Stop complaining about the economy

Time to stop complaining about the economy

Nothing is too big to fail

Why Trump is good for European stocks

Leadership lesson of the week

Is the Magnificent 7's golden run over? The big seven tech stocks - Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla - have pushed the S&P500 to new heights in recent years, but last week they dipped into correction territory. Josh Gilbert from eToro joined Sean Aylmer in the studio to look at each company, and whether the game has changed.

Listener Sam asks:

"Last week the RBA was warning about inflation being too low if they didn't cut rates. I get the impact of high inflation - but what happens if inflation gets too low?"

GOT A HOT TOPIC?

Thanks for reading my opinions on the week's biggest stories.

- Sean Aylmer

This morning, December quarter economic growth figures from the Bureau of Statistics show that the economy expanded by 1.3 per cent last year. Inflation is falling and the Reserve Bank has cut interest rates for the first time in five years, with another cut likely in coming months. The unemployment rate in Australia is consistently around four per cent – a level last achieved in the early 1970s. While growth is too slow, it’s a pretty good economic outlook for the lucky country. So why do we feel like economic times are so tough? It’s because many of the prices that have been rising in the economy have a direct impact on the hip pocket. The costs of electricity, housing, insurance and fuel have all risen in recent years (even if they are now abating). These are costs most of us cannot avoid. There’s also the Covid-19 hangover. The CEDA Misery Index surged after the pandemic as interest rates rose quickly. (The misery index, created by US economist Artur Okun in the 1960s, combines inflation, unemployment and interest rates to provide a general view on people’s economic misery.) The most recent reading says Australians aren’t as miserable as they were a couple of years ago, but they are still pretty gloomy. The good news is that things are starting to feel better. Entering 2025, consumer sentiment has lifted off its lows. The Reserve Bank has cut rates. The gloom, it seems, is lifting. If we could talk up the economy a bit more, things would get even better. It’s time to stop complaining.

Star Entertainment is on the brink of collapse. The Whyalla Steelworks lost $319 million in seven months before going into administration owing $1.35 billion. Australia’s second largest hospital group Healthscope has failed to fully pay rent on the buildings that house medical facilities and is being threatened with eviction. And that’s just what we found out this week. Add in the fact that the federal government is struggling to find a buyer for Regional Express Airlines, the developer Beulah International put the project manager of its high-profile South Bank project in Melbourne into voluntary administration three weeks ago, and the receivers of failed apparel group Mosaic brands is closing down labels from Millers and Noni B to Rivers, Rockmans, and Autograph. Many companies, from diverse parts of the economy, are hurting. It isn’t just small companies that are failing. It’s big businesses as well. In tough economic times, everyone gets hit and apart from the big banks, no-one is too big to fail. It's a lesson investors need to remember.

Managing distraction has always been challenging, and it's even tougher today when our work and private lives collide via mobile phones. American writer Nir Eyal was interviewed this week about his book Indistractable. He said: "Distraction is not something that happens to us. It is an action that we take." Eyal recommends four steps to manage it:

1. Master the internal triggers for distraction. Know yourself and the things that can divert your attention. Decide how to handle them.
   
   
2. Make time for traction. Set the right environment and tools to focus. Timebox your day. Rather than a "To-do" list, implement your intentions by allocating time in your diary to tasks. "Turn your values into time. If you want to know what somebody's values are... you look at how they spend their money and how they spend their time."
   
   
3. Hack back the external triggers. Turn off the notifications, bells, and whistles that can pull you away from the task. Review the effectiveness of every meeting in your diary. Remove or change them as required.
   
   
4. Prevent distraction with pacts. Create a personal statement as a last line of defence against distraction.

Global share markets, outside of Europe, are not in a good place right now. Since the beginning of the year, Wall Street is lower. So too the Japanese market, Chinese, New Zealand and Australian markets. It forces investors to look more broadly, and the winners in 2025 have been long beleaguered European stocks, led by Germany. The DAX40 is up 15 per cent, helped by the large number of defence companies on the bourse. The prospect of a trillion-euro fund for defence and infrastructure programs, in part a response to what’s happening in Washington, is helping the German market. So far this year, the French market is up 11 per cent, the Italian bourse has jumped 14 per cent while Spain is up 15 per cent. The UK market is nearly 15 per cent higher. The Trump Administration has proven beneficial to European markets, and negative for Wall Street. Trump’s policy of America first means other nations need to think harder about their own outlooks and regions – and that isn’t a bad thing. Will it continue? The imposition of tariffs on Canada and Mexico this week, and more tariffs on China, works in favour of Europe. Sellers of goods from those countries will look for new buyers. There is a caveat – Trump has threatened 25 per cent tariffs on Europe. But so far, the Trump Administration is good for European stocks.

ASK FEAR & GREED

BEST OF THE WEEK

IF YOU MISSED THIS GUEST, CATCH-UP NOW

AND ONE LAST THING...

This week marks 50 years since Australian television switched to colour. Australia got it relatively late on March 1, 1975 - the US, for example, changed in 1958.

This video is less than a minute long, showing the moment five different countries around the world transitioned to colour TV. Australia's is, of course, the most entertaining... but you have to see the French TV station and their somewhat subdued reaction.