Generate's Investment Specialist Greg Smith joined Mike Hosking on ZB again this morning to discuss the silver lining in the latest NZ trade data. He also looks at why US delivery giant FedEx is doing well, despite being caught in the eye of the trade storm. Also in the frame was the Bank of Japan which predictably kept rates on hold but sprung a surprise with plans to sell down its stock of ETFs at the rate of around 620 billion yen a year
Listen to the 22 September 2025 recording from The Mike Hosking Breakfast on Newstalk ZB here:
Or read the transcript below:
Now where are we? Kiwi trade data, what have we got? The deficit increased?
Yes, that's right, it did to 1.2 billion for August from 716 billion in July. But let's look at some positives on a rolling 12-month basis, the deficit decreased from 3.9 to 2.99 billion. It has softened in recent months, but if you look at it on a year ago numbers still looking pretty good. So good exports are 23% to 5.9 billion. Dairy, horticulture still driving the momentum. Fruit exports were 57% higher to 905 million. Kiwifruit exports, Mike, are still going gangbusters, up 300 million on the same month a year ago to 772 million. And milk powder, butter and cheese, that was up to 272 million to 1.1 billion. So China was up 343 million, Australia up 120 million terms of exports, EU up 210 million.
And even the good old US despite all the tariff turmoil, that's up 96 million on a year ago. On the other side, goods imports over down 30 million, to 7.1 billion. So weakening in recent months, but still good on a year ago. I think you'd have to think, obviously we saw those GDP numbers which you talked about last week. But yeah, we're going to get further cuts by the RBNZ, aren't we? And that's going to have an impact on the Kiwi dollar further, you would think. So there is the prospect of that deficit situation improving as our exports become cheaper to our trade partners and imports more expensive.
Talk to me about FedEx.
FedEx, yeah, bit of a cracker of a result in terms of the reaction on Friday. So the deliver giant has been at the centre of the trade storm, but beat at the top and bottom lines, Net income of 820 million was u on 790 million a year ago. What was more impressive, talking about trade, it was obviously a pretty tough environment for them all. It was certainly evolving. So they move around 17 million packages each day. They said tariff headwinds were 150 million in the quarter. That amounts to some 1 billion this year they reckon.
The main thing, Mike, is this de minimis exemption that used to mean that shipments under $800 didn't attract duties. They now do. That's pretty relevant to likes of Temu. That's increased costs, reduce the number of those shipments. FedEx also saw a few pressures in its business to business segment, but overall quarterly revenues up 3 percent, to 22.2 billion, international volumes they fell by 3%, but US they went up 6%. So it seems like US consumers are continuing to gravitate more and more to online shopping And FedEx are pretty upbeat about the full year outlook. Let's see revenue of 4 to 6% growth. It was a lot more in the market expected. They’re cutting back costs, they reduced the number of pickup times and that hasn't really been negative for customers as yet. They're actually increasing market share. So the shares were up 2% on Friday. They have been in the eye of the trade storm and they've fallen around 18% this year. But I suppose management will be hoping for things settling down on the trade front, I suppose, despite what Jerome Powell said last week and that it's still an evolving situation.
All right, so it gave inflation, but the BOJ [Bank of Japan] didn't move – and no one thought they were going to move, did they?
That's right. So they held half a percent, with a 7-2 vote. A couple voted for an increase to .75%. They’ve been actually trying to keep inflation going and inflation actually eased 2.7% in August from 3.1% in July. They're wary about the economic situation globally. Of course I've got their own political uncertainty with the PM resigning, but they are open to hikes later in the year. But what was surprising is that they revealed they're going to start selling their vast holdings of exchange traded funds. So they're going to do so at a pace of about 620 billion yen per year. That's about $4.2 billion worth, but does sound like a lot. But I've got a lot 75 trillion yen. So it's going to take them over a century to get through those at that pace. But look, they’ve committed to doing so. I mean, they actually became the largest holder of Japanese stocks around 2020 and they bought up lots of financial institutions during the various crises in the 2000s. They've got a way to go.
It's going to take a while, but just sort of really a signal of policy of normalisation. The other thing that sort of even though they haven't been buying ETF's, you know, the Japanese stock market's been hitting record highs, up around 15% this year. So the great unwind is starting, Mike, but they won't be doing it too fast, you would think, so as not to spook investors.
And how about some numbers?
So the dow was up .4% on Friday, 46315. S&P500 up half percent, 6664. The NASDAQ at .7 percent 22631, Footsie down 1.1%. Nikkei down .6 percent 45045. ASX200 up .3 percent, 8773. NZX 50, we had a good session. Bounced back at .9 percent, 13231. Gold up 41 dollars, 3685. Oil down 89 cents, 62.68.
Currencies – the Kiwi weaker against the US, 58.6 We're under 89 against Aussie 88.99 down .1%. British pound 43.5 that was up a little bit. Down against the Yen, down .4 percent, 86.7.
This week a little bit going on, but the earnings season settled down. UK and German manufacturing, US durable goods, second-quarter GDP and US inflation. We've got results from Costco. Locally, consumers confidence and full-year results from Kathmandu-owner KMD Brands and Fonterra.
Go well mate, appreciate it very much. Greg Smith out of Generate Wealth and KiwiSaver specialists.