00:00 Speaker A
I’m joined by Anna McDonald, investment manager at Aubrey Capital Management. Anna, thanks for joining us here on Market Sunrise. Well, let’s start with the Fed. We’re going to hear from some Fed speakers today, but since the Fed cut earlier this month, what have you made of the comments you’ve heard from Chair Powell and of course, the newest member of the board, Stephen Myron?
00:30 Anna McDonald
Well, I think if um they really show throw into sharp relief that we have two divergent schools of thought now on the Federal Reserve. We’ve got Pal who’s trying to be cautious, data- dependent, uh thinking about the effects of uh ongoing inflation, which is still, as you say, it might come in ahead of uh um in line with expectations, but it is still ahead of of target. So, he’s he’s got that cautious data- dependent attitude. And now Moran has taken a uh an unpaid leave of ad ad absence as from the White House where he was chair of the Council of Economic Advisors and he’s coming on and he’s talking about the a need for a much uh bigger rate cuts, 50 basis point rate cuts. And he’s talking about, you know, that the economy is not cratering, but there’s definite signs of weakness and that Trump’s actions have actually changed the the the the outlook really for for for um the the the way that the market should should think about inflation. You know, he’s been um a lot of work on immigrant workforce, for example. And so he’s saying that the markets of structures have changed a bit. So, it’s really interesting what they’re saying, but remember Moran is just one vote and there is a much broader Federal Reserve. So I expect that the other members of the of the of the Fed um will be thinking more along the gradual and slower rate cuts in order to not get that unanchoring from the uh inflation expectations that we want to have in the market.
01:42 Speaker A
Now, our top story today is the fact that there’s a potential government shutdown looming. Uh, but that could have a big impact on the Fed as well because on Friday we get non the non-farm payroll report. Uh, what could happen if we don’t get the non-farm payroll report? But also the number that we’re looking at, you know, the expectation is for quite a low number just 22,000. It seems like if it’s if there’s a miss, there could be quite a big impact on the markets.
02:07 Anna McDonald
Yeah, I think so. And actually, if you think back that August number of 22,000, it actually the it’s about the revisions they do going back. So actually it showed that in June there was actually a negative number there. So I think it’s always interesting to see not only what they’re coming out for this month, but what they’re saying um any revisions to previous months. I think September that we’re looking for 50,000, um but as we know, these these numbers might not even be published if if there is a fed shutdown.
02:30 Speaker A
And talking about the Fed shutdown in my colleague Julie Hyman said it might not have that big an impact on the markets. Are you in agreement with that?
02:40 Anna McDonald
Uh, well, I think we’re seeing an impact on gold. Um, one of the reasons I think that um, I mean we, you discussed earlier about, you know, it’s a it’s a bit of a safe haven, um, asset up 45% this year. And as the dollar continues to weaken, it actually becomes a more attractive asset for those overseas who might be now thinking because there’s been a lot of, let’s face it, there’s been that this this second administration by Trump has been very different and there are some overseas investors that may be thinking about buying gold instead of treasuries. And that looks increasingly, um, increasingly attractive when you have things like government shutdown, which don’t normally have more than a short-term impact, but, um, I think we’ve got a particularly febrile atmosphere at the moment and, and that might be leading investors into gold rather than treasuries.
03:22 Speaker A
Now it’s a pretty quiet week on the corporate earnings front, but we do hear from the sporting giant Nike. Uh, what are you looking out for there? It’s been a bit of a a tough sort of year for them so far, hasn’t it?
03:41 Anna McDonald
Yeah, it’s been a tough couple of years actually. Um the CEO has uh uh Chris sorry, Elliot Hill, he came back having spent 32 years as Nike’s head of commercial and marketing and he’s come back to be CEO. and I think he’s he’s going back to thinking about all his marketing expertise. We’re going to see quite a big increase in marketing budgets, particularly ahead of the World Cup next year. Nike are the suppliers to five of the top 10 teams that are in the FIFA rankings for the World Cup. And I think they’re seeing this as a big opportunity to try and regain market share, which they are losing to to maybe some new brands like Hoka and On, which, you know, these are small brands, two billion dollar brands, not like Nike that’s a just a shy of a 50 billion dollar Juggernaut. But I think that they, they need to cement themselves as serious, they’ve already tried to cement themselves as serious players in, in, you know, technical trainers, really good trainers and and football boots and so on. But I think they’re going to be looking to try and um to spread that halo effect um broader around and get more people back to buying Nike.
04:54 Speaker A
Anna McDonald from Aubrey Capital Management. Many thanks for your thoughts.
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