Rates rise around the world, why the Aged Pension isn't enough & Pimp my Portfolio with Owen Rask

Ren (0:00)

What happens when inflation remains above target? The Fed raises rates. It was a unanimous decision. All 12 members of the Fed's rate setting board voted for it.

Bryce (0:10)

So how did Trump react?

Ren (0:11)

He posted, Interest rates in the United States should be 1% or less because we are the best credit in the world by far. Our country is booming with new investment.

Bryce (0:25)

Welcome to another episode of Equity Mates, a podcast where we explore what's possible in the world of investing. If you've just joined us for the very first time, a huge welcome to our community. My name is Bryce.

Ren (0:35)

And I'm Ren and today we're talking about the Fed raising rates. I'm teeing off on the ASX, Pimp My Portfolio is back, Owen Rask is taking a look at a community member's portfolio and Super September continues as we tackle the myth, a house and the age pension is enough for retirement. Bryce, big episode, a lot happening in this episode, a lot happening in Equity Mates, nothing bigger than FinFest.

Bryce (0:59)

Nothing bigger than FinFest and goodness me, we are close to selling, putting that sold out sticker on all promotional materials.

Ren (1:06)

Tickets remaining keeps harving. So it was 200 and then it was 100, then it was 60, then it's 30

Bryce (1:12)

Yeah, it's kind of weird.

Ren (1:13)

It's like the Bitcoin harving.

Bryce (1:14)

I know.

Ren (1:15)

15 tickets next episode.

Well, speaking of the Bitcoin harving, there will be crypto sessions there. We're going to try and cover all asset classes, not just equities and the share market. We're going to talk property, crypto, alternatives. However, you want to make your money work for you. FinFest has something for you. But there's one session that we wanted to highlight, Bryce, a favorite guest here at Equity Mates. Tobias Bucks will be doing a session at FinFest.

Bryce (1:39)

Yes, Tobias Bucks is, as you said, a returning guest, favorite guest here at Equity Mates. He always brings small cup companies to the table that we've never heard of, that are making widgets in Scandinavia somewhere.

SPEAKER_3 (1:54)

Yeah, it's just a fascinating listen.

Ren (1:55)

The Slovakian ball bearing factory that's compounding earnings of 40%. Exactly, exactly.

Bryce (2:00)

So Tobias is going to be sitting down with Ali Selby to unpack how to find small cap opportunities globally. It's a session that we're really looking forward to.

Ren (2:09)

So head to equitymates.com/finfest, get your tickets before they sell out.

Bryce (2:13)

FinFest is proudly brought to you by Betashares. Stories we're covering today when the US has raised interest rates for the first time in three years and the ASX have let slip another golden opportunity.

Ren (2:29)

Yes.

Bryce (2:29)

Let's start with the US though, because as I said, they have raised interest rates by 0.25% or 25 basis points, taking their range from 3 or 2, 3.75 to 4%.

Ren (2:42)

Yeah. Yes. So it was a unanimous decision. All 12 members of the Fed's rate setting board voted for it. And it was expected. Inflation is above the Fed's 2% target. Oil prices are high and rising. Those energy prices flow into the cost of everything. Food prices are high.

Everything's high.

Bryce (3:02)

Diesel.

Ren (3:03)

Diesel is high. Petrol is high. Everything is high. Inflation is above target. What happens when inflation remains above target? The Fed raises rates. That is kind of economics 101

The meetings participants were then asked what they thought the direction of future rate rises or cuts was, and the majority expect at least one more rate rise by the end of the year.

Bryce (3:28)

So it was expected by the markets, but one person that was not happy was of course Donald Trump, who brought in Kevin Warsh with the, I would say expectation from his side that rates would be cut. So how did Trump react?

Ren (3:41)

Yeah, well, he truth socialed afterwards. He posted, interest rates in the United States should be 1% or less because we are the best credit in the world by far. Our country is booming with new investment. He went on from there, but yeah, he thinks it should be 1%.

Economics 101, if the economy is booming with new investment, often the Fed will raise rates to just curve inflation and stop the economy getting too hot.

Bryce (4:10)

He's going to lose it when the second one comes later this year.

Ren (4:12)

I thought you were about to say he's going to lose it when he hears this. And I said, I don't think he's listening to this. But look, I think so that's the US story. Let's broaden it out because the world is dealing with a persistent and sticky inflation challenge. Last week, the European Central Bank raised rates. And here in Australia, the RBA next meets on the 28th and the 29th of September.