Booze battle brewing

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NAB Morning Call 16 min 3 speakers 8 chapters transcribed 21 days ago
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Why did the market experience a classic risk‑off day on March 14 2025?

Phil Dobbie 0:01
Well, it's a bit like a classic risk off day. Even the US dollar is playing its bit in that. Why? Well, tariffs, of course, the battle is hotting up between the US and Europe over wine and whiskey, two of the most important factors in life. And the fact that a ceasefire with Russia is looking a lot less likely today. Also today, Japan's wages data and what that means for the future direction of the Bank of Japan. It's Friday, it's the fourteenth of March, twenty twenty five. It's the morning. Cole from Nab. Good morning. Well, the US dollar is a little higher today. It's up naught point two percent on the DXY. The Aussie has lost not point six percent, below sixty two point nine US cents now. The euro is down naught point three percent, the yen is up naught point four percent, the pound down naught point one per cent.
Phil Dobbie 0:46
Uh the US equities are well down. Uh at the close two percent off the Nasdaq, one point four percent off the S P, one point three percent off the Dow. Heavy trade. I comment Made on Bloomberg just now is that when there's heavy trade, that often signifies that you're at the bottom of a downward movement. Believe that or don't. In Europe, though, uh, half percent off the DAX, the Eurostocks 50 down by the same amount, uh, the uh FTSE one hundred is flat, and ten year treasury yields are down five basis points for ten year treasuries down to four point two six per cent, yields down three basis points for ten years in Canada, down two in Germany, down four in the UK. Aussie ten year yields yesterday down two basis points to four point four one percent on futures now, a few basis points higher than that.
Phil Dobbie 1:28
And oil is down today, one percent off WTI, one point one percent off Brent, which is down to sixty-nine ninety a barrel. I seem to use the word down a great deal in that last minute, didn't I?

How are US‑EU tariff threats on wine and whiskey affecting equity markets?

Phil Dobbie 1:39
Nabs Rodrigo Cotrill is with me today. That really is the direction. So the SP, not quite in correction territory, but very close. To it at that ten percent. And I mean some in normal times, you'd be expecting shares to rise on a day like today, because we had another soft inflation number, didn't we, in the PPIs in the United States. So lower inflation, you'd think faster cuts, more borrowing, more growth. And maybe that would be the case if it wasn't for pesky tariffs which are threatening to slow everything down.
Rodrigo Catril 2:06
Yeah, morning Phil. So we we're still in the midst of this sort of tariff tensions uh and this time the focus is on Europe. Um uh with the Europeans obviously uh threatening to to impose tariffs on whiskey, American uh American whiskey, and now President Trump is gone all out saying that he will impose two hundred percent tariffs on wine, champagne and other alcoholic beverages. Um if you know if Europe delivers So
Phil Dobbie 2:33
I think the American consumer is losing out there. They are losing the fine quality ingredients for Europe and they're gonna be stuck with American wine. I mean, you know.
Rodrigo Catril 2:43
And let's not forget they still get quite a bit of the good South American Chilean wine from, you know, Yeah, I knew I was just sweet. I just fed you that line. They'll find substitutes, yeah. Yeah, but it to your point, it you know, we've seen equity markets go down in terms of this risk aversion, which is also been reflected by this and spike in the VIX. So that's one thing that's gone up, the the increasing equity volatility. Um and then yeah, it just it it just highlights how markets are becoming a bit more concerned that um the tensions uh between Europe in in this case um are are probably heading into Uh getting worse before things get better. Um and there and certainly is is is affecting uh the equity market in particular.
Rodrigo Catril 3:25
So the the move down or move lower in US equities is being quite sharp.

What does the latest US PPI data reveal about underlying inflation pressures?

Rodrigo Catril 3:29
But
Phil Dobbie 3:29
it's not just uh equities, is it? I mean it I mean it's a risk off in many ways, so it's reflected in currencies as well. So the safe haven currencies, including the US dollar this time, are higher and uh the odds he's taking a tumble uh because it's you know, it it always does when uh times are tough.

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