Newstalk ZB Business Update: 1 September 2025

Authors

Greg Smith

Published

Every Monday Greg Smith, our Investment Specialist at Generate, chats to Mike Hosking about what’s happening in the global economy and the New Zealand business world.


Listen to the recording from The Mike Hosking Breakfast on Newstalk ZB here:



Or read the transcript below:


Now Greg Smith is with us from Generate Investment Management, which means you have a new job as of this morning?


I do, that's actually Generate, so they're a leading KiwiSaver and wealth management business. So very excited to be joining them, they manage around about $7 billion for Kiwis.


So good on you.

Yes, super excited to be joining Generate.


Now the tariffs, they didn't go well over the weekend for Donald.

Yeah, that's right. So was it all a bad dream?


The US Court of Appeals ruled that Trump stepped outside his authority in imposing country tariffs, and that only Congress can do it. So they are going to remain in place till mid-October. He's going to go the Supreme Court where Trump and George W Bush nominees are the majority, but look, there's no guarantee they'll side with them.


So he might need a change of tack back towards sector specific tariffs which remain safe from the ruling. So quite major implications. Before the ruling, tariffs were going to affect 70% of used goods imports. It could be just over 15% with this ruling, and if it sticks. So wide-ranging implications, particularly for inflation, which is not exactly soaring, but has been picking up. The core personal consumption expenditures gauge that hit 2.9% year on year in the data print on Friday, and that's the highest since February.

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The Fed, as we know, they target inflation of 2% so they're still expected to cut this month. But there might be some questions about that. They’ll be looking at the jobs numbers on Friday.


US consumers still have their wallets out, with spending up half a percent on the month, and tariffs aren't exactly putting Americans off imports or helping the coffers. The trade deficit was actually up 22% to $103.6 billion last month, and that was due to imports largely, which increased almost $19 billion. So there remains some debate over who's actually going to pay for Trump's tariffs and how this is all going to play out.


What about the consumer? Are they a little more cautious? What's the plan?

Yes they are getting a bit more cautious. This is the University of Michigan consumer sentiment index. It was down 6% on July, so still up around about 11% from the aftermath of Liberation Day, but it's down 14% from a year ago.


So concerns over the economy, business, job, conditions, which have all declined in terms of the readings. Whether it's a good time to buy a major household item - that dipped as well to the lowest in the year. A lot of it is all about your high prices. Inflation expectations, they moved up from 4.5% percent last month to 4.8%.

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So yes the consumers are coming becoming concerned. We also saw this coming through in some of the retailers results. So the Gap, obviously, they're pretty well known. Revenues were up just 1% to US3.7 billion. It’s worth noting they're into a two-year turnaround plan and trying to get some relevance back, particularly in the jeans markets.


Their ‘better in denim’ campaign wyou might have seen, that got 8 billion impressions, and was the number one search on TikTok. But yeah, overall sales outlook, very modest, 1 to 2% growth. Just on tariffs, Gap sees a tariff impact between 150 and 175 million. That's pretty relevant given the earnings were around about 216 million.


And also Caterpillar came out, and they see it, see a tariff impact of 1.5 to $1.8 billion in 2025 so the American consumers aren't the only ones. They'll be hanging around to see whether we get tariffs, whether they're here to start stay or not in a few months’ time.

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All right, now the Port of Tauranga, we know we love it's another good result, and good on them. But this, this, this delay thing. I mean, when does it ever seem we’ll see the light at the end of the tunnel?


Yeah, absolutely. I mean, we just want it resolved, don't we? So, yeah, the shares are up 2% strong result, as you mentioned, driven by agri. Container volumes up 5.3%.


Kiwifruit, that saw a record season up 31% in terms of volumes. But they made no bones about their frustration with the delayed resource content for the Stellar Passage development. Judicial review put on hold last week. It seems down to the fact that the Mount Maunganui Wharf extension was left off. Seems a major boo boo.


It was well known that that was going to be included in the project. So yeah, they've outlined the cost to the Kiwi economy. They've been turning away shipping services. A proposed new service to the Americas that was recently declined, that would have provided Kiwi imports and exports of an estimated 65 to 90 million per annum in international freight savings. So look, it is costing the economy.


I guess the only question is, is it costing us 10s of millions, or is it hundreds of millions of dollars? So we really need to get this sorted.


We do. What are the numbers?


So the Dow was actually down on that news on the tariffs in the court on Friday, down .2% to 45,544. S&P 500 down .6% - 6460 - so it's fourth winning month, up 2% in August. Also, by the way, the Russell 2000 Small Cap in August up 7%. NASDAQ down 1.2% on Friday. Footsie down .3% as was the Nikkei. ASICs 200 down .1%.


NZX 50 - we were a bit of an outlier. We were higher; we're up .2% 12,930. Gold up 30 bucks, 3447 an ounce. Oil down 59 cents, 64 even. Currencies against the US - Kiwi, 58.9 up slightly, also up against the Aussie, 90.1. Also up against the British Pound. 43.7 and Japanese Yen, 86.7.


This week, lots going on. The earning season is done locally, but we got building permits, export data, another dairy auction. Offshore, EU, inflation, Aussie quarterly GDP. We've got PMI, and of course, we've got the US non-farm payrolls. And on the earnings front, we've still got some trickling through on the global side. So we've got Salesforce, Hewlett Packard, Broadcom and Lululemon.


Enjoy your first start at the office. Go well. Greg Smith from Generate.



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