Christopher Joye: Brace yourself for a higher for longer rates cycle

Added: 2026-05-06

[00:00:03]Hi there folks, it's James Marley here, co-founder at Livewire Markets, and there is a ton going on in markets right now. Lots of moving parts. We've had the war in Iran, inflation bubbling around, uncertain rates outlook, and a budget on the agenda. Uh to help get a bit of perspective on some of these movements, I've reached out to Christopher Joy, who's a portfolio manager at Coolabah Capital Investments. It's an unplugged interview. Uh haven't given Chris any heads-up on what we're going to talk about, but uh hopefully uh we'll have some interesting points to discuss. Uh Chris, thanks for jumping on the call, and thanks for making some time to have a chat with us today. Thanks, mate.

[00:00:40]Great to see you again, buddy. Yeah, good to see you, too. Um I gave it a little bit of flavor in the intro, but inflation in Australia, this is a front-page issue right now. I saw some coverage in the AFR talking about it being a a ticking time bomb, some big numbers. Uh why has it been so hard to get under control, and and what's your assessment of it at the moment? Yeah, okay. Inflation. So, for the RBA, uh on a 6-month annualized basis, core inflation's been running at 3.9%.

[00:01:10]Uh this is the preferred trim mean measure. They target 2.5%.

[00:01:15]Uh so, that's a big miss.

[00:01:17]Uh and on a 12-month basis, it's been running at 3.4%, also a big miss.

[00:01:23]The RBA hasn't hit their inflation target since way back in 2021.

[00:01:28]Last year, they forecast that inflation would be 2.6%. We forecast 3.3.

[00:01:35]Came in at 3.4.

[00:01:37]Um with the benefit of hindsight, they shouldn't have cut rates three times at all last year.

[00:01:42]Uh we've had, you know, two rate hikes.

[00:01:45]Um and the market's pricing another two to three. Uh we've been arguing they should go to 4.5 to 5%, remembering that the trough in rates was 3.6%.

[00:01:56]Uh they lifted rates after the pandemic to a high 4.35%.

[00:02:00]As you might remember, we argued back in 2024 they needed to go to 5% because when we ran their models of the economy, that's what the models suggested they should do. That's what the West did.

[00:02:12]Canada, the UK, US, New Zealand all went to 5, 5.5 %.

[00:02:18]Uh the RBA wanted to run an experiment with a hot economy, and um yeah, that's failed. They've never normalized inflation, mate. And the problem is that there's really only two key drivers of inflation. You know, simply put, it's government spending and immigration. All of the inflation, more or less, comes from those two sources.

[00:02:41]And all have been, so government spending and immigration have been far too strong for the Aussie economy to absorb. That's driving up the cost of living, driving up inflation, driving up interest rates.

[00:02:53]And, you know, potentially in the budget we're going to find out that uh the solution to crazy amounts of government spending that have given us a government sector that as a share of the economy is the largest since World War II, the solution to that is taking more of our money and giving it to the politicians. So, I don't see how you solve a spending problem by stealing more of our hard-earned cash.

[00:03:17]Uh but, you know, it is what it is, right? But, yeah, so the RBA, I would say headline takeaway, the RBA was the first central bank in the world to cut rates in the pandemic, hiked them after the pandemic, cut them again, and now hiked them again. I did tell some of our clients, James, last year, prepare for a a second hiking cycle. I think folks thought we were crazy.

[00:03:38]No one in the world, mate, last year, nobody that I know of, was talking about a second hiking cycle.

[00:03:44]I did write in the AFR last year that the US bond market pricing in a 0% chance of hikes in 2026, 27, and 28 was crazy.

[00:03:56]And what's interesting, James, uh like one of the ideas I'm thinking about right now, is, you know, the US bond market is still pricing in no real hikes for the Fed.

[00:04:07]And this is why equity valuations are at all-time highs. So, the the dichotomy between US inflation, which is also running super strong, so 6-month annualized core PCE inflation in the US is running at 3.4% and over 12 months, 3%. Now, the Fed doesn't target 2.5% like the RBA. We have the highest inflation target in the developed world. The Fed targets a lower 2%.

[00:04:32]So, both central banks have missed their targets. Both central banks have failed to deliver price stability. And this is why we've argued prepare for a global synchronized hiking cycle. The um I'm in New Zealand right now. The RBNZ is talking about um hiking rates this year.

[00:04:47]We think they'll hike twice. Uh the European Central Bank is talking about hiking rates this year.

[00:04:52]Uh the Fed's chair, Jay Powell, after his last meeting, said the next move could be up. So, um inflation is entrenched. It's it's driven by government spending and immigration.

[00:05:04]It's coming up in what we call services inflation, but it's now also coming up in goods inflation.

[00:05:09]Uh I think the real risk, here's another idea that I'll throw at you, the real risk is the RBA hikes 100 basis points or so in total, so from 3.6 to say 4.6, but we find that we can't get inflation under control. We've still got rampant government spending. We've still got super strong immigration.

[00:05:29]And we could be staring down the barrel of an elongated hiking cycle, much like we saw in the 10 years before 2008, where it's stop-start, and we just keep on going higher and higher. And I could see the cash rate going into the 5 to 6% zone.

[00:05:44]Um this will be terrible for house prices and commercial property.

[00:05:49]Uh and it'll be terrible for, you know, uh anyone lending money to risky borrowers who don't have the capacity to service debt at higher rates. We'll talk about a few asset classes. I'm definitely keen to get into that. You sort of touched on equity equity markets briefly there.

[00:06:05]Uh US market all-time highs. Aussie market not far off them.

[00:06:10]Um seems to be a bit of a disconnect between a scenario that you've painted there and how risk assets are responding. Yeah, and you nailed it. And it's because there's no hikes priced in the US. There are hikes priced in Australia. So, we've got this unusual situation with the Aussie 10-year uh government bond yield, the triple-A rated benchmark, which is like the risk-free benchmark, that is more or less um amongst other things, the market's guess as to where the RBA cash rate will be over the next 10 years.

[00:06:38]That's at 5%, but in the US, the 10-year was down at 4.3%. That gap is unusually large. It's about 70 basis points, and it's at its sort of 94th percentile, historically speaking.

[00:06:50]Um and that's because we're pricing in hikes and they aren't is the short story. Yeah.

[00:06:56]And my concern for risk assets, for risk, for equities is we've got a Fed that's running inflation more than 50% above target. You've got a new incoming chair of the Federal Reserve, Warsh, appointed by Trump to cut rates.

[00:07:13]He's got a bit of cover because of this Iranian conflict, which has boosted oil prices and gas prices and fertilizer prices, and it's going to significantly boost inflation.

[00:07:22]So, he can turn around to Trump and say, "Hey, I can't cut rates anymore."

[00:07:25]And I think that's very credible.

[00:07:26]There's nothing Trump can do about that.

[00:07:29]But, uh what does he do with this very strong US economy? We've been very bullish on US uh economic growth.

[00:07:35]Um we've been saying the US economy will be as strong as 10 men because you got this monster AI CapEx boom, which the US is the key beneficiary of. We think the CapEx boom is much better than, sorry, much bigger than uh the hyperscalers in the market thinks. We think the hyperscalers are understating the true extent of CapEx cuz they don't want to tip off their peers.

[00:07:54]You've got uh fortunately a fiscal stimulus, tax cuts supporting the US economy. You've had the Fed cut the cash rate from 5.5 down to 3.6%. That's monetary stimulus.

[00:08:03]Uh I spent a lot of time in the US recently. The zeitgeist is very, very positive uh in most states, not all. Terrible in California, but in um red states, it's very positive. And I think if you're a businessman in the US or businesswoman, you really feel like the administration has your back. The tech leadership, the tech oligarchy, which used to be disposed towards Democrats, has really galvanized behind Trump. Uh it's kind of interesting and perhaps surprising. And uh you've also got massive military modernization and, you know, a conflict to pay for. So, all of that is demand positive. But, here's the rub, James, and what I was talking about is there's no population growth in the US. It's at at at its lowest level in US history.

[00:08:43]And what that means is there's no cheap labor coming in. There's no cheap illegal immigration.

[00:08:47]And so, for me, all roads lead likely to higher inflation uh unless we can get a productivity panacea, a productivity miracle through AI. I think AI will boost productivity, but whether it continuously boosts productivity through time and therefore continuously puts downward pressure on inflation, that remains an empirical question. In the short to medium term, we've argued, you know, AI is inflationary, and and so that's not going to help. Chris, we've touched on a few. You talked about some of the um issues that are the structural, almost, issues that are that are driving inflation here in Australia. It's it's front page again um as we approach the budget. We're seeing potential policies being aired and tested ahead of the budget release.

[00:09:28]What's been your take on some of the ideas that have been put forward in the direction of some of the the um the policies that that that are being muted for the budget? To be honest, I haven't followed um the muted ideas particularly closely, uh primarily because um I don't expect much of the political class from either side at this point. Until we have a kind of cathartic crisis, until I think So, I do have views on the question, but just just quickly, the mainstream calc- calculus. So, I think you'll get change. You'll get a cathartic crisis when Main Street understands that whilst I'm benefiting from the NDIS, and I feel good about, you know, essentially ripping all this cash out of the NDIS, on the other hand, I'm paying for the NDIS by a escalating cost of living. I'm paying for the NDIS through higher inflation. I'm paying for the NDIS now through higher interest rates.

[00:10:24]I'm paying for the NDIS through higher taxes. When people join those dots, I think you get a a will for change.

[00:10:32]And, you know, I have heard stories, interestingly, from folks who've been interviewing Main Street that they don't understand they're working their guts out, but, you know, inflation's going up and interest rates going up and they're getting hammered at the same time.

[00:10:45]So, I think we need to join those dots.

[00:10:47]Once we join those dots, I think, uh, you'll get change. I did read today that the government is thinking about rationalizing the NDIS. This is something I've regularly called for in my AFR columns. You know, the NDIS was created to be 13 to 14 billion in a year in size. It's now over 50 billion a year. It's clearly being heavily corrupted and looted. Um, and, you know, we spend more on the NDIS than Medicare.

[00:11:12]Uh, and almost as much on the NDIS as defense.

[00:11:16]Uh, that's one big problem. I think the NBN's another big problem. You know, we spent 60 billion on the NBN when they mooted the idea decades ago, I wrote in the ABC, uh, so on the ABC's website in an old opinion page called The Drum that used to exist, I said, "What happens if we get super high-speed wireless?"

[00:11:35]Now, we have Starlink.

[00:11:37]And, you know, you're going to get 1,000 megabit per second download speeds on Starlink soon.

[00:11:42]Um, so if I was the government, I'd be selling the NBN as quickly as possible, and just taking my comeuppance on that, cuz they're not going to recover 60 billion.

[00:11:51]Uh, I'd be cutting 75% at least out of the NDIS.

[00:11:56]Uh, and those two measures alone represent huge savings, but there's no doubt that there's colossal government waste in Australia right now. And we could rationalize that, I think, quickly, cut taxes. We need to be globally competitive. Australia needs to produce the great innovators, the great ideas. We need to produce world-class products. Who in Australia is really talking about producing world-beating products?

[00:12:18]Uh, you know, where are our uh, you know, Apples and Googles? Um, I've obviously got Atlassian, so at least that's one, uh, example, and Canva's another, but but we need to really be competing on the global stage for research, ideas, innovation, product development, and we need to create wealth, and through building world-class businesses, we can create incomes, jobs, wealth, prosperity, and boost, you know, something that economists refer to as productivity, which is output per hour worked, which is basically making more with less.

[00:12:53]And, [clears throat] um, so Australia used to be admired as one of the great, sort of, competitive, intense cultures, be it in business or sporting, um, domains, but, uh, I feel like I've argued that lucky country's become the lazy land. We've got, you know, amongst the world's worst productivity. Uh, we're I think eventually going to be forced to sell our physical amenities and natural resource endowments, but also, you know, our beaches and budgies, um, so to speak, become, you know, we I've said we're going to become Asia's Ibiza if we're not careful.

[00:13:26]>> Let's get back into to markets, um, and particularly your home turf, fixed income, um, long end probably been, uh, a difficult place to be, but even when we've been looking at some of the fixed income yields that are on offer at the shorter end compared to what you could get from the ASX 200 as a whole, it's it looks pretty compelling. Couple more interest rate hikes, I imagine it's going to be a pretty good place to be. Uh, where are you seeing value? Let's see what the short end first. So, cash, the RBA cash rate's paying 4.1. Bank deposits probably paying 4 1/2. If the RBA's going to 4 1/2 to 5 and gradually climbing into 5 to 6, you know, bank deposits going to be paying 5 to 6 again. So, cash is king again, make no mistake. It's got no risk. It's got infinite liquidity, infinite optionality.

[00:14:15]>> What's interesting, we we we surveyed our audience and we said, "What's the what's the number on term deposits that that flicks the switch and gets you into them?" And it was was 5% was, you know, the the majority of the response was that when when that term deposit hits 5%, it's it's almost like a calling card for investors. Yeah, and and that's right, because, like, you know, the franked dividend yield on CBA shares is probably about four, right? And so, if you can smoke the dividend yield on CBA shares in cash, you're doing well. Uh, what's interesting is we ran an analysis just as an aside on that topic, where we look at how much do major bank shares pay you above major bank bonds?

[00:14:52]Historically, it's been about 6% in terms of total expected return. Right now, it's 2.7% in terms of the one-year forward earnings yield over the real major bank bond yield. It's the lowest on record, and that measure implies major bank shares are 55% undervalued.

[00:15:07]Um, so coming back to the point, cash is king, and then you've got near cash. So, super high-grade floating rate notes, you know, variable rate bonds issued by the major banks, senior ranking bonds that are implicitly government guaranteed.

[00:15:18]Um, so that, I think, is very attractive. So, if if cash, let's just say the cash rate goes to five, then, you know, you're going to get major bank and regional bank bonds, senior bonds paying 5 1/2 to 6. You're going to get subordinated bonds paying potentially, you know, 6 1/2 to 7.

[00:15:35]So, I I think, you know, being floating, benefiting from rate hikes, uh, being liquid, um, not having credit risk, uh, by being in super safe, uh, securities makes sense.

[00:15:46]Uh, you talked about the long end, by which you mean, like, fixed rate bonds that are not variable, but rate bonds, uh, at, say, you know, a five-year point. So, five-year fixed rate bonds or 10-year, as I was talking about earlier, uh, government bonds. So, it's interesting, like, if we look at the returns last year, one of our best-performing strategies was actually our long duration, so fixed rate, um, global bond fund.

[00:16:10]Uh, and off the top of my head, I think they did about 7% net of fees last year.

[00:16:14]But, in March, we've had a big increase in long-term interest rates.

[00:16:19]Um, and you've seen fixed rate bond prices fall, and I think this is what you're talking about. So, the long end of the curve, as it's known, so fixed rate debt has struggled in March, um, given, uh, the big increase in interest rates at the long end of the curve, as a function of concerns around, um, uh, inflation. And in Australia, it's a different story. To be clear, fixed rate bonds in Australia last year didn't perform so well.

[00:16:43]So, the Aussie version of that strategy, uh, didn't deliver nearly as high a return than the global version, because in Australia, we did get interest rates right, or sorry, the expectations for interest rate hikes priced into the curve, and that meant fixed rate bonds underperformed in Australia. So, I do like I do like Aussie duration versus global duration, because you've got hikes priced in Australia, whereas you don't have hikes priced in the US. So, that, you know, is reflected in that 5% Aussie 10-year government bond yield versus, say, the circa 4.3% US 10-year.

[00:17:12]Um, I do like, uh, super safe assets. I'm not interested right now in, for example, hybrids or high-yield bonds or sub-investment grade bonds or private debt, um, because we're going to see, as rates rise, a big increase in defaults. We're going to see a big increase in insolvencies. You know, in the US, you're seeing these non-bank lenders, the private credit funds, uh, are being subject to a big, uh, redemption run. They're gating or freezing the funds, and then that means they can't lend, and you're going to see credit rationing, and the banks that fund those firms are also going to start rationing credit. And then, if US rates rise, you're going to see an even bigger default cycle. So, it could be, um, messy, um, but where I see value is, in particular, I don't like corporate bonds normally. Uh, so corporate bond spreads, the extra return you get above cash, look tight, skinny. I don't like high-yield bonds, um, I don't like anything risky. I do like senior ranking financials, and that's been our position for about a year. And so, what I mean by that is, you know, senior ranking bonds. The product we don't run run by BetaShares coupon is our ETF that invests in senior rank bonds, senior rank bonds, and that that is quite attractive, because the spreads on senior ranking bonds versus cash are not far from average levels. You can't say that about other assets. So, I I just make two key points, which I think is, um, you know, in terms of distilled takeaways, cash interest rates are much higher than they have been on average over the last, um, over the last, uh, say, 15 to 20 years and 25 years. So, if you look at in the period since the GFC, you're getting a much better return on cash today than you have over that period. Or, if you look at the period of the since 1999, much better return on cash. So, cash is looking looking good, and will look better. And then, long-term government bond yields are also much higher at 5% in Australia than they have been since the GFC or over the last 25 years. So, duration, as it's known, I don't mind averaging into duration, and, um, cash rates are interesting. Otherwise, I want to be liquid and close to home.

[00:19:10]Australian property, um, it was it's had a terrific run. Um, we saw auction clearance rates collapse, and, um, you know, I I guess people starting to get a little bit cautious about the outlook there.

[00:19:24]Um, you've always got some interesting views on Australian residential property. Could you give us a a snapshot of what you're thinking at the moment?

[00:19:31]>> Yeah, I mean, basically, we called for 5 to 10% house price rises last year. On the back of the cuts, house prices rose north of 9%. Um, this year, we're expecting house prices to start falling. They're already falling in Sydney and Melbourne. Um, Brisbane and Perth look like they're still going gangbusters. Um, you know, the performance of resi probably will be very, very different across Australia.

[00:19:55]Uh, Queensland will outperform, uh, given the capex and infrastructure boom in Queensland in anticipation of the 2032 Olympics.

[00:20:03]And I think also because Queensland's becoming a much more income and business friend- friendly state. You know, if you compare Queensland to Victoria, it just seems to be more, um, you know, welcoming of entrepreneurial activity and they're not just trying to tax every successful person to hammer them to pay back, uh, you know, their myopic political spending.

[00:20:26]They've got that that Olympic tailwind as well happening up in in Brisbane.

[00:20:30]Correct. And, um, you know, the Gold Coast is booming, the Sunshine Coast is booming, Brisbane's doing well. So, anyway, I like, uh, I think national resi prices will start falling. We should probably pay back the 9 to 10% growth we got last year uh, at some point, particularly if the RBA drifts towards five, um, percent in terms of its cash rate. And, um, I think commercial property will be very challenged, uh, in Australia. So, pretty negative that sector.

[00:20:57]Um, yeah, and it could get a bit difficult if, um, >> [clears throat] >> if, uh, you know, inflation's belligerent and sticky and they're forced into the 5 to 6% zone. The one mitigant I would say is, uh, population growth. So, if we continue to run super strong immigration, which I don't think is the same one. I think the swing of the political pen- pendulum to the right, the rise of One Nation will, you know, throw that into sharp relief, that immigration debate. And, uh, you're seeing, you know, much lower rates of population growth around the world as a consequence of those uh, changes. So, I think New Zealand, Canada, um, the UK, uh, so, it but having said that, like, if we just continue to import 500,000 people a year, uh, that's going to help the housing market. Um, so, that would be one mitigant. Just a final point, just to, I I guess, summarize those views that we opened up on just with with inflation and the relationship to rates domestically, I'm talking here. Um, you know, as I said, I I read some pretty alarming style coverage today.

[00:22:05]What's your sort of bull, bear, and and and base case on on the outlook for rates here in Australia? Like, how worried would you be if you were the the Reserve Bank governor? Yeah, I haven't seen that coverage, um, but so, I don't have the benefit of that hyperbolically, but, um, if I was the RBA governor, I'd be super worried. Um, I haven't hit my inflation target since I'm to be clear, I'm not suggesting that I will ever be the RBA governor. Yeah.

[00:22:29]But, you know, I wouldn't possibly, uh, anyway, Exactly. Yeah, so, if I was the RBA governor, you know, I'd be thinking to myself, I haven't hit my inflation target since 2021.

[00:22:44]I told the world that inflation was moving back to target back in 25. I thought it would be 2.6, but my target's 2.5. And that was actually 3.4. It was a massive miss. It was actually the worst forecast miss uh, in over, you know, 25 to 35 years. In fact, since the early 1990s.

[00:23:02]Um, I've been the laughing stock of the world on multiple occasions because of those forecast miss, because I'm the first central bank to capitulate and go through a double hiking cycle, because I dropped my yield curve target in late 2021, uh, the first time that a central bank had been bullied out of a peg since the, uh, since George Soros, um, forced the pound out of the European Exchange Rate Mechanism in the early 90s.

[00:23:24]Um, you know, we've had a review of the RBA and their forecasting, you know, missteps. Uh, so, you want to get it right. And the thing about central banks is they tend to be very data dependent, James. So, you know, they It's clearly RBA was politically influenced, you know, Jim Chalmers and I have no problems with him doing this cuz every politician will want to control leadership of their central bank as they rightly can. So, he sacked Phil Lowe, he appointed the governor, the deputy governor, seven of the voting members of the interest rate committee.

[00:23:50]And, uh, we've got a pre-financially dovish RBA that cut rates before the election, cut rates three times, and was way over optimistic about everything.

[00:23:59]Um, but to their immense credit, these are all very smart people, they're very hard working people.

[00:24:04]I have a lot of respect for them as individuals, and, um, and they'll they'll get it right. So, they'll they'll land at the right data dependent destination. That's what they're doing.

[00:24:11]So, again, to their credit, they got whacked in the face, like, smacked in the nose super hard by this inflation data, and they're going to get continued to get beast by this inflation data.

[00:24:21]Uh, but they're raising rates, and thus far, they've been, you know, they've done exactly what they should have done.

[00:24:26]We've had a double hike.

[00:24:27]Now, will they raise rates in May?

[00:24:29]That's an interesting test of, uh, their character because they should raise rates in May, but it's a week before the budget, and it's not a good look for the budget. Um, and the Treasury Secretary does sit on the RBA board, we're the only central bank in the world that has that structure.

[00:24:43]So, the politicians of the day have quite a lot of influence over the RBA.

[00:24:48]So, let's see what they do, but, um, you know, I think thus far, the RBA's been happy to get behind the curve. They argued in 23, 24, they could thread the needle, needle.

[00:24:59]They could run a a hot economy with all this government spending and immigration and not, uh, miss the inflation target. They've They've obviously missed. Uh, now, they should error correct error correct quickly, and I think we're seeing rapid error correction, which is tremendous.

[00:25:15]But, whether they have the metal and the fortitude to actually push the cash rate to where it needs to go. They failed last time. We argued they should go to five, they stopped at 4.35. We said they were wrong, they claimed I was wrong. Well, you know, the final analysis has sort of, um, you know, concluded what it has, and we're back in this situation again. So, it's fine to do a couple of hikes. Um, you know, the first hike actually in February made, like, it was pathetic.

[00:25:42]They hiked and basically signaled it was one and done.

[00:25:45]And they were completely unwilling to jawbone the you know, the community, the economy. What they should have done is leverage off the signaling benefits of saying, "Hey, we're hiking now cuz we have an inflation problem." Um, you know, pull in your horns. Uh, governments, you need to tighten your belt. This is the other problem with the RBA, they refuse to criticize any political or fiscal spending. They had no problem in the pandemic actively, vocally, publicly encouraging politicians to spend more when they shouldn't have been spending as much as they did at the time with benefit of hindsight. But, now the the the shoe's on the other foot, they're completely MIA, and that's a big problem. So, they need to be putting pressure on government because it's really government and government policy, it's government spending and immigration that's driving all the inflation and all the economic growth in Australia. You got to remember the private economy is shrinking relative to the the public economy. We're in a per capita income recession. Um, so, this is really a public artifice. So, there's a lot the RBA can do that they're not doing, but I think, you know, again, to their credit, they've gone hard with hikes, all things being equal. Like, we've got the hikes, whether they continue to go hard, I don't really know, but I think net net we'll get 100 to 125 basis points of hikes one way or another um, this year.

[00:26:51]And, uh, let's see whether that deals with the inflation problem. Obviously, if inflation comes down, and they can cut rates, happy days. I think if we look ahead, this is where I get very bearish.

[00:27:03]We look ahead and we say, "Okay, inflation is stubborn and sticky as it has been for half a decade. The RBA has to force the cash rate towards five or beyond five." At the same time, the politicians come under the pump big time about all this immigration. So, they slash migration, which I can really see happening. Population growth gets crushed as it has all around the world in New Zealand, the US, Canada.

[00:27:25]At that point, you've got an Aussie economy that has no population growth.

[00:27:28]And we have chapter we've never seen.

[00:27:30]And this is an idea I've been thinking about recently. We've never seen an Aussie economy without population growth. Hasn't really existed. We've always run the strongest population growth in the world. So, this is unprecedented, uncharted territory, and it probably means, combined with some fiscal consolidation, that we get a recession.

[00:27:47]Uh, so, that's the bad news. The other thing is this hiking cycle was very different to the last hiking cycle between 22 and 23 because, mate, we had cash buffers that built up during the pandemic. There were these massive cash transfers, and households could draw on those cash buffers to service the, uh, huge increase in interest rates. This time around, those cash buffers are much, much skinnier.

[00:28:07]Um, and this time around, we're very unlikely to see a big increase in government spending, which is what we did see in the last hiking cycle. So, um, again, you want to be liquid, you want to be at the top of the capital stack, you want to be long cash. Um, and, you know, this could be a very multi-year elongated, uh, cycle of pain. Mm, gosh. Talk about finish on a positive note. Well, um, Chris, I'm going to wrap things up there. Um, as I said, appreciate you taking the time to jump on the call while you're traveling. Uh, safe travels in New Zealand. Appreciate you giving us some candid views, and I I really appreciate your time. Yeah, and just, uh, shout out to the call by Crusaders.

[00:28:44]Uh, we battling the mighty Waratahs tomorrow, so, we'll see how we go. Uh, should be good game. Enjoy.