Generate's Investment Specialist Greg Smith joined Mike Hosking on ZB this morning to cover the latest inflation numbers in the US and what this means for the interest rate outlook. Back home he discusses the good news from the latest kiwi consumer confidence print and also what drove strong results from Hallenstein Glassons.
Listen to the 29 September 2025 recording from The Mike Hosking Breakfast on Newstalk ZB here:
Or read the transcript below:
From Generate Wealth and Kiwi Saver specialists Greg Smith, welcome to the week.
Thank you, Mike. Morning.
Now I read an article over the weekend about the American economy. It said everyone hates the American economy, but they're spending like they love it. It's weird, eh?
Yeah, they absolutely are. So that the personal saving in August was $1.06 trillion and that's about 4.6% as a percentage of disposable income. So yes certainly proving resilient. And you know, we talked about some pretty strong data on Friday in terms of GDP, durable goods, improving jobless data. So that's led to a few concerns about is the Fed going to cut rates. Well, thankfully in addition to that spending data, the inflation data on Friday also came in line with the estimates. So yeah, it looks like it's still going to get two more rate cuts. Personal consumption expenditures price index, it was 2.7%. Inflation in August, that was up from 2.6 in July. And the core PCE which strips out food and energy that was 2.9%. That's what the Fed tends to look at, that was .2% higher on the month. It was in line with estimates.
Fed targets 2% inflation. But yeah, yeah, still looking at two more rate cuts. And the other thing I suppose it also shows, Mike, is that Trump’s tariffs have only had a limited pass-through effect on consumer prices. So time will tell if that remains the case. But for now it's all looking pretty benign. Goods prices up just .1% and services .3% higher. So yeah, markets liked it. All pretty benign and indices closed higher on Friday.
Now what I liked about our consumer confidence number which came out was post that 0.9 number, it fell off a cliff and yet bounced back. So interesting, we're up a bit.
Yeah, that's right. So some of it was the timing of the survey. So yeah, those sort of polled after that year was pretty dire, wasn't it. And obviously made headlines in terms of that June GDP data, but it's not surprising in impact. But if you look at the ANC Roy Morgan consumer confidence index, the positives are it rose from 92 to 94.6 in September.
So that not only unwinds last month's fall, but actually might break the 10-month fall trend. So we're going to celebrate that. The big retail indicator, ‘is it a good time to buy a major household item?’ that rose a point still negative 11% so a bit of an improvement. People still cautious. Questions around the future conditions were unchanged, but perceptions of the here and now, thought this was interesting, whether people feel better or worse off than last year. That actually was up 11 points still -13% but going in the right direction. And people just feeling a little bit better about things in the here and now. I wonder if interest rates having a bit of a bit of an impact there, quite possibly.
And a net 14% expect to be better off this time next year. So that was positive. Around the economy, though, mentioned the GDP, things are still pretty soft, although has improved on a five-year outlook. Inflation, just in terms of the outlook that that barely budged 4.8%, but a use of food inflation running at 5%, that's probably a factor. House price expectations, that's dropped to 2.5%.
That's actually the lowest since July 2024. But yeah, it's not all doom and gloom out there, Mike. And yeah, I suppose with the RBNZ pivoting towards being concerned more about the growth outlook than inflation, you know, there should be some more response here. We're not spiralling downwards, but perhaps we might just wait a little a lot longer to see that June GDP data marked peak pessimism.
Now what about Hallensteins? Is this another one of those stories where Australia outperforms us?
Yeah, that's, that's absolutely right. So, yeah, obviously was starting to get, news from the retail coalface that yeah, things are perhaps improving KMD brands, we talked about that last week and you're quite right. Hallenstein Glassons, if you look at sort of the headlines, you think, this is pretty good. Net profit up 12 percent, 58.4 million, four-year sales up 8%, this is to 1 August, 470.7 million. But yeah, wasn't so much about New Zealand, was about across the ditch. So sales at Glassons in Aussie, they're up 15 percent, 251,000,000.
They’re working on a bigger warehouse and automation the like and it's going pretty well over there. They’re on the lookout for store opportunities, but New Zealand up just 1.7%, 111.9 million – still take that though. Refurbishments they’re helping. Looking at Hallensteins itself including Aussie that sales are pretty flat 107,000,000. But you know, the good news is the company raised a dividend and they also said this, the new financial years off to a solid start. First seven weeks sales up at 13%. But again being driven by Australia, they said conditions in New Zealand are mixed. Cost of living pressures are still having an impact and that's feeding through just to discretionary spending, but actually they say there's some moderate signs of improvement. So I think we'll take that. She's at .5%, up about 8% year to date.
Numbers please.
Yes. So we had a positive end to the week as mentioned. So S&P500 was up .6%, 6643. The Dow was up .7 percent, 46247. NASDAQ up .4% as well. Footsie 100 up .8 percent, 9284. Nikkei down .9% 45354. ASX 200 across the Tasman that lifted .2 percent, 8787. We were down .3 percent, 13111 for the NZX 50.
Commodities gold up 10 dollars, 3716 an ounce. Oil up 79 cents 65.72. Just in the currency it’s pretty flat against the US dollar 57.7. Likewise against Aussie 88.2. Against sterling we're 43.1 that was down .4% and against Yen we're slightly softer 86.3.
This week Mike big focus is actually across the ditch, we've got the RBA rate decision. We've got non-farm payrolls in the US, results wise, cruise liner Carnival, sportswear giant Nike and locally business confidence, building permits, 4-year results, Sinlait milk. And we’ve got another point on the retail sector, we've got numbers from The Warehouse.
Look forward to it, catch up soon. Appreciate it. Greg Smith out of Generate Wealth and Kiwi Savers specialists.