Chapter 1: What is the main topic discussed in this episode?
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After wild oscillations on Wall Street overnight, global investors are holding their breath as time ticks down on Donald Trump's latest deadline for Iran, set to expire tomorrow. And while the world remains caught in the grip of the global fuel crisis, a huge amount of investment continues to roll into artificial intelligence as it promises, or should that be threatened, to upend the economy.
Welcome to ABC Business Daily. I'm Carrington Clarke.
And I'm the ABC's Chief Business Correspondent, Ian Verinder.
Ian, thank you so much for joining me. I want to put a timestamp on this conversation because deadlines matter and time matters, even if Donald Trump seems happy to skirt around his own deadlines. We're speaking at around 11.30am here in Sydney, which means it's around 22 and a half hours until Donald Trump's latest deadline for Iran expires. We have seen this ratcheting up of language.
It's hard to think that he can keep ratcheting it up further, but this time it's expletives talking about raining hell down on Iran, blowing up its civilian infrastructure. And yet the Australian market has bounced quite extraordinarily today. What is going on?
Who knows, Carrington. I mean, I expected some modest advances this morning. I mean, Wall Street, when it shut last Thursday night, rose about 0.4% and didn't seem to be wild enthusiasm running through the veins of investors at that stage, I guess, faced with a four-day shutdown of markets. But yeah, this morning, it just bolted straight out of the opening. And
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Chapter 2: What are the latest developments in the global fuel crisis?
Well, this is an extension in itself because it was supposed to be Tuesday, 10 o'clock in the morning, our time. And suddenly overnight he said, well, it's going to be the next day. And then he said, so I gave him a 10-day extension. Oh, I make it 11 now.
I mean, it's amazing how flexible these deadlines have been. Yet again, this latest deadline... It did feel like his language was pretty adamant this time, but you could say that about some previous examples with Donald Trump. Once again, though, it is occurring outside the trading day. It'll happen in US terms at 8pm in New York or Washington DC terms.
He's then threatening basically four hours of blitz on Iran's civilian infrastructure if they do not come to some sort of an agreement, which he has specified does involve the opening up of the Strait of Hormuz, which you have to think would only result in Iran targeting its Gulf neighbours' assets, similar power plants, civilian infrastructure.
If they think America and Israel are targeting their civilian infrastructure, they think it's fair to hit those countries that host American bases.
Chapter 3: How is artificial intelligence impacting the economy?
I mean, how does this play out? And is there anything investors or markets can do to protect themselves and their financial investments?
The Strait of Hormuz clearly is the key asset that Iran holds. It's the ultimate weapon, I guess, they've got against America and the threat of a global recession. They're not going to give it up easily. That's always been the case that they control it. So
Why would you just suddenly decide to flip because Donald Trump has asked you to after he's been bombarding the country for the past five weeks? So I can't see any let up at all in that arrangement where they're going to basically just keep control of the Strait of Hormuz and keep all of those ships locked in.
This morning, there were two Qatari LNG ships that had permission to pass through, and that has just now been denied.
So we have seen some ships moving through that strait, mainly Iranian ships or countries that have a relationship with Iran. Iran is allowing them to pass, which does seem to indicate that it hasn't been mined yet, the fact that they're able to give approval for ships to move through that strait.
But obviously for any country that doesn't have the express permission of Iran, it's far too risky for them to move through that strait because it is such a narrow area. narrow body of water. And obviously, Iran has the capability of hitting ships.
As much as the weaponry is key to this, there's also just the fear, the threat itself. So insurers will not insure any vessel that attempts to sail through that strait that does not have the express permission of the Iranian government.
One of the things I think will be interesting this week as far as why Donald Trump might have this deadline where it currently sits is we do get inflation data out of the United States. This will be the first indication of how higher fuel costs are impacting the US economy.
Do you think that's part of the calculation that once it becomes clear, even though obviously for Americans who are filling up a tank of fuel, they already know this is hurting them. But this will show, won't it, that there has been a direct impact on the cost of living for Americans because of this war.
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Chapter 4: What are the implications of Donald Trump's deadline for Iran?
We're about to see the same impact here. I mean, we're all noticing how much it costs to fill up a tank with petrol. But pretty soon we're going to notice just exactly how much that is relaying through the entire economy. I mean, you know, 50%. Food, everything we use relies on fuel. And so if the cost of that fuel is rising, the cost of everything will rise along with it.
And I mean, look, a couple of interesting things, too, when you look at global pricing, the cost of shipping has absolutely soared. So to get a tank full of oil from the Persian Gulf to China has quadrupled. And you think, well, that sounds reasonable. Well, only a handful of ships can travel through that route. But shipping costs everywhere have soared.
So if you want to take oil from the Gulf of Mexico, for instance, through to China, it's triple the price that it was prior to this confrontation. Then there's refining costs. Refining costs have absolutely gone ballistic.
Because refiners can't, well, they're having difficulty getting hold of oil supplies and the correct oil supplies that they need to create the different types of fuel, diesel, higher grade fuels, lower grade fuels. So it's the cost of transporting and actually refining the oil, which is soared in price as well, is adding to those pressures.
As you said, we will kind of see now data from different parts of the world taking into account the March data because everything, most inflation is done month by month. We've seen previously February before this war kicked off. America is one of the first. We'll see data from March, but then Australia will see the same data.
And once I think those numbers are clear, then it's going to be even more front of mind for people. about the cost of this war. And obviously, Donald Trump is also preparing for the midterm elections. I want to flip to a different subject.
Before, if we could remember back before this war kicked off, I felt like on the daily, my reporting was mostly focused on the artificial intelligence blockbuster results slash cost to other countries.
So on one hand, you were seeing the Magnificent Seven in particular seemingly just endlessly hitting new heights when it came to valuations because people were betting on the transformative power of artificial intelligence and how much money people could possibly make by being invested on the right side of it.
And at the same time, we were seeing other technology companies, software as a service companies, seeing their share prices crater because people were concerned that artificial intelligence was going to eat their lunch, that artificial intelligence was going to basically have the capability to do what they had been doing for a long time and being paid handsomely for it.
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Chapter 5: How are investors reacting to market fluctuations?
I'm pretty sure that's how you pronounce his name. And look, he's made the point that we're not really considering what the longer term impact of artificial intelligence will be, particularly on the workforce. And his research essentially shows, because what he's done is he's looked through the payrolls, thousands upon thousands of payrolls in American companies.
And what he's saying is that it's already starting to impact younger workers. So 16% of younger workers are are having trouble getting a job. And we're talking about highly skilled workers here. And if they're involved in any way in software development, it's 20% of younger workers. So what is happening is, you've seen it, you can see it in law firms, all sorts of professions.
Nobody wants to hire the entry-level graduates anymore to do the grunt work that, you know, the partners, the senior partners used to do to learn the ropes. They've done their degree. They've done all the postgraduate, you know, courses that they needed to do.
Then you go into the workforce, the real workforce, and you get told, well, you make the coffees, you do everything, and then you can do this. And artificial intelligence has taken on all of those lower-level roles. But where does it stop?
I mean, once the senior people retire and the mid people work their way through, does artificial intelligence work its way up into the mid levels until you've finally and only got a company that's got a couple of people at the top of it? We just really don't know where this is going. Nobody's asking the questions, let alone contemplating what the potential solutions to this is going to be.
So we're talking about... really quite severe impacts on the workforce. You know, you've seen a couple of big companies. I mean, Atlassian, you know, you mentioned software companies. Atlassian is probably one of the hardest hit. Its share price is now 84% down from its peak in 2021. It just laid off 10% of its workforce. But Block, that's Jack Dorsey's company. He's the guy who started Twitter.
He's now, you know, got Block, which owns the Australian company Afterpay. It decided to lay off more than 40% of its workforce a month or so ago. And that was a week after Australian employees were at an off-site meeting down on the Victorian coastline there, where they were celebrating the company's success and how well it was doing. And they got back and were told, you're fired.
But that's a kind of interesting story. contrast because you've got a software company that's laying off people because they are in deep trouble. And you've got another company, which is a financial services company, laying off people because it can see a great opportunity here.
It's going to be able to double its profits or whatever because it'll get rid of all of these lower level jobs that artificial intelligence can do. But you've still got a lot of people not employed.
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