00:00The market was up 3.6 per cent, the Dow Jones Industrial Average at least, and so that's
00:06a huge lift on Wall Street overnight following this.
00:10There was a couple of other reasons in there though.
00:12I mean a lot of investors did expect this to be a much tighter race and the prospect
00:18of a drawn out legal battle and possibly even social unrest and perhaps even violence really
00:25unsettled markets prior to that.
00:28So the fact that Kamala Harris actually conceded very quickly just lifted all fears and so
00:34the volatility index dived and people really just went for stocks.
00:38Gotcha, so it gave that certainty there.
00:40Now we know that Donald Trump has promised tariffs on US imports of Chinese goods.
00:44What effect will that have and what could be the knock-on effect that we feel here from
00:48that?
00:49Well look, everyone is pretty much in agreement that if Donald Trump does manage to get all
00:54of his policies in place to the stated degree, 10 per cent tariffs worldwide and possibly
00:5960 per cent on China, that will lift inflation in the US and possibly globally.
01:05It will result in lower growth globally and possibly higher interest rates around the
01:10world.
01:11So it's not looking particularly positive on all fronts and interestingly we talk about
01:17Wall Street and the market really racing ahead overnight.
01:21For the past six weeks, money markets, particularly in the US, have been going in the other direction.
01:27So interest rates, the 10-year government bond rate in the US, which is the global benchmark
01:32for interest rates, it's been rising.
01:35Interest rates have been rising for six weeks now in anticipation that perhaps global interest
01:40rates will be forced to rise if Donald Trump wins back the White House, which is suddenly
01:45done.
01:46So far, this is really, really unusual because the US Federal Reserve, the world's biggest
01:53central bank, is in the process of a rate-cutting cycle.
01:57It's only just started.
01:58Now it's had one cut so far, a double cut, and it's got another one coming tonight.
02:03So the fact that the money markets are pushing rates in the opposite direction to the US
02:08Federal Reserve, incredibly unusual here.
02:11So markets are expecting higher inflation and higher interest rates.
02:17On tariffs again, and understanding that we would feel the effects on tariffs on Chinese
02:21goods of course, but we have a free trade agreement with the US, does that give some
02:25protection for Australian firms from any tariffs from the US?
02:29Free trade agreements really aren't worth the paper they're written on.
02:32All you've got to do is look at our free trade agreement with China a couple of years ago,
02:36where they basically imposed trade restrictions on everything that we export to them apart
02:41from iron ore, to give you a bit of an indication there.
02:44So no, I don't think that free trade agreement will protect us.
02:47It would require negotiations between our government and the US government to get some
02:52kind of concession through, which did happen in the last Trump administration.
02:56We did manage to negotiate our way through tariffs at that stage.
03:00But look, there's no doubt that if the tariffs that the US is talking about imposing on China
03:06come into force, that will affect the Chinese economy in a major way.
03:10And we are of course, China is our biggest trading partner, it couldn't help but affect
03:14us as well.
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