NAB Morning Call

Wednesday 23rd April 2025

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Markets are behaving very differently today. US equities are rising, bond movement is subdued, and oil prices are back on the rise. NAB’s Sally Auld says sentiment is being driven by talk from the US administration about trade deals getting closer with India and Japan, and how he current impasse with China is unsustainable. So, does that mean tariffs won’t bounce back up after their 90day pause? That seems to be how markets are taking it, but Sally says the sentiment could change when we start  to get real data on how badly the US economy (and others) have been impacted.  

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Tuesday 22nd April 2025

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The 'sell America' trade continued on Monday, with equities and bond prices both falling. NAB’s Tapas Strickland says it’s uncertainty over the independence of the Fed that is playing on market concerns this time. The US President has made no secret of his desire to replace Jerome Powell as Fed chair, although there’s a question of how far Presidential authority can stretch. This compounds other concerns. For example, how likely are trade agreements? It’s becoming apparent that a deal with Japan hasn’t progressed far, whilst animosity between China and the US ramping up further. Both countries are now threatening their trading partners to pick sides in the trade war. Tapas says we are now starting to see hard data showing us what’s really going on. 

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Thursday 17th April 2025

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IATA is predicting the airline industry will break through the $1 trillion revenue mark, but with margins averaging up 3.6 percent. Phil suggests to airline industry analyst John Strickland that it’s not much of a return for such a capital-intensive industry subject to so much geopolitical risk. But, John argues, if you take the long-term perspective, and look for airlines with strong, proven management that have shown they can deliver margins and cope with crises, you can still enjoy healthy dividends. When it comes to the challenges of tariffs, the manufacturers face the biggest problem, with components sourced all over the globe. There’s also the rise of China’s aircraft manufacturing that is likely to break the Boeing-Airbus duopoly.  

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Thursday 17th April 2025

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Things are getting uglier in the trade war between the US and China. Equity markets have been hit by new limits on the export of NVIDIA’s critical AI chip to China, and threats of secondary tariffs on US trade partners who trade significantly with China. NAB’s Gavin Friend also talks through Jerome Powell’s speech and fireside chat at the Economics Club of China. He basically said, that with all the uncertainty, there’s a chance the Fed could hold back on any further cuts this year. That all depends on whether tariffs are eased. It’ll be a question the ECB will have been pondering ahead of today’s rate decision. There’s also Australian employment data to talk about.

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Wednesday 16th April 2025

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Tariff and trade news continues to dominate and drive markets in all directions. Sentiment surveys are now showing a serious downturn, with the Bank of America claiming investors are ayt their most bearish in 30 years. NAB’s Rodrigo Catril says we are still waiting to see the hard data from April. The difference in FX moves for the pound and the Euro has been interesting, with a deal with the EU seeming a long way off, with JD Vance suggesting a deal with the UK could be closer, because of Trump’s love of the royal family. Meanwhile China has reportedly stopped their airlines from buying or leasing aircraft or parts from Boeing. It’s another day of information overload, which makes it a tough call for the Bank of Canada later today.

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Tuesday 15th April 2025

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US equities kicked off Monday’s session sharply higher on Friday's news of tariff exemptions for certain electronics items. Apple was one of the big beneficiaries. But as the session progressed most of those gains diminished, perhaps as President Trump’s weekend social media post sank in, suggesting nobody was exempt, they were just being moved to a different tariff bucket. Then, news circulated that car parts may also be exempt, pushing up the share price of auto manufacturers. NAB’s Ray Attrill joins Phil to make sense of the latest moves and to pick through the data that is still helping to guide investors.

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Monday 14th April 2025

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There was very little market reaction to the increase in tariffs from China on Friday. Could equities respond, though, to the news of exemptions announced by President Trump for certain electronics goods. Could this mean, as CEOs queue up for meetings at the White House, more exemptions will follow, including country-specific trade deals. NAB’s Skye Masters says all of that could be good for equity markets, but the damage has already been done for bond markets, with the sell off indebt likely to continue, pushing the US dollar lower.

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Friday 11th April 2025

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Economists these days tend not to treat the supply of money as a major determinant of economic growth. That’s because a downturn in the supply of money can be counteracted by the speed at which money changes hands. This week Steve Hanke, a Professor of Applied Economics at Johns Hopkins University in Baltimore, argues against that belief. The velocity of money is relatively constant, he says, but the supply of money is the major determinant of economic output, driven primarily by loans from commercial banks. Listen to his reasoning on this week’s podcast and why he thinks the RBA is doing a good job for Australia, but the US could be heading for a recession, even before Trump’s tariff adventure.

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Friday 11th April 2025

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Yesterday’s rebound in US equities has proven to be very short-lived, with equities well down at the close in New York. NAB’s Gavin Friend says it’s a reality check, with the tariff war continuing between the US and China, and the question of whether Trump will be realistic in the deals he seeks with other countries over the next 90 days. We are getting close to the end of the week with an immense amount of uncertainty, although the Aussie dollar has managed to gain ground in the midst of it all. NAB, meanwhile, has revised its outlook for the RBA, expected a more aggressive path of rate cuts. Listen in for more on that.

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Thursday 10th April 2025

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A roller coaster session on the markets. It started yesterday during the day in Australia with massive selloffs in US bonds on the news of rising tariffs from China and the US. The US is now up to 125%, with China imposing 84% from tomorrow. NAB’s Ken Crompton says if there was a Laffer Curve for tariffs we are well beyond the point where revenue keeps rising. But late in the session President Trump announced a 90-day delay on some of the heftier tariffs – China excepted. Elsewhere a 10% tariff will apply, and world leaders have three months to negotiate. That’s resulted in a record turnaround in US equity markets, although bond markets are a little less convinced. 

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