WEBVTT

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Welcome back to The Rate of Change with York

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Wealth Management. As advisors to some of the

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wealthiest families in the country, The Rate

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of Change is a podcast designed to help you in

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the pursuit of burning long -term wealth through

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the insights of some of the brightest minds in

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asset management. I'm your host, Murdoch Gaddy,

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and in today's broadcast, we're bringing you

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something a little bit different. Introducing

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Quarterly Insights with Jason Coggins. I think

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you're really going to benefit from Jason's perspectives

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and for those unfamiliar with Jason, he is one

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of the leading industry minds in strategic asset

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allocation, wealth management and economics.

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He's worked with some of the biggest names in

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the industry from the banks, ANZ, CBA type of

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very, very wealthy wealth management firms, Cota

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Capital, and currently advises five major institutions

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and family offices. We're very fortunate to have

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him as the Investment Committee Chair at the

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Heysen Wang Family Office and Initium, with whom

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York Wealth Management is proud to be partnered.

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This Insight Series focuses on strategic asset

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allocation. and macroeconomic themes. If you're

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a client of York and you were lucky enough to

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join us live last week, I really hope you found

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these insights as valuable as we did. If you're

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not a client and would like to attend future

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strategy sessions, as this current episode will

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always be a delayed release, feel free to reach

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out and we'd love to have you at our next quarterly

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live broadcast. We're also pleased to introduce

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our soon -to -be high net worth family client

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advisor, who is currently an associate, Anthony

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Adlam, who will be introducing and organizing

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the Insight Series going forward. Before we get

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into the conversation, please remember this broadcast

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is made for entertainment purposes only. Past

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performance is not a reliable indicator of future

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returns, and today's discussion is intended...

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to help you better understand the lay of the

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land and what's currently happening in the world

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and where you should be thinking about allocating

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your assets going forward. It is not personal

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advice. If you need advice, just reach out and

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we'll help you work with you in your portfolio.

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I encourage you to listen to the disclaimer at

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the end of the broadcast and as always, keep

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your feedback coming. You can reach me at mgatty

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at ywm .com .au. With that being said, I hope

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you enjoyed this conversation as much as we did.

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So sit back, relax and enjoy it. Everyone to

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insights with your wealth management. My name

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is Ed Natham. I'm an associate here at York Wealth

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and I'd like to extend a thank you to all of

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us for you joining us here today, not only the

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families and individuals as well, to this forum.

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Now, today we're lucky enough to be hearing from

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Jason Coggins, Investment Committee Chair at

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Amishian Capital and the Hayson and Huang Family

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Office. Furthermore, we're also joined by Murdoch

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Gaddy, as you can see in his strings here, founder

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of York Wealth and host of the podcast Rate of

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Change. We felt that given the current climate

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we're experiencing, not only financially, markets,

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but politically, pending the current election

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as well, it was more important than ever to open

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a forum such as this. Furthermore, we'll be seeking

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to run this sort of asset allocation strategy

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session monthly, designed in the sort of assist

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in the pursuit of building our portfolios holistically.

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Now, our conversation this afternoon is directed

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to current events, covering a wide range of topics

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such as... Globalisation in reverse and Trump

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and his tariffs and the like. And then obviously

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RBA cuts, imminent Australian property outlooks

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and the upcoming election impact markets as well.

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Also, we'll delve into many of the standards

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that Jason and Murdoch may explore during the

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conversation. And we look forward to seeing what

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gets unpacked along the way. Just in terms of

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housekeeping today as well, given the interactive

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nature of the session, if you do have any questions

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during the discussion, feel free to drop them.

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There's a chat box located on the right of your

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screen there. Feel free to drop them in there,

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or there's a typing option available. Also, if

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you can just wait to the end as well, when we

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do open up the forum, you can save them there

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for Jason and Murdoch as well. We'll be addressing

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some of the pre -submitted questions that was

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available via our registration form as well,

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so that'll also be looked at in time. And then

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we'll open the floor up in an open forum as well.

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Regarding technical issues that anyone may experience...

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feel free to message me directly. I'll assist

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as best I can once we get the discussion underway.

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But without further ado, I will hand over now

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to Murdoch and Jason. So, gents, take it away,

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Murdoch. Welcome, everyone. Glad to have you

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with us. Jason, why don't we kick off like we

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always do in the podcast and tell everyone a

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little bit about yourself, what you've been doing

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for the family office and what you're currently

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doing now. Hi everyone, thanks for taking the

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afternoon to listen to this podcast. So again,

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we're going to make this interactive. So look,

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for the past 20 years, I've been involved in

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financial services, primarily in investing, consulting

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and researching. So in the last 10 years, I was

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at a private wealth firm. quite a large private

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wealth firm nationally, where my colleague and

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I built out the investment capabilities. So that

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started with a blank sheet of paper. It involved

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creating a philosophy, identifying investments,

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traveling the world, and most importantly, talking

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to clients and making sure that those investments

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are applicable and right for them. Before private

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wealth, I was at ANZ, where I led the advice

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research team. which included a whole lot of

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advisors at one point over 2000. And before that,

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consulting, institutional asset consulting. Thanks,

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Jason. Why don't we always kick off with the

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elephant in the room, the fun one. There's been

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a very, very large shift in government over in

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the States that everyone's aware of. I think

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one client joked to me that after he watched

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Squid Game on Netflix that it kind of feels like

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red light, green light. You go to bed, you think

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it's one way, then you wake up, you know, it's

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completely done a backflip and it's just changing

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red to green on the screens continuously. So

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I think we're discussing, Jason, you mentioned

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that you think globalization is now in reverse.

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So with all these changes coming through, you

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know, where did we actually stand, you know,

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from an asset allocation perspective? What's

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currently happened and where do you think it's

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going? So, look, I wouldn't go so far to say

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it's reversing. It is ultimately changing. Now,

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I also think we need to look at the context in

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how the president, President Trump, negotiates.

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Now, you don't have to like the guy and a lot

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of people don't, but he has a very unique approach,

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almost bullying into what he does. Now, what

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I would caution is what he says one minute will

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ultimately change. And it's almost to get everybody

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confused. And then therefore he has an apparent,

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you know, lift in negotiating. Right. So I think

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what ultimately occurs is very different to what

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he says initially. Now, I do think what you will

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see and what you've already started to see, right

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or wrong, the US believes it's got the short

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end of the straw in terms of trade, has a lot

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of free trade with other countries. It's not

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reciprocated. And so I think what they're trying

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to do is get some quick wins. I wouldn't look

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at the rhetoric and say they want to. produce

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iPhones or they want to produce textiles in the

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US. They're simply making a lot of noise and

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they want to renegotiate trade deals. Now, if

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you saw where the first tariffs came out, there

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was about 20 countries seeking access to the

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White House to negotiate fairer trade. That's

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really what I think. So I don't think it's in

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reverse. I do think what you will see, and this

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has really been happening for, you know, since

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its first term, is you're very likely to see

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supply chains globally alter. And instead of

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having a single global supply chain, which was

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based in China, you effectively are going to

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have regional supply chains. So you'll have a

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supply chain closer to the US. You'll have a

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supply chain closer to the Middle East. You'll

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have a supply chain closer to Europe. Now, the

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issue... is moving from one supply chain to multiple

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supply chains and even ignoring the cost to develop

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that. That will be inflationary. So I do think

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while inflation is coming down, it's definitely

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down from the peaks, inspired by COVID, supply

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chain disruptions, and also the Ukrainian war.

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Inflation has come down, but I think it is ultimately

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sticky with tariffs and changes to supply chains.

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So the one thing between you and I, the thing

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when I'm allocating capital that's just quite

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been on my mind is like, what does this actually

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mean? So when you say that, you know, the Trump

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government has said a whole bunch of crazy stuff

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to bring people to the table and start renegotiating,

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a lot of the biggest question was, okay, where

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did you get the percentages from the tariffs,

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right? But can you explain to me? Take Japan

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as an example. Japan may have very low percentage

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tariffs, but I think Donald Trump even said if

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you try to sell rice back into China or say,

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take Australia, everyone's like, oh, you should

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never have stuck a tariff on Australia. But he's

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like, hold on a second, US can't sell beef into

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Australia. His argument was something along the

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lines that they... Technically, these countries

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do have tariffs, but they're not technically

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a tariff. They're like a firm barrier to entry,

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and it's only like one way. Like the Japanese

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can sell whatever they want, cars, you name it,

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straight in one way, but it's not reciprocal

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the other direction. So can you explain that?

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And potentially, the other thought I'm having

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is when we're looking at a lot of, say, these

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companies, US, and you're talking about how they

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restructure and how things change, is this going

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to necessarily... change the profitability of

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these companies or the capacity, the ability

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for them to actually do business in particular

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countries? You know what I mean? That's essentially

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what I'm thinking. Yeah, so back to my first

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point. I don't think he's looking for a complete

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reorganisation of globalisation. But to your

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point, it's exactly that, right? So, you know,

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there are trade barriers that are set up despite

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of having free trade. And so that's his focus.

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Now, to your point... what does this mean for

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investment implications? Now, I don't think you

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want to be second guessing or predicting how

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policy will evolve. But at Initium, we spoke,

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you know, late December, early January to frame

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up some of our views on markets. And we had three

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core themes that we thought we should look at.

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And this becomes important in the context of

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what happens in the US and whether or not profitability

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stays up. So the first theme that we had, we

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wanted to be underweight US dollars. and we want

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to be overweight rest of the world. I think after

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trade, he will then go for an orderly managed

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accord to have a lower US dollar. That is really

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the only way to support US trade. The second,

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we saw two standard deviation, three standard

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deviation, extreme valuations in the US market

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versus the rest of the world. And we viewed having

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an underweight position to the US market. not

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a 0 % weight, but an underweight position. Remember,

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the US market was 75 % of the misky world. It

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was huge. It was overrepresented. We thought,

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particularly with the German election in the

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first quarter of the year, that Europe looked

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cheap and Asia looked cheap. And lastly, particularly

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given the massive growth in index funds with

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the preference to be invested in the US market,

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huge amounts of flows. were being directed into

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the mega caps in the US. And we said it's probably

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time to down weight those. So non -USD, rest

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the world over the USD, and then also non -mega

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caps. Now, to your point, what does it mean for

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US companies? The reason we took that view was

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you can't predict what will happen. But where

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US valuations were, you were not being paid up

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to take the risk, right? valuations were so high

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that if something went wrong, the market was

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going to fall quite heavily. Now, we knew tariffs

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were coming. That was the campaign on that. One

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of the events that I don't think we saw coming

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was deep seek and AI, the progress that China

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has made. And that really threw a spanner in

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the works around valuations of the big AI companies

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in the US. Now, that's not to say they are very

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high quality, but when they're trading at 30,

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40, 50 times earnings, there's not much room

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for error. Yeah. So can you explain a bit more

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the potential opportunity in Europe? Because

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we're talking about, if you think about Europe,

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right, everyone thinks about how the banks fell

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over. You know, the pigs are horrible. You know,

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there's debt everywhere. You know, there's bureaucracy

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and people can't, you know, actually manage Greece

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properly. But we've had a conversation and you're

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saying that potentially the opportunity lies

00:13:41.110 --> 00:13:43.490
in Europe. Do you want to give a bit of colour

00:13:43.490 --> 00:13:46.370
around that in the thinking? So there's a couple

00:13:46.370 --> 00:13:51.750
of angles here. So after the banking crisis with

00:13:51.750 --> 00:13:55.409
Portugal, Italy, Greece and Spain, there's been

00:13:55.409 --> 00:13:57.509
a lot of reform in some of those countries. So

00:13:57.509 --> 00:14:01.970
I would now say that Spain and Greece and Portugal

00:14:01.970 --> 00:14:05.070
are showing much stronger rates of growth and

00:14:05.070 --> 00:14:07.610
much stronger rates of reform than what we see

00:14:07.610 --> 00:14:10.409
even in Australia. So how things change, and

00:14:10.409 --> 00:14:13.000
it changes pretty quickly. Now, what Europe does

00:14:13.000 --> 00:14:15.539
in times of crisis, they do work very well together.

00:14:15.720 --> 00:14:17.399
And so they are increasingly working together.

00:14:17.779 --> 00:14:23.259
You also had the German elections, which resulted

00:14:23.259 --> 00:14:26.179
in a very pro -fiscal stance. So if you think

00:14:26.179 --> 00:14:29.039
about the German DNA, they don't like deficits

00:14:29.039 --> 00:14:31.840
and they don't like inflation. And so they have

00:14:31.840 --> 00:14:36.279
had a very balanced budget since World War. Now,

00:14:36.340 --> 00:14:39.539
what they've committed to doing. because growth

00:14:39.539 --> 00:14:42.700
is so slow, is really having a massive fiscal

00:14:42.700 --> 00:14:46.639
spending program. And this is not just in defence.

00:14:47.240 --> 00:14:49.980
This is across the entire economy. So when you've

00:14:49.980 --> 00:14:51.700
got... And then you've got the other countries

00:14:51.700 --> 00:14:54.639
who are endorsing that within the EU. So even

00:14:54.639 --> 00:14:59.299
if, you know, Germany recorded, you know, massive

00:14:59.299 --> 00:15:02.259
deficits, larger than what we see in most countries

00:15:02.259 --> 00:15:04.639
now, they could do that for five to ten years

00:15:04.639 --> 00:15:07.960
and still be the second lightest geared... country

00:15:07.960 --> 00:15:09.899
from a fiscal perspective. So there's a lot of

00:15:09.899 --> 00:15:12.580
capacity there. So I look at the region as a

00:15:12.580 --> 00:15:14.559
whole. You know, I think France just does its

00:15:14.559 --> 00:15:16.259
own thing. It's not really interested in growing

00:15:16.259 --> 00:15:18.759
or reforming. You've got Germany who's going

00:15:18.759 --> 00:15:21.659
to spend. You've got Italy who's, you know, it's

00:15:21.659 --> 00:15:23.960
an older population, but there's definitely a

00:15:23.960 --> 00:15:26.500
reformist element in that government. And in

00:15:26.500 --> 00:15:30.019
Greece, Spain is booming and Portugal. So I think

00:15:30.019 --> 00:15:31.360
it's an interesting market. Look, the market

00:15:31.360 --> 00:15:33.460
has rallied substantially. So that was one of

00:15:33.460 --> 00:15:36.700
the things we thought would happen. It was really

00:15:36.700 --> 00:15:39.480
dependent upon the German election. I still think

00:15:39.480 --> 00:15:41.320
relative valuations are still pretty cheap. I

00:15:41.320 --> 00:15:45.379
mean, a lot of companies have gone up significantly,

00:15:45.440 --> 00:15:47.440
but I think that fiscal boost over the next couple

00:15:47.440 --> 00:15:50.240
of years is going to be very powerful. So we've

00:15:50.240 --> 00:15:52.379
seen a lot of the banks, like in the UK, Barclays

00:15:52.379 --> 00:15:53.980
Bank, and a lot of the banks actually put on

00:15:53.980 --> 00:15:56.059
some serious returns. I think Barclays is up

00:15:56.059 --> 00:15:58.000
somewhere nearly 80 % for the past 12 months.

00:15:58.340 --> 00:16:03.580
But inside Europe, what specifically are the

00:16:03.580 --> 00:16:06.519
subsectors that are of interest in Europe? Look,

00:16:06.559 --> 00:16:10.340
I try not to take an overly micro approach to

00:16:10.340 --> 00:16:13.419
things. So, you know, my role is to be very macro

00:16:13.419 --> 00:16:16.840
driven and find strategies. But really, if you

00:16:16.840 --> 00:16:19.259
think about what's happening in Europe, there's

00:16:19.259 --> 00:16:22.080
economic reform. So that's broadly positive for

00:16:22.080 --> 00:16:24.440
the entire market. You've got population growth

00:16:24.440 --> 00:16:27.440
and you've got defence spending. So there's some

00:16:27.440 --> 00:16:29.100
of the key themes you would expect portfolio

00:16:29.100 --> 00:16:31.919
managers to look at. But I think, you know, it's

00:16:31.919 --> 00:16:34.860
a rich hunting ground. that market. A lot of

00:16:34.860 --> 00:16:36.840
people have spent a lot of time in the US. I

00:16:36.840 --> 00:16:39.759
think every portfolio in the domestic space here

00:16:39.759 --> 00:16:43.120
is overweight US markets, by and large, because

00:16:43.120 --> 00:16:45.360
it made up such a large part of the index. But

00:16:45.360 --> 00:16:49.019
there's interesting companies in Germany. Now,

00:16:49.019 --> 00:16:51.460
if we go to China, for example, whether or not

00:16:51.460 --> 00:16:54.460
the market's investable or not, it's rallied

00:16:54.460 --> 00:16:58.000
a lot this year on its ability to demonstrate,

00:16:58.240 --> 00:17:00.220
whether or not you believe it or not, that they

00:17:00.220 --> 00:17:04.980
can do AI with a hundredth of the cost and a

00:17:04.980 --> 00:17:08.599
quarter of the processing speeds for chips. Now,

00:17:08.660 --> 00:17:12.720
I've always had the view on China. It's very

00:17:12.720 --> 00:17:15.000
dangerous to bet against China. Now, that doesn't

00:17:15.000 --> 00:17:16.119
mean you have to have an investment in it. It

00:17:16.119 --> 00:17:17.259
doesn't mean you have to have a large investment

00:17:17.259 --> 00:17:20.180
in it. But if you think about the top 1 % of

00:17:20.180 --> 00:17:23.059
people in China, being entrepreneurs, being scientists,

00:17:23.500 --> 00:17:25.900
being engineers, and compare that to the top

00:17:25.900 --> 00:17:30.619
1 % in the US, they are as good, potentially

00:17:30.619 --> 00:17:33.549
better. So the innovation capability within that

00:17:33.549 --> 00:17:36.789
economy, it would be very dangerous to ignore

00:17:36.789 --> 00:17:41.549
that. It's interesting you mentioned the economy

00:17:41.549 --> 00:17:44.029
in China over the past 30 years. They went from

00:17:44.029 --> 00:17:45.730
rice farmers to an extended large part of the

00:17:45.730 --> 00:17:47.970
population. They just completely built up the

00:17:47.970 --> 00:17:49.950
middle class, you know, the expensive, say, the

00:17:49.950 --> 00:17:52.349
US class. So I think the biggest, what I'm hearing

00:17:52.349 --> 00:17:54.630
right now is a lot of the reform essentially

00:17:54.630 --> 00:17:56.890
is dictating which way you think the wind's blowing

00:17:56.890 --> 00:17:59.769
based on a macro component. Is that fair? And

00:17:59.769 --> 00:18:03.789
where I'm going with this is... If other governments

00:18:03.789 --> 00:18:06.009
are thinking from a reform perspective, the only

00:18:06.009 --> 00:18:08.289
way to fix their economy is to essentially help

00:18:08.289 --> 00:18:10.710
build up their middle class right across the

00:18:10.710 --> 00:18:12.750
board, just like what China's done for the past

00:18:12.750 --> 00:18:15.410
number of years. Do you think that strategy is

00:18:15.410 --> 00:18:18.710
actually going to help the middle class and will

00:18:18.710 --> 00:18:21.730
that overflow to Australia or bring back manufacturing

00:18:21.730 --> 00:18:24.529
and that type of thing or just a long journey

00:18:24.529 --> 00:18:29.269
ahead? No, so I think China, in saying quite...

00:18:29.579 --> 00:18:31.559
positive of what's happened in the last year

00:18:31.559 --> 00:18:35.680
in the market uh it still has very large structural

00:18:35.680 --> 00:18:40.220
issues right so a very aging population significantly

00:18:40.220 --> 00:18:43.039
aging population uh you've got large amounts

00:18:43.039 --> 00:18:45.619
of debt levels in some parts of the economy uh

00:18:45.619 --> 00:18:48.180
you've got a lot of idle infrastructure and you've

00:18:48.180 --> 00:18:51.279
got the dreaded deflation and so when your population

00:18:51.279 --> 00:18:53.279
and you've got you know people not really having

00:18:53.279 --> 00:18:56.920
children so it's it looks like a deflationary

00:18:56.920 --> 00:19:00.259
uh time bomb And we saw that happen to Japan

00:19:00.259 --> 00:19:04.339
over 20, 30 years. But it is a very large economy.

00:19:05.160 --> 00:19:08.720
Now, on the idea that we can recreate our middle

00:19:08.720 --> 00:19:10.700
class, Australia is not going to be able to do

00:19:10.700 --> 00:19:12.240
that through manufacturing. We don't have a comparative

00:19:12.240 --> 00:19:13.579
advantage in that. We don't have the size of

00:19:13.579 --> 00:19:16.079
the population. And we are very far away from

00:19:16.079 --> 00:19:18.519
the rest of the world. The only way to restore

00:19:18.519 --> 00:19:20.380
the middle class is through economic reform.

00:19:21.869 --> 00:19:24.009
removing the impediments of doing business in

00:19:24.009 --> 00:19:26.930
this country, making it easier to employ people,

00:19:27.289 --> 00:19:30.650
making it easier to build and develop things.

00:19:31.190 --> 00:19:35.690
Now, unfortunately, that has been absent in Australian

00:19:35.690 --> 00:19:38.529
policy for the good part of the last two decades.

00:19:39.809 --> 00:19:41.849
Speaking of Australia, we've got an election

00:19:41.849 --> 00:19:44.250
on. A lot's been happening the past three years.

00:19:44.909 --> 00:19:46.609
You know, what do you think is going to happen

00:19:46.609 --> 00:19:48.329
there? Do you think potentially whoever gets

00:19:48.329 --> 00:19:50.470
in are going to make those reforms to benefit

00:19:50.470 --> 00:19:52.930
Australians? Or is this the same on the same

00:19:52.930 --> 00:19:55.349
again? And what do you think is happening for

00:19:55.349 --> 00:19:58.009
the Australian election? So in saying that, I

00:19:58.009 --> 00:20:01.170
shouldn't be too hard on Australia. The economy

00:20:01.170 --> 00:20:04.450
is still doing okay. I think that, you know,

00:20:04.490 --> 00:20:06.049
one thing that we're very good at is population

00:20:06.049 --> 00:20:08.430
growth. And so we have a naturally increasing

00:20:08.430 --> 00:20:11.890
population over time. I think when you want to

00:20:11.890 --> 00:20:14.700
invest in Australia. you know, the top 20 companies

00:20:14.700 --> 00:20:17.460
don't look that interesting to me. You have this

00:20:17.460 --> 00:20:20.779
very interesting concept in Australia. The large

00:20:20.779 --> 00:20:24.339
superannuation inflows every month that we receive,

00:20:25.299 --> 00:20:27.599
you know, 20 % to 30 % of that makes its way

00:20:27.599 --> 00:20:30.779
into the ASX and that makes its way into the

00:20:30.779 --> 00:20:33.920
top 20 companies. So we call it the lowest cost

00:20:33.920 --> 00:20:36.779
of capital in the world, right? Because these

00:20:36.779 --> 00:20:39.240
companies just, they stay at high valuations

00:20:39.240 --> 00:20:40.539
because there is so much money coming in the

00:20:40.539 --> 00:20:44.450
market. Despite... The ASX, for example, this

00:20:44.450 --> 00:20:46.250
will be the third consecutive year where the

00:20:46.250 --> 00:20:50.390
ASX 20 earnings have gone backwards. Now, I think

00:20:50.390 --> 00:20:52.250
where some of the more interesting things in

00:20:52.250 --> 00:20:54.210
the market is where the super funds can't play.

00:20:55.799 --> 00:20:58.640
Despite not having productivity reform, you know,

00:20:58.660 --> 00:21:00.900
our small companies, our universities, and our

00:21:00.900 --> 00:21:02.720
entrepreneurs still punch above their weight

00:21:02.720 --> 00:21:05.640
globally. So I think certain segments in smaller

00:21:05.640 --> 00:21:07.779
mid -caps in the Australian market is very interesting.

00:21:07.980 --> 00:21:10.980
And then also some of the more private equity,

00:21:11.019 --> 00:21:13.220
private market plays, where you're really in

00:21:13.220 --> 00:21:15.079
that lower mid -market segment, where you're

00:21:15.079 --> 00:21:17.339
not competing against, again, big super funds

00:21:17.339 --> 00:21:19.599
or institutional investors. So there's opportunities

00:21:19.599 --> 00:21:22.359
here, but like any market, you have to be extremely,

00:21:22.440 --> 00:21:27.160
extremely selective. The one thing we talk a

00:21:27.160 --> 00:21:28.640
lot about in the Australian market is private

00:21:28.640 --> 00:21:32.960
credit. We dig into this quite a bit. We've discussed

00:21:32.960 --> 00:21:34.539
a number of the major players in the Australian

00:21:34.539 --> 00:21:38.500
market on the podcast as well. But my question

00:21:38.500 --> 00:21:42.380
is, considering, as you mentioned, the ASX, what

00:21:42.380 --> 00:21:44.500
on average returns something like 8%, some of

00:21:44.500 --> 00:21:46.880
these private creditors and private lenders are

00:21:46.880 --> 00:21:50.599
doing 10 % higher for asset -backed, less volatility.

00:21:50.920 --> 00:21:53.880
Do you think the private credit Australian market

00:21:54.590 --> 00:21:57.789
is better than the international market from

00:21:57.789 --> 00:21:59.410
a regulation of robustness? And do you think

00:21:59.410 --> 00:22:01.430
it's here to stay? Is there any risk associated

00:22:01.430 --> 00:22:06.329
to this particular space? Okay, so before I answer

00:22:06.329 --> 00:22:08.109
that, I'm going to say that I work with a few

00:22:08.109 --> 00:22:10.910
groups, families and some other wealth managers,

00:22:10.990 --> 00:22:13.609
and people have different views on this. Now

00:22:13.609 --> 00:22:15.690
I'm going to be very clear, very, very, very

00:22:15.690 --> 00:22:18.109
clear. I think there's a role for different...

00:22:18.359 --> 00:22:21.740
assets in portfolios. So I think the debate private

00:22:21.740 --> 00:22:24.079
credit versus liquid credit versus offshore private

00:22:24.079 --> 00:22:27.859
credit misses the whole point. Now, I will be

00:22:27.859 --> 00:22:30.900
on record to state that I'm very bullish on local

00:22:30.900 --> 00:22:33.779
private debt. Now, if you think about what local

00:22:33.779 --> 00:22:36.519
private credit is, it is bridge financing by

00:22:36.519 --> 00:22:40.279
and large. And by and large, it's 80 % asset

00:22:40.279 --> 00:22:43.240
-backed lending. So it's against a physical hard

00:22:43.240 --> 00:22:45.819
asset like a property. or a shopping centre,

00:22:46.039 --> 00:22:48.500
or an office tower, versus cash flow lending

00:22:48.500 --> 00:22:50.359
to the corporates in the small to medium -sized

00:22:50.359 --> 00:22:52.299
range, which is probably a little bit more risky.

00:22:52.900 --> 00:22:54.980
Now, if I think about the Australian market,

00:22:55.180 --> 00:22:59.420
it's still largely in its infancy. We have, and

00:22:59.420 --> 00:23:00.900
what I mean by that, it's still relatively new,

00:23:01.059 --> 00:23:03.279
and so the inefficiencies within that market

00:23:03.279 --> 00:23:07.680
is really great. Now, despite all the hysteria

00:23:07.680 --> 00:23:12.779
in the media, and I think these are... probably

00:23:12.779 --> 00:23:15.700
competitors to the asset class, making a lot

00:23:15.700 --> 00:23:20.400
of noise. We have not seen any systemic risk

00:23:20.400 --> 00:23:23.500
in the asset class. We have not seen any instances

00:23:23.500 --> 00:23:26.859
of poor underwriting. We have not seen any instances

00:23:26.859 --> 00:23:29.640
of declining underwriting. And we have not seen

00:23:29.640 --> 00:23:33.559
many instances of default rates. Now, people

00:23:33.559 --> 00:23:36.019
can claim that the asset class hasn't gone through

00:23:36.019 --> 00:23:40.859
a stress point or a cycle. Yes, it has. This

00:23:40.859 --> 00:23:44.089
asset class was around. pre -COVID. It was around

00:23:44.089 --> 00:23:49.369
during lockdowns. It was there when we were closed

00:23:49.369 --> 00:23:52.809
off to the world. And it was there when we had

00:23:52.809 --> 00:23:55.130
a rapid normalization of interest rates from

00:23:55.130 --> 00:23:59.390
zero to 4 .6 % or wherever it was. So the asset

00:23:59.390 --> 00:24:01.869
class has been tested. Now, the most important

00:24:01.869 --> 00:24:04.309
thing, and I think this gets missed by some of

00:24:04.309 --> 00:24:06.609
the journalists who are trying to get a gotcha

00:24:06.609 --> 00:24:09.829
moment. The fact of the matter is that this asset

00:24:09.829 --> 00:24:14.440
class has two massive structural tailwinds that

00:24:14.440 --> 00:24:16.940
are permanent. One, the economy needs lending

00:24:16.940 --> 00:24:19.299
and banks simply aren't going to do it in certain

00:24:19.299 --> 00:24:21.839
segments because they haven't trained underwriters

00:24:21.839 --> 00:24:23.099
and they haven't done it for a long period of

00:24:23.099 --> 00:24:25.920
time. So the economy needs lending to grow. That's

00:24:25.920 --> 00:24:28.599
not going to change. And second of all, as the

00:24:28.599 --> 00:24:32.480
demographics change, as we get older and as people

00:24:32.480 --> 00:24:36.440
move to retirement and deaccumulation, they will

00:24:36.440 --> 00:24:39.809
want higher income. Now, one final aspect on

00:24:39.809 --> 00:24:42.450
the dynamic of Australian private credit, it

00:24:42.450 --> 00:24:45.690
is by and large bridge financing. It's not long

00:24:45.690 --> 00:24:48.210
-term loans. It can be anywhere from six months

00:24:48.210 --> 00:24:51.609
to 12 months to 24 months. That's important for

00:24:51.609 --> 00:24:53.950
a number of reasons. If you lend on a seven -year

00:24:53.950 --> 00:24:57.029
basis, things change. A sector may not be around.

00:24:57.609 --> 00:24:59.910
Inflation may go from really high to really low.

00:25:00.450 --> 00:25:02.670
You know, we may have a prolonged recession or

00:25:02.670 --> 00:25:05.049
the asset just deteriorates. Bridge financing,

00:25:05.289 --> 00:25:07.769
shorter term. not as many things can go wrong.

00:25:08.170 --> 00:25:10.029
Now, lastly on private credit, Australia has

00:25:10.029 --> 00:25:12.750
some of the best credit protection rights in

00:25:12.750 --> 00:25:16.150
the world. It's universally regarded. When a

00:25:16.150 --> 00:25:19.730
loan goes pear -shaped, the key is to fix it.

00:25:20.069 --> 00:25:24.390
And so the discussion should not be around whether

00:25:24.390 --> 00:25:28.390
or not private credit is systemically sick. It's

00:25:28.390 --> 00:25:30.710
actually you want a manager who can go in and

00:25:30.710 --> 00:25:32.869
get their hands dirty and fix a loan and do it

00:25:32.869 --> 00:25:34.940
quickly. It's asset -backed. You don't want to

00:25:34.940 --> 00:25:38.140
see that deteriorate. Now, that's very different

00:25:38.140 --> 00:25:41.140
to the US market where you have Chapter 11 and

00:25:41.140 --> 00:25:43.880
you have no control and it's extremely value

00:25:43.880 --> 00:25:46.599
destructive. So there's some really unique attributes

00:25:46.599 --> 00:25:49.160
of Australian private credit. The structural

00:25:49.160 --> 00:25:51.880
thematics are there. People want income. People

00:25:51.880 --> 00:25:54.539
need lending. But in saying all of that, it's

00:25:54.539 --> 00:25:57.000
not one or nothing. So a lot of the discussion

00:25:57.000 --> 00:25:59.069
has been... don't have private credit because

00:25:59.069 --> 00:26:01.309
you should be invested in listed credit. I think

00:26:01.309 --> 00:26:03.950
that misses the complete point and it's more

00:26:03.950 --> 00:26:05.670
around competitors trying to position their own

00:26:05.670 --> 00:26:09.549
product. That makes a lot of sense. You said

00:26:09.549 --> 00:26:11.069
that was the last thing on private credit, but

00:26:11.069 --> 00:26:13.069
one of the biggest questions that we get from

00:26:13.069 --> 00:26:17.539
clients is people keep... So the RBA keeps discussing

00:26:17.539 --> 00:26:19.799
rate cuts. You know, you did say it did supply

00:26:19.799 --> 00:26:22.500
practically zero. It's gone back up. You're talking

00:26:22.500 --> 00:26:24.720
about it coming back off. You know, what does

00:26:24.720 --> 00:26:28.059
potential rate cutting schedule look like, say,

00:26:28.180 --> 00:26:30.980
for, you know, Aussie equities, the Australian

00:26:30.980 --> 00:26:33.660
market property and, you know, same thing, private

00:26:33.660 --> 00:26:36.140
credit. What does that look like? Let's start

00:26:36.140 --> 00:26:39.519
with private credit and let's then go into bonds

00:26:39.519 --> 00:26:42.000
and then we'll go to equity markets and not.

00:26:42.059 --> 00:26:44.420
So look, private credit, interesting. So private

00:26:44.420 --> 00:26:47.619
credit. And apologies for the jargon, it's not

00:26:47.619 --> 00:26:50.500
typically a spread product. So when you have

00:26:50.500 --> 00:26:53.839
a mortgage, interest rates are cut, your cost

00:26:53.839 --> 00:26:55.839
of interest goes down. It's not how private credit

00:26:55.839 --> 00:26:58.299
works. Private credit is typically a fixed rate

00:26:58.299 --> 00:27:03.920
asset class, and it is less influenced by interest

00:27:03.920 --> 00:27:08.559
rates. It will charge for some type of bridge

00:27:08.559 --> 00:27:11.279
financing anywhere from 6 % to 12%, and that

00:27:11.279 --> 00:27:13.660
will be largely independent of the interest rate.

00:27:13.980 --> 00:27:16.759
uh cycle or where interest rates are and really

00:27:16.759 --> 00:27:19.000
largely reflective around how much the asset

00:27:19.000 --> 00:27:20.859
is worth and how much value is going to be created

00:27:20.859 --> 00:27:23.200
by lending to it so interest rate sensitivity

00:27:23.200 --> 00:27:25.779
to private credit is not really there where it

00:27:25.779 --> 00:27:28.220
becomes interesting if term deposits come become

00:27:28.220 --> 00:27:30.980
lower. If alternatives to private credit become

00:27:30.980 --> 00:27:34.700
lower, then private credit becomes more advantageous

00:27:34.700 --> 00:27:36.559
and its role in a portfolio is very important.

00:27:37.079 --> 00:27:40.180
In terms of traditional bonds, absolutely traditional

00:27:40.180 --> 00:27:43.480
bonds might have a role in a portfolio. I think

00:27:43.480 --> 00:27:49.539
if we look at what the RBA is likely to do, looking

00:27:49.539 --> 00:27:52.779
at the forward implied curve, which is simply

00:27:52.779 --> 00:27:54.660
a measure of what the market is expecting the

00:27:54.660 --> 00:27:57.890
RBA to do, this may shock some of you, but Four

00:27:57.890 --> 00:28:01.930
months ago, it was forecasting two rate cuts

00:28:01.930 --> 00:28:07.109
this year. As of May, the forward curve is implying

00:28:07.109 --> 00:28:12.450
nearly five rate cuts. More likely four, but

00:28:12.450 --> 00:28:15.869
nearly five rate cuts. Now, that's probably more

00:28:15.869 --> 00:28:19.930
of a reflection of the uncertainty around trade,

00:28:20.089 --> 00:28:23.329
tariffs, noise, geopolitics. But the market is

00:28:23.329 --> 00:28:24.970
really getting ready to factor in four to five

00:28:24.970 --> 00:28:26.890
rate cuts. That would be advantageous to bonds.

00:28:27.500 --> 00:28:30.819
It would be advantageous for all card assets.

00:28:31.099 --> 00:28:35.000
So property, you know, particularly will benefit

00:28:35.000 --> 00:28:37.839
in that cycle. You know, more broadly in property

00:28:37.839 --> 00:28:40.799
markets, we've seen a massive underbuild, not

00:28:40.799 --> 00:28:43.059
just in residential, but, you know, things like

00:28:43.059 --> 00:28:44.759
shopping centers, things like office towers.

00:28:45.980 --> 00:28:48.460
You know, the replacement costs are very high.

00:28:48.759 --> 00:28:51.819
We haven't built much. And a lot of these, you

00:28:51.819 --> 00:28:53.519
know, their cap rates went up. When interest

00:28:53.519 --> 00:28:57.240
rates went up, IE valuations went down. If interest

00:28:57.240 --> 00:29:00.180
rates come down by 100 to 125 basis points, bringing

00:29:00.180 --> 00:29:02.700
the cash rate to below three, that's going to

00:29:02.700 --> 00:29:05.339
have a huge, powerful impact on property prices

00:29:05.339 --> 00:29:09.859
in this market. Yeah, it's so interesting how

00:29:09.859 --> 00:29:13.240
it all goes in together. So with the bonds and

00:29:13.240 --> 00:29:16.119
then we rotate into property, just on the bond

00:29:16.119 --> 00:29:17.859
point you mentioned, I think I can't remember

00:29:17.859 --> 00:29:19.680
the gentleman's name, the current treasurer of

00:29:19.680 --> 00:29:22.819
the US. He mentioned that something like he got

00:29:22.819 --> 00:29:25.950
the bond rate down from five to four. then essentially

00:29:25.950 --> 00:29:28.630
the deficit, the debt which has to be paid back

00:29:28.630 --> 00:29:30.329
purely in the interest is something ridiculous

00:29:30.329 --> 00:29:33.009
like, was it $100 million? It was something insane.

00:29:33.589 --> 00:29:35.789
And then, what, the next day you saw the largest

00:29:35.789 --> 00:29:38.430
bond trade in history when, in a sense, China

00:29:38.430 --> 00:29:40.470
gave the middle finger and essentially said,

00:29:40.509 --> 00:29:42.690
we're not going to let this happen. You know,

00:29:42.710 --> 00:29:45.170
what is the impact of, and will they even let

00:29:45.170 --> 00:29:47.650
it happen, you know, for that 10 -year bond rate

00:29:47.650 --> 00:29:49.410
to essentially fall? And what does that mean

00:29:49.410 --> 00:29:52.589
for, say, you know, the impact on Australia and

00:29:52.589 --> 00:29:55.309
Australian property? Yeah, so look, I think,

00:29:55.309 --> 00:29:58.029
again, it's all noise. I mean, when the tariffs

00:29:58.029 --> 00:30:00.990
were first announced, the currency in the US

00:30:00.990 --> 00:30:03.309
was more volatile than it's been in 20 years.

00:30:03.829 --> 00:30:06.569
The 10 -year yield curve or 10 -year bond moved

00:30:06.569 --> 00:30:09.470
the most in a day since the tech wreck in the

00:30:09.470 --> 00:30:13.430
2000s. And the 30 -year bond rate moved the most

00:30:13.430 --> 00:30:17.670
in a week than it ever has since the 1980s. Wow.

00:30:18.680 --> 00:30:21.519
This is not what first world countries do. This

00:30:21.519 --> 00:30:23.859
is what emerging markets do that are on the brink

00:30:23.859 --> 00:30:28.359
of default or politics is out of control. So,

00:30:28.380 --> 00:30:30.940
again, I think it's unorthodox. I think he creates

00:30:30.940 --> 00:30:34.140
noise to start the negotiating tool. His first

00:30:34.140 --> 00:30:37.539
deal, the office, is not the end. It's the starting

00:30:37.539 --> 00:30:41.119
point for negotiations. I do think, look, the

00:30:41.119 --> 00:30:42.519
interesting thing is, and I was looking at some

00:30:42.519 --> 00:30:46.660
stats today. You've had bond yields come down

00:30:46.660 --> 00:30:49.400
substantially everywhere around the world. Even

00:30:49.400 --> 00:30:51.440
in Germany, we've got that massive fiscal spending.

00:30:51.559 --> 00:30:55.240
Even in the US, we've got instability. It's around

00:30:55.240 --> 00:30:58.039
the concerns around growth and concerns around

00:30:58.039 --> 00:31:01.299
tariffs. But interestingly, at the same time,

00:31:01.819 --> 00:31:06.240
the forecast that the market is expecting around

00:31:06.240 --> 00:31:09.480
inflation expectations has risen substantially.

00:31:10.990 --> 00:31:12.950
And so people are expecting higher inflation,

00:31:13.230 --> 00:31:15.890
but they're expecting lower interest rates. So

00:31:15.890 --> 00:31:19.450
that's inconsistent, but it could be people fearing

00:31:19.450 --> 00:31:23.309
around that instability in US policy, but also

00:31:23.309 --> 00:31:28.730
the dreaded stagflation fear. Yeah, it's very

00:31:28.730 --> 00:31:30.609
interesting to see how this all plays out. So

00:31:30.609 --> 00:31:35.750
when this plays out and the volatility and everything

00:31:35.750 --> 00:31:37.950
settles, maybe a better question is, which everyone's

00:31:37.950 --> 00:31:39.309
kind of thinking, you're looking at the market

00:31:39.309 --> 00:31:41.299
today. right you know you've seen these play

00:31:41.299 --> 00:31:43.140
-outs and a huge amount of volatility multiple

00:31:43.140 --> 00:31:46.000
different ways and then all of a sudden uh they've

00:31:46.000 --> 00:31:47.819
come out with the negotiations there's like a

00:31:47.819 --> 00:31:50.200
90 -day hiatus on we won't impact these tariffs

00:31:50.200 --> 00:31:52.059
everything's stable looks like the market's starting

00:31:52.059 --> 00:31:54.539
to rally a bunch of green in the screens do you

00:31:54.539 --> 00:31:58.480
think this is here to stay for a period or are

00:31:58.480 --> 00:32:02.240
we pretty much like one headline away from it

00:32:02.240 --> 00:32:04.759
all unfolding again. Like a lot of people are

00:32:04.759 --> 00:32:08.259
asking, like, you know, it's definitely a, you

00:32:08.259 --> 00:32:09.839
know, which way is the wind blowing type of question.

00:32:09.980 --> 00:32:11.960
But from an asset allocating perspective, one

00:32:11.960 --> 00:32:15.059
of my colleagues mentioned it's very, very difficult

00:32:15.059 --> 00:32:17.440
to invest in this current market because you're

00:32:17.440 --> 00:32:18.880
damned if you do, you're damned if you don't.

00:32:18.960 --> 00:32:20.599
So I'm just wondering with everything playing

00:32:20.599 --> 00:32:23.619
out right now, do you think it's kind of stabilized

00:32:23.619 --> 00:32:27.960
a bit for the next couple of months or you sleep

00:32:27.960 --> 00:32:31.299
with one eye open? I think market's always difficult.

00:32:31.680 --> 00:32:34.940
to invest. I think structurally long -term, you

00:32:34.940 --> 00:32:37.299
want to be in the market. I think timing the

00:32:37.299 --> 00:32:39.319
market is inherently difficult and that's not

00:32:39.319 --> 00:32:42.099
a cop -out. It just is. You can always have an

00:32:42.099 --> 00:32:44.420
excuse of not investing in the market. Now, if

00:32:44.420 --> 00:32:46.759
I look at the market now, everybody has a strategic

00:32:46.759 --> 00:32:49.220
weight. You have your asset allocation and your

00:32:49.220 --> 00:32:50.940
strategic weight to equity is maybe 10%. It could

00:32:50.940 --> 00:32:53.200
be 20%. It could be 50%. I would say at this

00:32:53.200 --> 00:32:55.759
point, you would want to be slightly less in

00:32:55.759 --> 00:32:58.059
your strategic weight. And the reason I say that

00:32:58.059 --> 00:32:59.779
is I think it's going to be volatile up until

00:32:59.779 --> 00:33:02.339
February, March next year. And why do I say that?

00:33:02.460 --> 00:33:04.579
I think he's got a lot to do. This is his final

00:33:04.579 --> 00:33:08.799
term. The midterms are November next year. Now,

00:33:08.839 --> 00:33:11.400
the Republicans will be very, very, very aware

00:33:11.400 --> 00:33:13.500
that they do not want to lose their Senate majority,

00:33:13.779 --> 00:33:18.119
53 to 47 for the Democrats. He will make a lot

00:33:18.119 --> 00:33:20.799
of noise until the campaign starts for the midterms.

00:33:22.410 --> 00:33:23.769
You know, they don't want to lose the House.

00:33:23.849 --> 00:33:25.190
They don't want to lose members, effectively.

00:33:25.490 --> 00:33:26.789
They've got the majority in the Senate, but they

00:33:26.789 --> 00:33:28.950
don't want to lose, you know, he doesn't want

00:33:28.950 --> 00:33:31.130
to be a lame duck president. And so I think a

00:33:31.130 --> 00:33:35.990
lot of noise until February. I also think that

00:33:35.990 --> 00:33:39.670
markets are expensive. You know, the US market

00:33:39.670 --> 00:33:42.829
is not cheap. Maybe it doesn't deserve to be

00:33:42.829 --> 00:33:44.839
cheap, but you're not. being paid up. And if

00:33:44.839 --> 00:33:46.819
there's another bit of volatility, the market

00:33:46.819 --> 00:33:49.200
can fall. So I think in this environment, you

00:33:49.200 --> 00:33:52.539
want to be overly diversified. You want to have

00:33:52.539 --> 00:33:55.519
some key thematics. And that's why we set those

00:33:55.519 --> 00:33:59.339
three, non -USD versus USD, rest of the world

00:33:59.339 --> 00:34:03.579
versus US market. more active, more small, more

00:34:03.579 --> 00:34:06.140
mids versus large caps. I think you then want

00:34:06.140 --> 00:34:09.679
to be opportunistic in allocating to things like

00:34:09.679 --> 00:34:12.500
alternatives with much lower correlation and

00:34:12.500 --> 00:34:15.719
much lower reliance on the market. I think there's

00:34:15.719 --> 00:34:18.079
definitely an opportunity for private credit.

00:34:18.199 --> 00:34:20.159
I think there's definitely an opportunity in

00:34:20.159 --> 00:34:24.440
property selectively. And I think you just got

00:34:24.440 --> 00:34:26.219
to look at every investment, but I think in terms

00:34:26.219 --> 00:34:29.539
of broad market indices. and large caps and US

00:34:29.539 --> 00:34:32.159
dollar investments, you probably want to be slightly

00:34:32.159 --> 00:34:36.360
to moderately underweight. Thanks, Jason. One

00:34:36.360 --> 00:34:38.079
thing we've been discussing here with the family,

00:34:38.179 --> 00:34:40.280
which they do, as everyone knows, they do specialise

00:34:40.280 --> 00:34:43.420
in the property space. But one thing which we've

00:34:43.420 --> 00:34:46.039
seen, which has been so exciting to experience,

00:34:46.099 --> 00:34:48.860
has been the changes in New South Wales, to your

00:34:48.860 --> 00:34:52.119
point about, you know, the houses are expensive,

00:34:52.320 --> 00:34:54.260
you know, middle class kind of fall into essentially

00:34:54.260 --> 00:34:57.159
purchase. So they've come out and proceeded to...

00:34:57.519 --> 00:35:01.639
put in zoning changes like across the board in

00:35:01.639 --> 00:35:03.000
areas that you would never have thought that

00:35:03.000 --> 00:35:05.340
would occur that was at 400 meters from essentially

00:35:05.340 --> 00:35:07.340
a city centers and there's a number being named

00:35:07.340 --> 00:35:09.519
and then practically overnight with the stroke

00:35:09.519 --> 00:35:14.079
of a pen um some of these r2 or r3 dwellings

00:35:14.079 --> 00:35:17.019
can now build to six to nine stories high when

00:35:17.019 --> 00:35:20.280
it used to only be essentially a two -story da

00:35:20.280 --> 00:35:22.360
allowed so can you give a bit of a color around

00:35:22.360 --> 00:35:25.269
for the people in New South Wales that may have

00:35:25.269 --> 00:35:27.309
missed it or the people that live externally,

00:35:27.469 --> 00:35:30.570
what's actually changed in New South Wales with

00:35:30.570 --> 00:35:32.809
the zoning and how that may impact property,

00:35:33.010 --> 00:35:36.590
please. So these are called transport -orientated

00:35:36.590 --> 00:35:39.070
development sites. Now, effectively, what we

00:35:39.070 --> 00:35:43.050
saw over the last 20, 30 years is how difficult

00:35:43.050 --> 00:35:46.349
it is to build things in Sydney, particularly

00:35:46.349 --> 00:35:48.849
with local government approval. So with the stroke

00:35:48.849 --> 00:35:51.750
of a pen, the New South Wales government implemented

00:35:51.750 --> 00:35:54.389
a policy that I think it's within 200 metres

00:35:54.389 --> 00:35:57.789
of a major transport corridor. You can build

00:35:57.789 --> 00:36:01.369
six to eight storeys and within 400 metres, you

00:36:01.369 --> 00:36:05.150
can subdivide without council approval. Now,

00:36:05.190 --> 00:36:08.289
it is probably, I would argue, maybe the only

00:36:08.289 --> 00:36:11.210
reform the entire country has seen in the last

00:36:11.210 --> 00:36:14.489
decade. It is really the most powerful reform

00:36:14.489 --> 00:36:19.219
to improve supply of housing. Now, it's kind

00:36:19.219 --> 00:36:21.559
of under the radar. I would probably argue that

00:36:21.559 --> 00:36:23.900
there's probably a lot of annoyed people in some

00:36:23.900 --> 00:36:28.860
of the North Shore or the North Shore particularly.

00:36:29.920 --> 00:36:32.019
Why do New South Wales feel they could do this

00:36:32.019 --> 00:36:34.900
now? Now, if you think about the amount of investment

00:36:34.900 --> 00:36:36.820
that is going on, particularly in the Sydney

00:36:36.820 --> 00:36:40.780
Metro project. So now that the Northwest City

00:36:40.780 --> 00:36:44.440
is opened, you'll then have Bankstown. which

00:36:44.440 --> 00:36:46.679
is being completely converted to a metro system,

00:36:46.880 --> 00:36:50.059
I think opening at the end of the year, early

00:36:50.059 --> 00:36:52.780
next year. And then you have the giant one, Metro

00:36:52.780 --> 00:36:55.099
West, which will go all the way to Parramatta

00:36:55.099 --> 00:36:58.800
in less than 20 minutes. Now, this is very different

00:36:58.800 --> 00:37:01.820
to a suburban rail network. These move people

00:37:01.820 --> 00:37:05.219
around very fast and they enable a lot more density.

00:37:05.679 --> 00:37:07.639
The fact of the matter is we had two options

00:37:07.639 --> 00:37:11.409
in Sydney. close its new residence or build infrastructure

00:37:11.409 --> 00:37:13.530
like this country's never seen which has been

00:37:13.530 --> 00:37:15.809
you know we're halfway through the next stage

00:37:15.809 --> 00:37:18.289
is then if you're building a 20 billion dollar

00:37:18.289 --> 00:37:20.730
or a 40 billion dollar metro project you've got

00:37:20.730 --> 00:37:23.150
to build apartments and high -rises around them

00:37:23.150 --> 00:37:25.949
so i do genuinely believe this is a fundamental

00:37:25.949 --> 00:37:32.039
race shape of of sydney it's a brave reform I

00:37:32.039 --> 00:37:34.280
think there'll be a lot of pushback. It's been

00:37:34.280 --> 00:37:36.400
enacted. There's going to be a lot of pushback

00:37:36.400 --> 00:37:38.239
at the election. You're going to see some, not

00:37:38.239 --> 00:37:40.500
the federal election, the state election, which

00:37:40.500 --> 00:37:46.219
is some time away off. But it's an exciting change

00:37:46.219 --> 00:37:48.760
and something had to be done. And you could have

00:37:48.760 --> 00:37:52.420
governments pumping money into... silly projects

00:37:52.420 --> 00:37:54.480
and spending $10 billion or planning to spend

00:37:54.480 --> 00:37:56.340
$10 billion, but it actually achieves nothing.

00:37:56.679 --> 00:38:01.500
This is a big reform and it was, I argue, it's

00:38:01.500 --> 00:38:05.920
needed. There's probably a couple of people listening

00:38:05.920 --> 00:38:08.280
in right now that it's either incredibly popular

00:38:08.280 --> 00:38:11.199
for or not popular for. Could you imagine you

00:38:11.199 --> 00:38:13.699
woke up the next day and essentially, depending

00:38:13.699 --> 00:38:15.900
on the side of the street you are on, a particular

00:38:15.900 --> 00:38:19.519
suburb, it's like your house went up. dramatically

00:38:19.519 --> 00:38:21.800
in value or essentially you miss the boat by

00:38:21.800 --> 00:38:27.460
like a metre. I'm hearing also as well the other

00:38:27.460 --> 00:38:31.840
suburbs. I'm hearing also as well a number of

00:38:31.840 --> 00:38:34.719
the people living in congested suburbs. These

00:38:34.719 --> 00:38:37.380
things can go up. The number of cars coming on

00:38:37.380 --> 00:38:41.239
the roads. The transport. The roads can't handle

00:38:41.239 --> 00:38:44.059
the amount of traffic as well. Isn't it an infrastructure

00:38:44.059 --> 00:38:47.199
problem as much as an opportunity for... The

00:38:47.199 --> 00:38:50.900
key here is that these TDOs have been developed

00:38:50.900 --> 00:38:54.500
around mass transportation systems. If it's an

00:38:54.500 --> 00:38:56.619
existing train line on New South Wales trains,

00:38:56.800 --> 00:38:59.199
if it's a new station for the Metro project particularly,

00:38:59.539 --> 00:39:01.059
so you think about what's going to happen at

00:39:01.059 --> 00:39:05.099
Crows Nest, North Sydney, it's going to be concentrated

00:39:05.099 --> 00:39:08.440
in those areas and also major bus interchanges.

00:39:09.179 --> 00:39:12.599
It makes no sense to have a Metro project at

00:39:12.599 --> 00:39:16.440
Crows Nest and have... houses sitting on 600

00:39:16.440 --> 00:39:20.760
square metres of a block, right? Population grows,

00:39:20.920 --> 00:39:24.440
it's a fact. Yeah, it's great. Do you see this,

00:39:24.460 --> 00:39:26.659
if it's successful in New South Wales, expanding

00:39:26.659 --> 00:39:31.159
to the rest of the country? No idea. No idea.

00:39:31.920 --> 00:39:34.099
Look, I think if you look at Brisbane as a single

00:39:34.099 --> 00:39:37.019
council, Brisbane is pretty easy to do things.

00:39:37.159 --> 00:39:40.179
So Brisbane is one giant council next to another

00:39:40.179 --> 00:39:42.539
giant council, the Gold Coast, so it's pretty

00:39:42.539 --> 00:39:44.989
easy to... Not pretty easy, but it's easier to

00:39:44.989 --> 00:39:47.789
deliver. The problem here is if you propose something,

00:39:48.010 --> 00:39:50.530
councils could reject it, and then there was

00:39:50.530 --> 00:39:53.550
a way to get state significant development approval,

00:39:53.730 --> 00:39:56.050
which was costly and hard and time -consuming.

00:39:56.309 --> 00:39:58.429
So I think Sydney was unique in the number of

00:39:58.429 --> 00:40:02.570
councils. Well, that isn't just fascinating.

00:40:02.829 --> 00:40:04.730
The council was just removed. It's just like

00:40:04.730 --> 00:40:06.329
we're making the decision at the top, and you

00:40:06.329 --> 00:40:07.849
need to jump, otherwise you're not going to get

00:40:07.849 --> 00:40:10.570
funding. And the question is how high. It's just...

00:40:10.780 --> 00:40:12.139
And the most interesting thing, as you mentioned

00:40:12.139 --> 00:40:13.900
in the beginning, I think there hasn't been a

00:40:13.900 --> 00:40:17.719
change of this kind since the 1930s. And it was

00:40:17.719 --> 00:40:19.360
like when the new airport came in, it was just

00:40:19.360 --> 00:40:21.820
huge. But apparently, you know, our friends are

00:40:21.820 --> 00:40:24.480
saying that was like 1 % equivalent of this change.

00:40:24.699 --> 00:40:26.940
It's just such a dramatic effect for the stroke

00:40:26.940 --> 00:40:30.780
of a pen overnight in New South Wales. So, look,

00:40:30.820 --> 00:40:32.260
if anyone wants to know more about this topic,

00:40:32.420 --> 00:40:34.599
we love discussing it, so please reach out after.

00:40:34.639 --> 00:40:37.019
But in the light of just time, just moving on,

00:40:37.159 --> 00:40:40.159
I just... Anyone have any specific questions

00:40:40.159 --> 00:40:45.619
they want to ask? It can be as controversial

00:40:45.619 --> 00:40:49.559
as you like. Yeah, we love it. Get into the detail.

00:40:50.679 --> 00:40:53.539
We do have some pre -submitted questions actually

00:40:53.539 --> 00:40:59.059
lodged in the course there. From Michael in terms

00:40:59.059 --> 00:41:01.510
of... I mean, we may have covered it already

00:41:01.510 --> 00:41:03.469
to some extent. What will happen to the US dollar

00:41:03.469 --> 00:41:05.969
from here more so and the impact on the Australian

00:41:05.969 --> 00:41:09.429
dollar as well that Jason and Miriam? Yeah, so

00:41:09.429 --> 00:41:15.389
I think the US dollar will, you know, still produces

00:41:15.389 --> 00:41:17.110
the most amount of innovation. But I think the

00:41:17.110 --> 00:41:20.710
next stage after tariffs and trade will be some

00:41:20.710 --> 00:41:22.949
type of agreement that the US dollar needs to

00:41:22.949 --> 00:41:26.730
appreciate. Now, you know, most currencies have

00:41:26.730 --> 00:41:28.690
already done that. So the euro has rallied quite

00:41:28.690 --> 00:41:32.079
substantially. The yen, Australia's been a little

00:41:32.079 --> 00:41:34.139
bit left behind. The Australian dollar is quite

00:41:34.139 --> 00:41:37.019
unique. The Australian dollar, it's a top 10

00:41:37.019 --> 00:41:39.360
currency in the world, may even be in the top

00:41:39.360 --> 00:41:42.860
six in terms of tradability. And so investors

00:41:42.860 --> 00:41:46.840
around the world use this, and I'm talking about

00:41:46.840 --> 00:41:49.440
hedge funds and investment banks. They use the

00:41:49.440 --> 00:41:52.139
Australian dollar as a proxy on China. So if

00:41:52.139 --> 00:41:53.719
they want to, because you can't trade the Chinese

00:41:53.719 --> 00:41:56.360
currency. So if you want to express a view that's

00:41:56.360 --> 00:41:59.159
negative on China, which China's a bit. growth,

00:41:59.420 --> 00:42:03.619
low growth state for the last couple of years,

00:42:03.800 --> 00:42:06.780
people have expressed that by being short the

00:42:06.780 --> 00:42:10.739
Australian dollar. So look, I think the Australian

00:42:10.739 --> 00:42:12.539
dollar is going to be more linked to China and

00:42:12.539 --> 00:42:15.719
commodities, but more globally, including Australia.

00:42:15.940 --> 00:42:18.119
I think we've seen the peaks of the US dollar.

00:42:19.900 --> 00:42:22.219
Excellent. Thank you, Jason. We also had another

00:42:22.219 --> 00:42:24.960
one jump in there as well in terms of the outlook

00:42:24.960 --> 00:42:33.840
for the Australian resource sector. Yes, there's

00:42:33.840 --> 00:42:36.420
a few things. So gold, obviously, what we've

00:42:36.420 --> 00:42:40.039
seen in this instability is record gold prices.

00:42:40.300 --> 00:42:42.320
And so gold has been one of the best performing

00:42:42.320 --> 00:42:44.860
assets over the last three years. Australia produces

00:42:44.860 --> 00:42:47.119
a lot of gold. So I think our export numbers

00:42:47.119 --> 00:42:49.820
will hold up. I think the cyclical stuff is really

00:42:49.820 --> 00:42:54.130
hard. because China is so weak. This may be a

00:42:54.130 --> 00:42:56.690
little bit controversial, but we've also done

00:42:56.690 --> 00:42:59.030
everything we possibly can to make it harder

00:42:59.030 --> 00:43:02.789
for our resource companies. We're putting more

00:43:02.789 --> 00:43:07.269
regulation, more time to get through environmental

00:43:07.269 --> 00:43:09.969
approvals, more rejections by the government.

00:43:10.799 --> 00:43:12.500
You know, this is one of the sectors that we

00:43:12.500 --> 00:43:14.940
are genuinely competitive in and we're making

00:43:14.940 --> 00:43:17.420
it next to impossible. We could have been the

00:43:17.420 --> 00:43:19.639
single largest LNG exporter in the world, but

00:43:19.639 --> 00:43:24.119
we just decided not to be. Woodside is progressively

00:43:24.119 --> 00:43:26.599
going, Australia is too hard. I'd rather do this

00:43:26.599 --> 00:43:29.519
in the US. And they announced the giant Louisiana

00:43:29.519 --> 00:43:33.500
$27 billion US dollar project in the US yesterday.

00:43:34.000 --> 00:43:35.719
And that will come at the expense of investing

00:43:35.719 --> 00:43:38.039
in Australia. So I think we've really got to

00:43:38.039 --> 00:43:39.840
quickly decide if we want a resource sector.

00:43:40.349 --> 00:43:42.269
And if we don't, what else are we going to be

00:43:42.269 --> 00:43:45.050
good at? Well, we just lost the Beedaloo Basin

00:43:45.050 --> 00:43:47.489
like a couple of years ago. It was all Tambourine,

00:43:47.510 --> 00:43:49.489
had it up and running, Australian based, and

00:43:49.489 --> 00:43:51.349
then they got the labour and the greenies stepped

00:43:51.349 --> 00:43:52.949
in and made it challenging. So what did they

00:43:52.949 --> 00:43:55.429
do? They moved the company and the tax paid to

00:43:55.429 --> 00:43:57.469
essentially Delaware. They're still saying, hey,

00:43:57.530 --> 00:43:58.989
you're going to get your first contract into

00:43:58.989 --> 00:44:03.050
the Northern Territory. But it's just, isn't

00:44:03.050 --> 00:44:05.070
it insane how you've got it all in your backyard

00:44:05.070 --> 00:44:07.030
and through a few technicalities you make it

00:44:07.030 --> 00:44:10.400
too difficult and they've just lost. hundreds

00:44:10.400 --> 00:44:14.539
of millions of revenue for multiple generations.

00:44:14.800 --> 00:44:17.900
It doesn't make any sense. I won't make a political

00:44:17.900 --> 00:44:20.139
view on it because I think most political parties

00:44:20.139 --> 00:44:23.219
are at fault here. The problem you have is the

00:44:23.219 --> 00:44:27.960
seats to win. If you can't communicate properly

00:44:27.960 --> 00:44:30.579
why we need a resource sector and why we may

00:44:30.579 --> 00:44:34.400
still need gas and energy, it's going to be very

00:44:34.400 --> 00:44:38.019
hard to win seats in the city. I think you need

00:44:38.019 --> 00:44:41.699
someone who can communicate it very well, why

00:44:41.699 --> 00:44:44.420
it's important, why we need to make one area

00:44:44.420 --> 00:44:46.480
that we have a comparative advantage in against

00:44:46.480 --> 00:44:48.199
the rest of the world, and political stability.

00:44:48.699 --> 00:44:51.440
If you think about most resource regions in the

00:44:51.440 --> 00:44:53.460
world, they're not in political stable areas.

00:44:53.679 --> 00:44:57.099
So we have that advantage. But it is quite sad

00:44:57.099 --> 00:44:59.280
to see that, you know, even our own countries

00:44:59.280 --> 00:45:01.840
are not making investments here and rather doing

00:45:01.840 --> 00:45:07.079
it overseas. Yeah. So... One thing we've discussed,

00:45:07.219 --> 00:45:09.780
you and I, some of our clients have allocated

00:45:09.780 --> 00:45:11.460
to, we've had a conversation on the podcast,

00:45:11.639 --> 00:45:13.119
but I just really want to cover it because, you

00:45:13.119 --> 00:45:15.699
know, resources are so important. What's your

00:45:15.699 --> 00:45:19.159
opinion on resource royalties? Yeah, so look,

00:45:19.260 --> 00:45:23.179
I, you know, I think if, you know, the commodity

00:45:23.179 --> 00:45:24.280
sector is always going to be there. So commodity

00:45:24.280 --> 00:45:28.139
companies are extremely cheap, extremely cheap.

00:45:29.230 --> 00:45:30.530
Maybe they should be. Maybe China doesn't grow.

00:45:30.769 --> 00:45:33.269
Another segment that you can get exposure to

00:45:33.269 --> 00:45:36.329
indirectly is royalties. So, effectively, what

00:45:36.329 --> 00:45:39.010
commodity companies will do is they'll effectively

00:45:39.010 --> 00:45:41.170
sell some of their balance sheet. And you're

00:45:41.170 --> 00:45:45.190
entitled to a percentage of gross revenue that

00:45:45.190 --> 00:45:48.010
those mines produce. You don't take operational

00:45:48.010 --> 00:45:51.130
risk. You don't take capex risk. You just get

00:45:51.130 --> 00:45:53.610
a percentage of commodity price of what you're

00:45:53.610 --> 00:45:57.780
selling. It typically has less cyclicality to

00:45:57.780 --> 00:46:00.599
it to commodity companies that have a lot of

00:46:00.599 --> 00:46:04.940
costs and cyclicality to their earnings. So I

00:46:04.940 --> 00:46:08.420
think royalty is a great asset class. I think

00:46:08.420 --> 00:46:11.420
it provides probably cleaner, less risky exposure

00:46:11.420 --> 00:46:16.179
to the industry, and it's growing. So there's

00:46:16.179 --> 00:46:19.860
a couple of funds here. There's a broader range

00:46:19.860 --> 00:46:21.400
of royalties. It's just not resources. It can

00:46:21.400 --> 00:46:24.559
be pharmaceuticals. It can be IP. It can be music.

00:46:24.639 --> 00:46:26.579
It can be a whole bunch of things. So, again,

00:46:26.719 --> 00:46:29.519
those type of alternatives, which have lower

00:46:29.519 --> 00:46:32.320
correlation to the rest of the market, I think

00:46:32.320 --> 00:46:36.800
is a good place to be hunting. Excellent. Thank

00:46:36.800 --> 00:46:38.219
you, Joe. So we just had some thoughts as well

00:46:38.219 --> 00:46:41.340
in relation to China and how they're booming

00:46:41.340 --> 00:46:44.480
with Evergrande going belly up. However, China

00:46:44.480 --> 00:46:48.849
has recovered as a whole. Yeah, so the property

00:46:48.849 --> 00:46:51.349
market evergreen. So look, I think there's still

00:46:51.349 --> 00:46:54.409
a lot of weakness in the property market. I think

00:46:54.409 --> 00:46:55.969
that when you don't have a population growing

00:46:55.969 --> 00:46:59.010
and you overbuilt houses, it's not a great spot

00:46:59.010 --> 00:47:03.829
to be in. China this time has been more targeted

00:47:03.829 --> 00:47:08.130
in its response in providing fiscal support.

00:47:08.769 --> 00:47:11.550
No longer do we have the bazooka of just spending

00:47:11.550 --> 00:47:14.329
a whole lot of money. But I think the Chinese

00:47:14.329 --> 00:47:17.230
definitely turned a corner. at the beginning

00:47:17.230 --> 00:47:20.869
of the year and late last year, not just in terms

00:47:20.869 --> 00:47:24.090
of their economic response, but also their warm

00:47:24.090 --> 00:47:27.190
embrace of the tech sector. Now, a big part of

00:47:27.190 --> 00:47:32.489
why the Chinese market underperformed was when,

00:47:32.510 --> 00:47:37.570
you know, Jack Ma was effectively banned from

00:47:37.570 --> 00:47:42.159
being in the media, and this is Alibaba. The

00:47:42.159 --> 00:47:43.739
government in China really went hard against

00:47:43.739 --> 00:47:46.179
the technology sector, and the technology sector

00:47:46.179 --> 00:47:48.699
stopped investing and stopped feeling like it

00:47:48.699 --> 00:47:51.039
could contribute to the economy. That fundamentally

00:47:51.039 --> 00:47:53.980
shifted, I think it was in November to February,

00:47:54.099 --> 00:47:58.019
of reintegrating that and bringing them back

00:47:58.019 --> 00:48:00.599
to the table. That was a big move. And then you

00:48:00.599 --> 00:48:03.039
had DeepSeek happen, and I think that's been

00:48:03.039 --> 00:48:06.139
the catalyst of why people are looking at China

00:48:06.139 --> 00:48:09.400
again. Yeah, they're all kind of ties into each

00:48:09.400 --> 00:48:12.010
other, doesn't it? One thing we haven't... touched

00:48:12.010 --> 00:48:15.650
on is digital assets you know crypto um just

00:48:15.650 --> 00:48:18.050
that on a whole on a macro and why this is interesting

00:48:18.050 --> 00:48:20.650
it ties into the deep seek it ties into nvidia

00:48:20.650 --> 00:48:25.010
it ties into the infrastructure demand for natural

00:48:25.010 --> 00:48:28.429
gas for electricity like the grid you know they're

00:48:28.429 --> 00:48:30.650
discussing now over in the u .s like they've

00:48:30.650 --> 00:48:32.630
sold so many teslas but the grid is in there

00:48:32.630 --> 00:48:35.309
to support essentially the electrical you know

00:48:35.309 --> 00:48:37.769
california was told stop charging in teslas because

00:48:37.769 --> 00:48:39.409
we may have a brownout and then they had to fight

00:48:39.869 --> 00:48:42.650
right so what i'm wondering is you know where

00:48:42.650 --> 00:48:46.389
do you think uh where to for digital assets you

00:48:46.389 --> 00:48:48.409
know has it become more robust the etfs have

00:48:48.409 --> 00:48:50.349
been announced you're starting to see uh you

00:48:50.349 --> 00:48:52.909
know private credit or essentially you know hybrid

00:48:52.909 --> 00:48:57.190
style scalping of you know uh the lending rates

00:48:57.190 --> 00:48:59.670
you know you know i mean like these uh these

00:48:59.670 --> 00:49:01.590
fund managers are starting to pop up offering

00:49:01.590 --> 00:49:05.469
you know 20 % returns on just doing what hedge

00:49:05.469 --> 00:49:07.250
funds used to do, you know, scalping interest

00:49:07.250 --> 00:49:09.949
rates, moving one to the other. So do you think

00:49:09.949 --> 00:49:13.710
the digital asset market is, I suppose, old enough

00:49:13.710 --> 00:49:17.929
now to be taken seriously? Do you think the demand

00:49:17.929 --> 00:49:21.130
from the resources from the infrastructure and

00:49:21.130 --> 00:49:23.650
the economy, you know, is going to keep continuing

00:49:23.650 --> 00:49:26.929
this? Or am I mad? Like, what's your opinion

00:49:26.929 --> 00:49:30.190
on the digital asset space currently? So I'll

00:49:30.190 --> 00:49:33.289
be honest. I wish I bought digital currencies

00:49:33.289 --> 00:49:37.869
a long time ago. I wish I did. I was wrong, completely

00:49:37.869 --> 00:49:43.510
wrong. But I still, obviously, I may not just

00:49:43.510 --> 00:49:46.409
get it, but I've been wrong, and I'll admit that.

00:49:46.670 --> 00:49:52.530
But I think still, yeah, I don't gravitate towards

00:49:52.530 --> 00:49:56.130
it like some people do, but I did, and I wish

00:49:56.130 --> 00:50:00.809
I kind of understood it better. Yeah. the new

00:50:00.809 --> 00:50:03.110
nasa nasa class uh there's the core hardcore

00:50:03.110 --> 00:50:05.530
believers you know there was a few events where

00:50:05.530 --> 00:50:09.130
and this was wrong again where i thought bitcoin

00:50:09.130 --> 00:50:11.489
would have went up when it didn't and that kind

00:50:11.489 --> 00:50:14.230
of shaped my view when china implemented capital

00:50:14.230 --> 00:50:16.670
controls kind of remember what it was but when

00:50:16.670 --> 00:50:18.710
they introduced capital controls i would have

00:50:18.710 --> 00:50:21.130
expected bitcoin to rally because that was a

00:50:21.130 --> 00:50:23.949
way to potentially get money out of china i didn't

00:50:23.949 --> 00:50:27.590
i also expected bitcoin to rally at the commencement

00:50:27.590 --> 00:50:32.219
of russian sanctions It didn't. So those two

00:50:32.219 --> 00:50:34.940
kind of points, and maybe Bitcoin is a lot larger

00:50:34.940 --> 00:50:40.400
than that, but the two points of capital controls

00:50:40.400 --> 00:50:44.760
in China and sanctions on Russia, I would have

00:50:44.760 --> 00:50:47.239
expected those countries to have warmly embraced

00:50:47.239 --> 00:50:50.519
Bitcoin to get money out of their economy. And

00:50:50.519 --> 00:50:52.780
it just didn't happen. But again, I was wrong.

00:50:53.260 --> 00:50:56.039
But I look at those two catalysts and it didn't

00:50:56.039 --> 00:51:00.289
happen. Yeah, it's quite interesting how that

00:51:00.289 --> 00:51:03.130
all works. Just have a quick question. I'll quickly

00:51:03.130 --> 00:51:08.329
summarise. With mass immigration, there's been

00:51:08.329 --> 00:51:11.070
some changes in laws in Australia, which I believe

00:51:11.070 --> 00:51:15.789
came into effect as of April. Yes, regarding

00:51:15.789 --> 00:51:20.210
foreign money coming in, you have to be a resident

00:51:20.210 --> 00:51:24.039
in order to own property. and you're locked out

00:51:24.039 --> 00:51:26.039
for essentially two years or something equivalent.

00:51:26.119 --> 00:51:27.480
Do you want to give a bit of colour around that

00:51:27.480 --> 00:51:29.380
and how it may impact the Australian property

00:51:29.380 --> 00:51:33.920
market? I haven't followed that aspect. The bigger

00:51:33.920 --> 00:51:37.380
aspect is the kind of pausing of the special

00:51:37.380 --> 00:51:41.300
investor visa. So this was a visa where bringing...

00:51:41.630 --> 00:51:45.650
You know, bring five mil in, invest that in a

00:51:45.650 --> 00:51:50.570
prepackaged product, which included some VC assets,

00:51:50.690 --> 00:51:53.190
venture capital. It included some listed micro

00:51:53.190 --> 00:51:57.650
caps and then a diversifying component. A lot

00:51:57.650 --> 00:51:59.949
of countries have these. New Zealand has just

00:51:59.949 --> 00:52:05.110
re -implemented their special investor visa and

00:52:05.110 --> 00:52:07.230
actually made it really easy. Really, really

00:52:07.230 --> 00:52:11.429
easy. Trump. You just have to invest. Trump has

00:52:11.429 --> 00:52:16.309
announced a pure cash component. So pay five

00:52:16.309 --> 00:52:17.769
or 10 mil, whatever it is, and you get a visa

00:52:17.769 --> 00:52:21.809
on the spot. Look, Australia removed it. It did

00:52:21.809 --> 00:52:26.130
have an impact on some aspects, but there's ways

00:52:26.130 --> 00:52:28.110
to come in. I think there's another visa called

00:52:28.110 --> 00:52:31.590
the Innovatives Visa where it costs 10 mil and

00:52:31.590 --> 00:52:35.389
you've got to put it in a company that has certain

00:52:35.389 --> 00:52:39.279
criteria. Look, it hasn't had a... measurable

00:52:39.279 --> 00:52:42.300
impact on the luxury property market. But these

00:52:42.300 --> 00:52:45.420
new changes could very well. But the special

00:52:45.420 --> 00:52:48.539
investor visa, the concerns around that was that

00:52:48.539 --> 00:52:52.420
it was bringing people with questionable backgrounds

00:52:52.420 --> 00:52:56.880
and money laundering. But a lot of countries

00:52:56.880 --> 00:53:00.539
have these. And yeah, Australia is taking a view

00:53:00.539 --> 00:53:02.860
that it doesn't want it. Well, the US is bringing

00:53:02.860 --> 00:53:06.900
out the gold card now, right? To my understanding,

00:53:07.019 --> 00:53:08.860
yes, it gives you five years, but if you commit

00:53:08.860 --> 00:53:11.440
a crime, you're out. So was the Australian version,

00:53:11.619 --> 00:53:13.659
if you committed a crime, it doesn't guarantee

00:53:13.659 --> 00:53:17.619
you residency? No. I think it has to be invested

00:53:17.619 --> 00:53:20.579
for three to five years, and then at the end,

00:53:20.579 --> 00:53:23.199
you get approved. There's probably criteria.

00:53:23.400 --> 00:53:25.099
I'm sure if you committed crimes, you wouldn't

00:53:25.099 --> 00:53:28.400
get it, but there's criteria. But as soon as

00:53:28.400 --> 00:53:32.920
you meet that whatever term, you then apply,

00:53:33.079 --> 00:53:36.969
and then you get it. Anyway, thank you very much

00:53:36.969 --> 00:53:39.329
for joining us. I really appreciate the questions

00:53:39.329 --> 00:53:42.530
that you brought in for Jason. Jason, before

00:53:42.530 --> 00:53:45.610
we go, is there anything we haven't covered that's

00:53:45.610 --> 00:53:48.469
front of mind or a message you want to leave

00:53:48.469 --> 00:53:51.949
for everyone? Yeah, look, while I said that markets

00:53:51.949 --> 00:53:54.550
were expensive, I think there's a lot of opportunity

00:53:54.550 --> 00:53:58.409
when drilling down. And so the role and what

00:53:58.409 --> 00:54:00.050
we do and what we spend all our time is trying

00:54:00.050 --> 00:54:02.869
to find those ideas. We don't want to be making

00:54:02.869 --> 00:54:04.969
wholesale shifts of... pulling all your money

00:54:04.969 --> 00:54:07.110
out of the market and sitting in cash. But the

00:54:07.110 --> 00:54:10.190
portfolio definitely will evolve over time. I

00:54:10.190 --> 00:54:12.389
think it's, you know, in this environment, I

00:54:12.389 --> 00:54:16.650
wouldn't be jumping at shadows in terms of what

00:54:16.650 --> 00:54:19.989
comes out of the US. I would be, you know, taking

00:54:19.989 --> 00:54:22.130
a measured approach to managing my allocation

00:54:22.130 --> 00:54:25.750
to the market. And I, you know, it sounds a bit...

00:54:26.210 --> 00:54:29.289
you know, cop out, but it's a time in the market

00:54:29.289 --> 00:54:31.309
rather than trying to time the market. But if

00:54:31.309 --> 00:54:33.429
you can have some liquidity in the portfolio,

00:54:33.510 --> 00:54:35.409
you can tactically allocate when the market falls

00:54:35.409 --> 00:54:38.030
heavily. And maybe, you know, I do think to February

00:54:38.030 --> 00:54:40.530
next year, markets will remain volatile, but

00:54:40.530 --> 00:54:43.309
take advantage of, you know, I'm not saying buy

00:54:43.309 --> 00:54:45.570
the dip, but if there is a meaningful drawdown,

00:54:45.730 --> 00:54:48.710
that's an opportunity to buy stuff. So quite

00:54:48.710 --> 00:54:51.670
literally, play red light, green light. Pretty

00:54:51.670 --> 00:54:54.010
much. Pretty much. And I think that's what it's

00:54:54.010 --> 00:54:57.360
going to be for February. So essentially play

00:54:57.360 --> 00:54:59.699
conservative with your core and then essentially

00:54:59.699 --> 00:55:01.460
you have liquidity around and play red light,

00:55:01.519 --> 00:55:04.420
green light when the opportunity arises is pretty

00:55:04.420 --> 00:55:05.739
much what you're thinking. Is that right, Jason?

00:55:06.440 --> 00:55:09.039
Correct. And also be prepared just lastly, I

00:55:09.039 --> 00:55:11.300
know everybody has to go, but interest rates

00:55:11.300 --> 00:55:14.380
are coming down. The forward curve is pretty

00:55:14.380 --> 00:55:17.739
anchored in that kind of three or potentially

00:55:17.739 --> 00:55:21.780
below three, whereas it's 4 .1 now. That will

00:55:21.780 --> 00:55:25.280
have a powerful impact for the economy. you know,

00:55:25.280 --> 00:55:30.199
spending all the way to asset prices, particularly

00:55:30.199 --> 00:55:32.619
hard asset prices that are priced off interest

00:55:32.619 --> 00:55:35.059
rates. So I think we are, you know, we saw just

00:55:35.059 --> 00:55:38.460
lastly, we saw, you know, office towers particularly,

00:55:38.679 --> 00:55:42.539
you know, see 30 to 40 % declines. I think capital

00:55:42.539 --> 00:55:45.099
is coming back into that market as people realise

00:55:45.099 --> 00:55:46.860
we haven't built enough for a growing population,

00:55:46.980 --> 00:55:50.679
you know, shopping centres and retail. You know,

00:55:50.699 --> 00:55:54.239
Nishim has a proud legacy in retail. I would

00:55:54.239 --> 00:55:55.940
say in some of the largest shopping malls, we've

00:55:55.940 --> 00:55:58.940
not built a single shopping center on a large

00:55:58.940 --> 00:56:02.019
scale in nearly 20 years. And the population

00:56:02.019 --> 00:56:05.500
has gone from 15 mil to 28 mil. So, you know,

00:56:05.500 --> 00:56:07.440
you see these property markets move in cycles.

00:56:07.539 --> 00:56:09.659
And I think when interest rates come down particularly,

00:56:09.940 --> 00:56:13.480
that is a very powerful driver of capital growth

00:56:13.480 --> 00:56:17.849
in property markets and hard assets. Thank you

00:56:17.849 --> 00:56:19.650
very much for that, Jason. Thank you very much

00:56:19.650 --> 00:56:22.389
for joining us. If anyone wants to reach out,

00:56:22.530 --> 00:56:25.369
please do. I'm happy to talk to you after this

00:56:25.369 --> 00:56:27.329
if you have any specific questions. But in that

00:56:27.329 --> 00:56:29.610
case, thank you very much. And we will distribute

00:56:29.610 --> 00:56:32.190
this conversation around so you can hopefully

00:56:32.190 --> 00:56:34.130
listen to it again and pick up anything that

00:56:34.130 --> 00:56:35.969
you want to pick up. But thank you very much,

00:56:35.989 --> 00:56:37.550
everyone, for joining us. Really appreciate it.

00:56:37.750 --> 00:56:41.730
Don't forget to vote. Don't forget to vote. That

00:56:41.730 --> 00:56:45.269
is true. Do not forget to vote. Thanks, Jason.

00:56:45.690 --> 00:56:58.239
Thanks, Anthony. Any use of this recording does

00:56:58.239 --> 00:57:01.079
not represent the view of any other third party

00:57:01.079 --> 00:57:03.519
and are the sole personal opinions of the speaker.

00:57:03.800 --> 00:57:06.019
Any reference to financial products does not

00:57:06.019 --> 00:57:08.719
constitute advice or recommendation and before

00:57:08.719 --> 00:57:11.420
any action you should seek proper advice from

00:57:11.420 --> 00:57:14.369
your financial professional. Australian listeners

00:57:14.369 --> 00:57:18.889
should head to www .moneysmart .gov .au to find

00:57:18.889 --> 00:57:20.090
more information on obtaining