaker 2 (07:34):
One Oak Street, Gore, or give me a call on
O three two, O nine one, five to two.
Speaker 1 (07:39):
Your opposite New World and some of the most prime
real estate and Gore. Always good to catch up.
Speaker 2 (07:43):
Thanks Andy, the must Have financial segment with Craig's Investment
Partners in Gore.
Speaker 1 (07:48):
This information is general in nature and it's not financial advice.
Craig's Investment Partners Limited Financial Advice Provider Disclosure Statement can
be found at craigsip dot com.
Tom Show out of Craig's Investment Partners, joins us here
as we catch up with a team every couple of weeks.
Good afternoon, Good afternoon, Andy.
Speaker 2 (00:20):
Certainly been a bit of water under the bridge since
we last caught up.
Speaker 1 (00:24):
Well in the case of Ron Burgundy, well that escalated quickly.
Speaker 2 (00:29):
It certainly has. I don't think the Trump administration expected
to be and it's a fourth week of a war
in Iran.
Speaker 1 (00:38):
But he's just got to own this now because he
started it.
Speaker 2 (00:41):
He does. I think. Now that's a question of how
can Trump figure out a way to declear victory, because again,
he's not going to stop unless he can say he's won.
But what that looks like nobody knows.
Speaker 1 (00:57):
And when that looks like as well, depending on who
you speak to. People saying it will be over and
done with in two weeks, But the ramifications that we
face and economic sense are going to be found throughout
the year quite.
Speaker 2 (01:07):
Easily, exactly. The spread of possible outcomes is now so wide.
Even if there's a resolution to conflict today, the supply
training disruptions will flow on at least another three months
minimum to renormalize the system.
Speaker 1 (01:26):
Okay, straight off the bat oil. We've got these ridiculous
prices and no respite seems to be inside.
Speaker 2 (01:32):
The key fact is the Strait of Hormoz normally carries
about twenty million barrels of oil a day flow through
the straits, currently down somewhere between ninety and ninety five percent.
That's obviously an enormous reduction and it explains what we're
seeing significant price differentials opening up in different parts of
(01:52):
the world. So physical crude in the Middle East for
immediate delivery, say in Dubai or Ama is trading well
above headline brentor or West Texas intermediate benchmarks Somediate immediate
delivery in the Middle East, barrels have or until last
week had been trading around one hundred and fifty dollars
(02:14):
dollar mark. And even jet fuel in parts of Asia.
There was barrels of jet fuel trading it over two
hundred dollars a barrel in Singapore last week. So yeah,
there's volatility across geographies.
Speaker 1 (02:30):
And there's no end in sight regarding these rises in price.
I mean, diesel at the moments over three dollars Dare
I say it does a reach.
Speaker 2 (02:38):
For Yeah, well, even if the conflicts stopped today and
every tank are currently in the golf made a break
for it. It's still three months minimum to renormalize the system.
And almost all of our refined products here in New
Zealand come through the Gulf in the Middle East.
Speaker 1 (02:58):
Well, one thing about these events, it's occurring around the
world as we're getting a geography lesson every time. I
mean the California wildfires, I think the Palis slaves for example,
I never heard of the end before all of a sudden,
boom fard there they are, and the Jumas Strait, which
you never really contemplated before, and all of a sudden
we're realizing this has such a detrimental effect on supply
(03:19):
chains can namely fuel and red meat as well. Nonetheless,
we don't even talk about fertilizer.
Speaker 2 (03:26):
The r kl's here of global trade, Andy and fertilizer. Look,
it's a supply chain story that doesn't get covered nearly
as much as the oil price, but it's arguably the
most important for rural economies. Roughly a third of global
fertilizers supply originates through the Middle East or passes through
(03:46):
the Strait of Hormos, Iran. It souse a significant producer
of urea and an ammonia, and there's large volumes of
sulfur flying through the strait, so all key inputs that
we rely quite heavily on here in South.
Speaker 1 (04:02):
So how does New Zealand set compared to the rest
of the world in this conflict?
Speaker 2 (04:08):
So I guess one of the well, the two most
obvious issues West regards to say, the primary expert sector
are air inputs, fuel and fertilizer flow on. Obviously will
be interest rates already you can see some commentary and
media about longer dated interest rates rising across the across
(04:29):
the banks. I think that repricing may ultimately prove misguided
and practice. Rising energy costs are a direct tax on
households and businesses, so you know, when prices at the
pump climb, consumers must dellocate a greater share of their
their disposable income simply to maintaining existing levels of activity.
(04:52):
So yeah, the magnitude of this transfer is pretty substantial,
represent hundreds of billions of dollars in purchasing power shifting
away from oil importing economies towards energy exporters. So while
it might be inflationary in the short term, it's a
(05:14):
handbrake on economic activity, so ultimately a rate rise wouldn't
be justified.
Speaker 1 (05:20):
So what's the gat feel around the markets with this situation?
I mean, is this just going to be the new
normal for the result of the year courtesy of what's
going on?
Speaker 2 (05:28):
The honest answer is that the timing of the resolution
is the single biggest variable, and that's inherently unpredictable. So
what's clear is that the supply change effects, particularly energy
and fertilizer, already in motion. That'll take a while to
work through the system, regardless of what happens next politically.
(05:51):
But yeah, look, it's worth noting that markets aren't pricing
a catastrophic outcome. The working assumption still seems to be
that resolution comes reasonably soon. Key variable is how quickly,
how quickly it emerges, and whether the inflation signal from
prim energy and food starts to feed through to the
(06:12):
broader economy.
Speaker 1 (06:13):
So likes of inuest rates, what are we going to see?
Speaker 2 (06:16):
Yeah, I mean, as I said, we've already seen a
spike in some of the longer dated rates, but my
views that's probably probably misguided, just a response to inflationary concerns.
But the energy shock itself is a pseudo rate rise,
right because it flows through to consumers prockets. So if
(06:37):
this blows over three months time, yeah, I don't know
if we will, we'll be looking down the barrel of
an immediate rate rise to to steam inflation. Ultimately, energy
is only a small part of what makes up the CPI,
the consumer price and Dix calculation.
Speaker 1 (06:54):
Keeping it local thim. I suppose the other thing the
look is look at is that everything's still looking pretty
chipp wise. Majority of the province is looking pretty good.
Not far from you. Actually it's pretty dry at the moment,
but all in all, I think everybody on the farming
sets for the middle of March is going pretty good.
Speaker 2 (07:10):
Yep, the mode's pretty boyant out there. Yeah, one I
can show a couple of weeks ago, great, great opportunity
to catch up with everyone in South London and and
O Targo and yeah, the modes mode's very positive. So
look hopefully a short term event. And yeah, that's certainly
the way the markets are looking at it at the moment.
Speaker 1 (07:29):
Right out Tom Craig's investment partners, If anybody wants to
go and catch up with you guys, Location.
Speaker 2 (07:34):
One Oak Street, Gore, or give me a call on
O three two, O nine one, five to two.
Speaker 1 (07:39):
Your opposite New World and some of the most prime
real estate and Gore. Always good to catch up.
Speaker 2 (07:43):
Thanks Andy, the must Have financial segment with Craig's Investment
Partners in Gore.
Speaker 1 (07:48):
This information is general in nature and it's not financial advice.
Craig's Investment Partners Limited Financial Advice Provider Disclosure Statement can
be found at craigsip dot com.
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