AUSTRALIA’S MOST POPULAR BUSINESS PODCAST

Fear & Greed, Fear and Greed

Tuesday 13 June 2023

The Voice referendum is set to go to the Senate in the next fortnight, but support is waning. 

Also today:

  • A rush of deals shrinks the local share market 
  • Share of tax paid by Australia’s top earners reaches its highest level in at least a decade
  • And a major apple grower develops a new super variety to stem a slide in sales

Find out more: https://fearandgreed.com.au

See omnystudio.com/listener for privacy information.

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Michael Thompson: The voice referendum is set to go to the Senate

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Michael Thompson: in the next fortnight, but support is waning. A rush

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Michael Thompson: of deals shrinks the local share market. And a major

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Michael Thompson: apple grower develops a new super variety to stem a

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Michael Thompson: slide in sales. It’s Tuesday the 13th of June, 2023.

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Michael Thompson: Welcome to Fear and Greed, Australia’s most popular business podcast.

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Michael Thompson: I’m Michael Thompson. And good morning, Sean Aylmer.

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Sean Aylmer: Good morning, Michael.

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Michael Thompson: Sean, your interview today, well, it’s a fairly topical one

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Michael Thompson: really, isn’t it? You’re speaking with Lee Howard, the CEO

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Michael Thompson: of Asialink business.

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Sean Aylmer: Yes. So it’s all about trade in Asia. And we

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Sean Aylmer: talk a lot about China and whether or not the

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Sean Aylmer: 20 billion worth of tariffs are going to come or

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Sean Aylmer: the tariffs that are interrupting the supply of 20 billion worth

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Sean Aylmer: of goods are going to come off or not. But

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Sean Aylmer: really, with Lee, we talk more about the other opportunities

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Sean Aylmer: in the region. Indonesia is the most obvious one, a

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Sean Aylmer: huge population. It is moving from third world through to

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Sean Aylmer: become a first world country. We talk about that. We

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Sean Aylmer: talk about India, other opportunities for Australian businesses and Australian

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Sean Aylmer: investors. It’s a really interesting chat.

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Michael Thompson: Yeah, it sure is. It is well worth a listen

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Michael Thompson: today. The main story though this morning, Sean, support for

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Michael Thompson: the indigenous voice has fallen below 50% on the yes/

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Michael Thompson: no question that will decide the referendum.

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Sean Aylmer: A poll in the age in Sydney Morning Herald this

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Sean Aylmer: morning shows the yes vote has fallen to 49% for

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Sean Aylmer: three months in a row. The yes vote has been

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Sean Aylmer: falling, demonstrating the massive job the proponents of the referendum

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Sean Aylmer: have ahead of themselves. It’s the first time a major

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Sean Aylmer: poll has shown the no vote in the majority. While

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Sean Aylmer: residents in Victoria and New South Wales are in favor,

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Sean Aylmer: many other states aren’t. The objections are strongest in Queensland,

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Sean Aylmer: with only 44% of voters in favor of the voice,

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Sean Aylmer: followed by South Australia, 48%, and Western Australia at 49%.

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Sean Aylmer: The referendum at this point is unlikely to win a

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Sean Aylmer: majority of votes in a majority of states, according to

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Sean Aylmer: the resolve strategic poll, and that’s what it needs to

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Sean Aylmer: do to pass.

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Michael Thompson: So, where are we up to then on the voice?

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Sean Aylmer: Prime Minister Anthony Albanese so far has rejected all calls

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Sean Aylmer: to amend the voice proposal before it goes to the

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Sean Aylmer: Senate. Now that’s exactly where we’re up to. It is

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Sean Aylmer: going to the Senate some point in the next couple

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Sean Aylmer: of sitting weeks. If it passes, then it’s pretty much

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Sean Aylmer: cemented in terms of the wording of the voice. Now,

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Sean Aylmer: over the weekend there were some really high profile advocates

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Sean Aylmer: of the voice, including Noel Pearson warning that the yes

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Sean Aylmer: movement really does lack a clear message at the moment.

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Sean Aylmer: The wording isn’t helping. And certainly, the yes movement isn’t

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Sean Aylmer: really being heard above the no arguments at the moment.

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Michael Thompson: Sean, in this particular case, is it political leaning that’s

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Michael Thompson: skewing the vote given that the coalition has recommended people

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Michael Thompson: vote against it?

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Sean Aylmer: It’s an interesting question given that there are so many

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Sean Aylmer: labor states all by Tasmania are labor states, and federally

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Sean Aylmer: we’re labor, of course. Yes, I mean, I suppose it

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Sean Aylmer: is political leaning. But even labor supporters are predicating at

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Sean Aylmer: the moment. Support for the voice among labor voters has

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Sean Aylmer: fallen from 75% in April to 69% in May, 63% this month. Support has

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Sean Aylmer: been stable among green voters. 81% in favor of June.

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Sean Aylmer: But has fallen among coalition voters from 30% to 27% to 26%

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Sean Aylmer: in the latest survey. It means 74% of coalition voters

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Sean Aylmer: are now on the no side. So obviously, there is

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Sean Aylmer: a big delineation between labor and coalition. But even on

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Sean Aylmer: the labor side, support is falling.

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Michael Thompson: It’s a big story and we’ll see how it obviously

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Michael Thompson: plays out over the next couple of weeks as it

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Michael Thompson: heads to the Senate. Now, Sean, the local market was

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Michael Thompson: closed yesterday for the King’s birthday holiday in most states.

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Michael Thompson: What can we expect for the rest of the week?

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Sean Aylmer: Well, I reckon what happens in overseas markets, particularly the U.

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Sean Aylmer: S. Federal Reserve’s decision on interest rates will be most

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Sean Aylmer: influential, but we also have labor force figures due for

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Sean Aylmer: release on Thursday. We have the National Australia Bank business

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Sean Aylmer: sentiment and the Westpac consumer confidence reading’s out. Plenty going

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Sean Aylmer: on to keep investors interested, Michael.

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Michael Thompson: Sean, you mentioned the Fed’s decision. Now, I should have

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Michael Thompson: my calendar of major economic events here in front of

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Michael Thompson: me, but I don’t. So when is that?

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Sean Aylmer: It’s tomorrow night, Australian time. Really, it’ll be Thursday morning

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Sean Aylmer: by the time we work out what’s going on. The

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Sean Aylmer: consensus is that the Fed will pause on rate hikes

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Sean Aylmer: and give itself some time to see how things are

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Sean Aylmer: going. There’s growing confidence that inflation in the world’s largest

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Sean Aylmer: market is falling sharply. They expect the May reading, which

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Sean Aylmer: will come out in the next week or so to

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Sean Aylmer: be down to 4.1% annualized, that’s pretty good. The European Central

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Sean Aylmer: Bank is also meeting this week. It’s expected to lift

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Sean Aylmer: its benchmark rate by 25 basis points. Now remember, the

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Sean Aylmer: ECB started hiking rates much later than the U. S.

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Sean Aylmer: It’s well behind the U. S. in terms of capping

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Sean Aylmer: inflation, and there’s probably still a ways to go before

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Sean Aylmer: it gets prices under control.

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Michael Thompson: All right. It’s a bit of a short week for

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Michael Thompson: most states, Sean, but there’s still plenty of news around.

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Michael Thompson: We’ll be back in a moment with the rest of

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Michael Thompson: the day’s business news. Sean, trade minister Don Farrell has

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Michael Thompson: finished free trade talks with the European Union with little

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Michael Thompson: movement after the EU refused to improve its offer on

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Michael Thompson: better market access for Australian farm exports.

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Sean Aylmer: Yes, agricultural products seem to always be the key sticking

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Sean Aylmer: point when it comes to negotiating with Europe. Farrell told

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Sean Aylmer: the Australian Financial Review he’ll likely return to Brussels next

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Sean Aylmer: month for another push, but it was looking more difficult

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Sean Aylmer: to land the deal in coming months. Now, given Farrell’s

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Sean Aylmer: previous statements looking more difficult is certainly a suggestion that

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Sean Aylmer: it’s a ways away. Even if something did happen, it

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Sean Aylmer: means a free trade agreement would probably not be wrapped

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Sean Aylmer: up until after European parliamentary elections in a year’s time.

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Sean Aylmer: Who knows beyond that? Basically, it’s still a long way

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Sean Aylmer: to go. The EU is a market of 450 million

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Sean Aylmer: consumers with an estimated 26 trillion U. S. dollars GDP.

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Sean Aylmer: So, any FTA, any Free Trade Agreement we might get,

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Sean Aylmer: is definitely a significant prize.
It has been under negotiation

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Sean Aylmer: for five years though. And, Europeans are notoriously reluctant to

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Sean Aylmer: take on their powerful farm lobby by easing their high

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Sean Aylmer: terrace and tight quotas, particularly around beef and lamb. They’re

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Sean Aylmer: also seeking much tougher protections for geographical indicators, which would

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Sean Aylmer: prevent Aussie farmers using names like Feta, Palmerson, maybe even

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Sean Aylmer: Prosecco. So, I think we’re some way off on that one.

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Michael Thompson: Yeah, it does seem that way. Now, Sean, the Hunter

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Michael Thompson: region in New South Wales will be declared Australia’s second

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Michael Thompson: offshore wind zone, a boost to the industry that energy

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Michael Thompson: executives say will be critical if the country is to

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Michael Thompson: meet its renewable energy targets.

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Sean Aylmer: Back in February, federal energy minister Chris Bowen invited community

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Sean Aylmer: feedback on permitting offshore wind in the hunter region. The

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Sean Aylmer: proposal received overwhelming local support. And the Australian is reporting

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Sean Aylmer: that Mr. Bowen will formally declare applications to develop in

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Sean Aylmer: the region open within a month. Australia expects to replace

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Sean Aylmer: its fleet of coal power stations, which is the largest

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Sean Aylmer: source of electricity in the country in little more than

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Sean Aylmer: a decade, but it’s struggling to build enough renewable energy

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Sean Aylmer: sources to compensate. Offshore wind projects are often much larger

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Sean Aylmer: than onshore wind or solar projects, offering far better compensation

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Sean Aylmer: for the loss of coal- fired power stations that typically

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Sean Aylmer: produce more than two gigawatts.
Australia has legislated a target

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Sean Aylmer: of having renewable energy account for more than 80% of

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Sean Aylmer: its electricity generation by the end of the decade, a

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Sean Aylmer: target that’s obviously put a lot of pressure on coal

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Sean Aylmer: generators, but also on wind farmers and solar farmers. And

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Sean Aylmer: Michael, I just think it’s worth in paying our respects

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Sean Aylmer: while talking of the hunter, our thoughts go out to

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Sean Aylmer: everyone involved in the tragic bus accident over the weekend,

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Sean Aylmer: which killed 10 people traveling back to their accommodation after

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Sean Aylmer: celebrating a wedding.

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Michael Thompson: Oh, it’s just such an awful story, Sean. And those

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Michael Thompson: buses are such a common thing after those after weddings

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Michael Thompson: taking everybody say back to town, and I think, most

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Michael Thompson: people have been on them at the end of a

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Michael Thompson: wedding. It’s always such an exciting time and no one

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Michael Thompson: ever expects it to end in such a terrible tragedy,

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Michael Thompson: and it’s just such an awful story. Moving on, Sean,

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Michael Thompson: this is an interesting story, the share of tax paid by Australia’s top

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Michael Thompson: earners is at its highest level in at least a

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Michael Thompson: decade, with new data showing the top 1% contributed nearly

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Michael Thompson: a fifth of personal income tax revenue in 2020/2021.

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Sean Aylmer: Figures released by the Australian Taxation Office last week show

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Sean Aylmer: the average individual tax bill for the top 1% of

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Sean Aylmer: earners was $ 317,000 in the period, up by more than $

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Sean Aylmer: 47,000 from a year previously according to analysis by the AFR,

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Sean Aylmer: the Australian Financial Review. The release of the figures came

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Sean Aylmer: as the latest national accounts show personal income taxes are

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Sean Aylmer: adding up a near record 16% of household earnings as

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Sean Aylmer: wage inflation pushes workers into higher tax brackets. The federal

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Sean Aylmer: budget has become increasingly reliant on income taxes as inflation

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Sean Aylmer: pushes ordinary earnings into higher tax brackets. Last month’s budget

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Sean Aylmer: papers showed more than 50% of total commonwealth tax revenue

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Sean Aylmer: will be paid by individuals next financial year. If ever

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Sean Aylmer: there was a need to do something about the tax

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Sean Aylmer: system, this story shows it.

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Michael Thompson: It’s shown a rush of takeovers and a lack of

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Michael Thompson: new floats, means the Australian share market will shrink this

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Michael Thompson: year for the first time since 2005.

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Sean Aylmer: I hadn’t really thought much about this, but it’s quite

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Sean Aylmer: fascinating. So big mergers, particularly in the resources sector, will

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Sean Aylmer: contribute to a $ 43 billion shrinkage in the market this year.

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Sean Aylmer: Now, that’s the first time it’s gone backwards since 2005.

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Sean Aylmer: Sydney Airport and Crown Resorts were both taken private last

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Sean Aylmer: year while Newcrest Mining is on the verge of leaving

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Sean Aylmer: the Boss. Newmont is about to take that over. That’s

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Sean Aylmer: the U. S. based organization. Companies being taken over by

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Sean Aylmer: foreign players or private equity isn’t really unusual. But normally,

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Sean Aylmer: there’s a list of initial public offerings to backfill the

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Sean Aylmer: exchange. But since the start of last year, there’s only

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Sean Aylmer: been one float worth more than a $ 100 million. Hence, we’re

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Sean Aylmer: actually seeing the ASX shrink, which is a real problem,

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Sean Aylmer: because we’re still contributing plenty more into super. Well, our

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Sean Aylmer: big super funds have to put the money somewhere. And,

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Sean Aylmer: there’s less places to put it.

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Michael Thompson: Yeah. Yeah, shrinkage is a real problem, Sean.

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Sean Aylmer: Certainly is for some people, Michael.

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Michael Thompson: Oh. Savage. Now, there’s been some pretty hefty home purchases.

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Michael Thompson: Sean, did you see how quickly I moved on there?

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Sean Aylmer: You did. Very quickly.

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Michael Thompson: And some big sales by some big known names in

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Michael Thompson: the past few weeks.

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Sean Aylmer: Sure has. Outgoing Qantas chief executive Alan Joyce is one.

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Sean Aylmer: He sold $ 17 million worth of shares in the airline just

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Sean Aylmer: a few days after purchasing a penthouse in the rocks

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Sean Aylmer: overlooking the Sydney Opera House, he paid about 9 million

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Sean Aylmer: for that one. Media is reporting that Joyce had held

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Sean Aylmer: the shares since 2012. He purchased them for a $1. 50. They

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Sean Aylmer: were sold about two weeks ago at $ 6. 74. That

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Sean Aylmer: will net Joyce around $ 14. 8 million. And of course,

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Sean Aylmer: he still has plenty of Qantas shares. Also, F45 co-

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Sean Aylmer: founder Rob Deutsch and his wife Nicole Perso… Not that

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Sean Aylmer: I’m a big fans of Rob Deutsch and Nicole Perso

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Sean Aylmer: because of what they put me through three or four

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Sean Aylmer: times a morning at F45. However, Rob and Nicole, no

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Sean Aylmer: personal disrespect, but it does kill me. Anyway, they bought

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Sean Aylmer: an apartment in Crown’s one Barangaroo Tower for $ 25.5 million.

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Sean Aylmer: What I love about this, they have no mortgage. They

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Sean Aylmer: just paid cash. And in fact, a few months ago,

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Sean Aylmer: they bought a Bellevue Hill house for 37 and a half

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Sean Aylmer: million dollars. And once again, cash. No need for finance.

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Michael Thompson: Oh, that’s not too bad, is it? They’re fairly well

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Michael Thompson: protected against interest rate rises.

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Sean Aylmer: Yeah.

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Michael Thompson: Sean, a very large chunk of superannuation money is held

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Michael Thompson: in self- managed super funds. Most SMSF trustees want greater

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Michael Thompson: control over their money for retirement. But, how about this?

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Michael Thompson: Only one in four uses advisors.

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Sean Aylmer: Yeah, that really surprised me.

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Michael Thompson: Yeah.

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Sean Aylmer: Given we’re talking about most people’s second- largest asset behind

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Sean Aylmer: their home. The Vanguard Investment Trends SMSF report shows that

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Sean Aylmer: the number of DIY super funds remains high, with wind

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Sean Aylmer: down rates, people closing their fund much lower than normal.

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Sean Aylmer: The average age of a new SMSF has risen from a 42- year-

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Sean Aylmer: old to a 45- year- old over the past year. And

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Sean Aylmer: the average balance at establishment now sits at about $ 300,000

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Sean Aylmer: up from $220, 000. Now, only 27% of trustees say they

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Sean Aylmer: sought advice in the past year, despite the bulk of

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Sean Aylmer: them saying they actually need it. In terms of asset

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Sean Aylmer: allocation, over a third of SMFS indicated an increased allocation

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Sean Aylmer: to cash and cash products. Direct share investments saw the

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Sean Aylmer: largest relative decline in most SMSF portfolios.

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Michael Thompson: Sean, this next story is definitely one for you. We

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Michael Thompson: spoke a few weeks ago about the best apples of

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Michael Thompson: all things. And lo and behold, just by sheer coincidence,

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Michael Thompson: today, we have a story about a new super variety

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Michael Thompson: of apple.

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Sean Aylmer: I’m very excited about this. So I was away on

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Sean Aylmer: the weekend. I spent three days in Canberra. And, I

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Sean Aylmer: was watching a hockey tournament for those three days, to

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Sean Aylmer: be honest. And anyway, I reckon I averaged four or

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Sean Aylmer: five apples a day.

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Michael Thompson: Never been so regular.

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Sean Aylmer: No. That’s exactly right. I mean, you don’t want to eat junk food, and

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Sean Aylmer: when you’re at these kids sporting tournaments, you end up

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Sean Aylmer: eating bacon, egg rolls, and sausage rolls. I thought, ” No,

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Sean Aylmer: I’m not. I’m going to be sensible.” I had four

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Sean Aylmer: or five apples a day. And, we’ve discussed before, I

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Sean Aylmer: am a massive fan of Pink Ladies. Absolutely. Yeah, the

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Sean Aylmer: 40% of Apple sales in Australia are Pink Ladies. Did

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Sean Aylmer: you have that?

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Michael Thompson: I didn’t realize it was quite that high.

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Sean Aylmer: Yeah. Yeah. Anyway, one of the nation’s largest apple growers,

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Sean Aylmer: Red Rich Fruits has just spent $ 27 million developing a

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Sean Aylmer: new variety known as the Cosmic Crisp.

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Michael Thompson: Oh, good name.

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Sean Aylmer: It’s a great name. Red Rich Fruits supplies to all

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Sean Aylmer: the major supermarkets. It developed this in the U. S.

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Sean Aylmer: and it’s now planted 360,000 trees locally. It hopes that

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Sean Aylmer: these cosmic crisps will be in store next year.

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Michael Thompson: God, they’re getting behind it in a big way then.

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Sean Aylmer: That’s right.

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Michael Thompson: 360, 000 trees, because that’s not a short term investment either.

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Sean Aylmer: I hope they taste good. What I loved is the

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Sean Aylmer: director, Matthew Palai, telling the financial review, talking about the

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Sean Aylmer: apple saying, ” It doesn’t oxidize. It’s firmer and juicier.” That’s

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Sean Aylmer: his quote. There you go. It actually needs a bit of

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Sean Aylmer: a burst, the apple growing sector, because per capita consumption

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Sean Aylmer: is today about half what it was 20 years ago.

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Michael Thompson: Really?

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Sean Aylmer: Yeah. Sure is. Now, Pink Lady is the top seller.

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Sean Aylmer: Number two is Royal Gala. And then, the Granny Smith.

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Sean Aylmer: I grew up on Granny Smiths, can’t go near them

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Sean Aylmer: now. Dislike green apples. Totally well behind. They’re their top

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Sean Aylmer: three well and truly the big sellers. Number four is

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Sean Aylmer: Fuji. So I don’t mind the odd Fuji. And number

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Sean Aylmer: five is Red Delicious.

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Michael Thompson: Sean, I’ve learned two things from you this episode. And they are at

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Michael Thompson: very different ends of the spectrum. Number one was when

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Michael Thompson: the Federal Reserves decision is on interest rates.

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Sean Aylmer: Yes.

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Michael Thompson: And the other one is that Pink Ladies make up

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Michael Thompson: such a large percentage of apple purchases in Australia. And,

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Michael Thompson: that you didn’t even mention the most underrated apple in

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Michael Thompson: the world, the Golden Delicious.

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Sean Aylmer: No, too flowery.

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Michael Thompson: Okay. All right. That’s a very specific complaint. And very

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Michael Thompson: quick actually. It feels like-

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Sean Aylmer: I know my apples.

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Michael Thompson: … You did spend a lot of time eating apples

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Michael Thompson: this weekend.

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Sean Aylmer: I did.

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Michael Thompson: All right. Let’s get to international news. UBS Group has

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Michael Thompson: completed the acquisition of Credit Suisse, sealing the biggest merger

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Michael Thompson: in banking since the 2008 financial crisis and creating a

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Michael Thompson: global wealth management titan.

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Sean Aylmer: Don’t you love that? A titan.

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Michael Thompson: I never get to use the word Titan.

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Sean Aylmer: I know.

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Michael Thompson: I miss it.

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Sean Aylmer: We thought we’d throw it in. The closing of the deal announced in an open letter published yesterday,

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Sean Aylmer: end’s Credit Suisse’s independent existence after 167 years and allows

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Sean Aylmer: UBS to move forward with the very, very complex integration

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Sean Aylmer: of its former rival. Now, that process is likely to

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Sean Aylmer: involve thousands of job cuts, according to a report on

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Sean Aylmer: Bloomberg, there’s already been job cuts locally in Australia from

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Sean Aylmer: the Credit Suisse operations. The acquisition sets UBS up for

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Sean Aylmer: a win for gain of tens of billions of dollars.

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Sean Aylmer: Though it will hold assets that could be written down

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Sean Aylmer: and there will be legal and regulatory costs. Much of

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Sean Aylmer: them are unknown. Now, the closing of the deal comes

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Sean Aylmer: after UBS finalized negotiations with the Swiss government over a

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Sean Aylmer: 10 billion U. S. dollar guarantee against potential losses. The

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Sean Aylmer: deal is now done.

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Michael Thompson: All right. Final story, Sean. Silvio Berlusconi, the colorful, perhaps

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Michael Thompson: flamboyant even, media mogul who became Italy’s longest serving post-

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Michael Thompson: war Prime Minister has died, aged 86.

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Sean Aylmer: His reign as PM was plagued by sex scandals and

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Sean Aylmer: allegations of corruption. Berlusconi was hospitalized in Milan over the

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Sean Aylmer: weekend. He had a history of heart ailments. Berlusconi was

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Sean Aylmer: one of the most influential figures in Italian politics of the

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Sean Aylmer: last three decades. Originally, he built a television empire in the

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Sean Aylmer: 1980s. He then deployed his showmanship and talent for catchy

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Sean Aylmer: soundbites to win three national elections, which was quite an

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Sean Aylmer: incredible feat in Italian politics. Berlusconi faced a string of

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Sean Aylmer: judicial proceedings, yet he faced only one conviction in a

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Sean Aylmer: tax fraud case that saw him lose his parliamentary seat,

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Sean Aylmer: though only temporarily. His fortune was estimated at $ 7. 4

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Sean Aylmer: billion by Bloomberg. But, Michael, he ran very much as

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Sean Aylmer: a man of the people.

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Michael Thompson: Oh, what a story to finish on, Sean. Up next

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Michael Thompson: is the Fear and Greed daily interview. Today you’re speaking

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Michael Thompson: with Lee Howard, CEO of Asialink business.

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Sean Aylmer: All about our interaction with buyers of our products in

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Sean Aylmer: Asia, but we stay pretty much away from China. We

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Sean Aylmer: talk about Indonesia, and India, and other places like that. It’s

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Sean Aylmer: a great interview.

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Michael Thompson: Yeah, absolutely. And, if you were perhaps enjoying a public

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Michael Thompson: holiday yesterday and you missed Fear and Greed – The Week

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Michael Thompson: Ahead with Stephen Koukoulas, our resident Economist, definitely recommend going

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Michael Thompson: back and having a listen to that one as well.

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Michael Thompson: Thank you very much, Sean.

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Sean Aylmer: Thank you, Michael.

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Michael Thompson: It’s Tuesday, the 13th of June, 2023. Make sure you’re

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Michael Thompson: following the podcast. Join us online on LinkedIn, Instagram, Twitter, and

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Michael Thompson: Facebook, and stay up to date on all the business

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Michael Thompson: news with Alexa and your Amazon Echo Smart speaker. Simply say, ”

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00:19:11,430 –> 00:19:13,859
Michael Thompson: Alexa, play the Fear and Greed podcast,” to catch the

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Michael Thompson: latest episode. You can get yours now at amazon. com.

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Michael Thompson: au. I’m Michael Thompson and that was Fear and Greed.

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Michael Thompson: Have a great day.